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It’s evident that cryptocurrency is more than a trend and maybe here to stay for the long term. Data supplied by Statista indicates that there are almost 6,000 cryptos developed to date, and more are still being developed. There’s much more information on cryptocurrencies, and more people accept it as a safe way to invest and transact.
But supposing you find cryptos to be intriguing and would want to develop your coin, what do you need to know? This article looks at cryptocurrency development basics and the critical processes in creating a cryptocurrency. But first, what is a cryptocurrency?
What Is A Cryptocurrency
Cryptocurrency is a world phenomenon created in 2009 and is a decentralized digital currency. It uses cryptography in blockchain to encrypt the currency units and fund transfers and works on a peer-to-peer (P2P) network composed of data blocks. These blocks store information chronologically, follow inter-node communication protocol when validating new blocks.
You can’t alter data stored on these blocks without changes occurring in subsequent blocks. Its key features are decentralization, anonymity, transparency, and high security. There’s no government or central authority that regulates cryptocurrencies. You transact through digital wallets, which come in different forms, including software, hardware, and paper wallets, such as the Ethereum paper wallet.
Fundamental Processes in Making a Cryptocurrency
Before you start the development process, you need to know what the process entails. Here are the main steps in making a cryptocurrency.
Creating a cryptocurrency for business requires that you develop a working strategic plan. Like any other business idea, you need to define the problem the crypto is looking to solve and for what target group. Ensure you carry out a business analysis to know the feasibility of your idea. You’ll need to have a value proposition that makes people interested in your Initial Coin Offering (ICO).
This is an essential step since an idea without a value proposition won’t go far and will only remain an idea.
Pick a Development Team
The best way to create a cryptocurrency is through a competent and experienced development company, particularly a company oriented towards blockchain solutions. You need to select a team that combines expertise with experience, good reputation, and communication skills. They should be knowledgeable on wallet development platforms such as Ethereum and Bitcoin wallets.
Remember, you’re essentially choosing a partner, consultants, and advisors for your business. Creating a cryptocurrency has many phases, and a good team should be able to lay down their project strategy in a way you can understand. The cost may be relatively high, but you’ll be saving yourself from a poorly developed project.
Create Smart Contract Rules
Smart contracts work similarly to traditional contracts, only they are in a digital form and operate on the blockchain, and they play a significant role in the project. Smart contracts are the pre-determined rules that your cryptocurrency will work and enable the transaction to execute automatically. You need to create a set of rules and represent them as the idea behind the ICO.
Hire an Auditor
In the era of scams right, left, and center, many ICOs are scams and fraudulent processes from people looking to make quick money at the expense of others. That has made investors wary of many projects, the reason you need to hire an external auditor to audit the project. Auditors ensure the genuineness of the project. Ensure you use a credible, reputable auditor.
Craft your White Paper
The quality of information on your white paper is what investors get their impressions and judge the viability of your project from. If your white paper fails to reveal the value proposition for your idea clearly, they’re more likely to ignore your project. A good paper is crucial to the success of your ICO. It should elaborate these things:
- What problem exists and if there’s a need for a solution
- How your company will spend the ICO funds
- When you plan to release the coins and on which exchange platforms
- Whether you have a roadmap
- Who are your team, experience, and value they bring to propel the project further
Promote your ICO
Marketing is a necessary process in any business product or service, and your ICO needs to be promoted to create awareness among its target audience. You can use social media, blogs, news articles, and email marketing.
Create a Community for your Crypto
You need to have a strong following for your cryptocurrency. If you look at all the major digital currencies, they have strong communities. Research on the channels your target audience uses to get information and reach out to them. Be engaging and active, answer concerns and questions, acknowledge feedback, give accurate and timely updates on the project. You need a support team available 24/7.
The steps above show you how to create a cryptocurrency from idea to launch, and you’ll have a cryptocurrency with a better chance to earn a position in the market.