Did you know, there are different forms of money? Not just real and counterfeit. Those categories were relevant in the 20th century. Now we have Cash money, digital money or money that can be accessed through online mediums, and plastic money which refers credit cards and debit cards.
But in the last decade, the whole world has seen the emergence of a new form of money. It is definitely the cryptocurrency. Cryptocurrencies or virtual currencies are digital assets which can be used as a medium for exchange. Some notable instances of cryptocurrency are Bitcoin, Dogecoin, and Dentacoin. There are many more such cryptocurrencies available online.
It is important to keep in mind that the cryptocurrency operates on the digital domain. It is not part of the daily economy. Digital currencies cannot be used in lieu of regular money. Another way to look at it is that the digital currency space is unregulated by the government.
Digital currency is ‘mined’ by users. The total value of the currency depends on user involvement and it cannot be monitored or managed by the federal government. This is what makes the cryptocurrencies volatile and risky.
The Tech Behind Cryptocurrency
The hype surrounding Bitcoin is the primary reason for a huge surge in demand for digital currencies. However, cryptocurrencies are the outcome of the technology called as ‘Blockchain’. The Blockchain is one the revolutionizing technology that has emerged since 2007. Blockchain development technology is a network-based system which records data and stores it in the form of blocks on the network. Each block has information on different aspects like
- User details – personal information of the users entering into the transaction. This includes name, username, IP address, personal address etc.
- Transaction details – records of the product being transacted, the value of the transaction, quantity, and rate
- Timestamp – The timestamp records the date and time when the block is created or accessed.
This information is contained in every block. Each block can be accessed from anywhere in the network. Since the information is decentralized and transparent, Blockchain development technology is also referred to as a ‘Distributed pubic ledger’.
Making your own Virtual Currency
Since it is not regulated by the government, you can create a crypto coin of your own without needing any government approvals or permissions. Some background knowledge in coding and programming is sure to help, but one can still create a virtual currency without this knowledge.
So how do you go about creating a virtual currency in your name?
Step 1: Define your source code
A source code is also called as a smart contract. A smart contract contains all the information about the virtual currency. The source code is similar to the prospectus of a company. The nature of the coin or the purpose behind issuing this coin is contained in the source code. If the purpose behind creating the crypto-coin is well defined then it becomes easier to raise money with the initial coin offering. For example, there is a crypto coin called Dentacoin which was issued to support dental care. Users could pay their dentists (who accept Dentacoin) for their services or as a premium payment for future services. This way the users won’t have to spend actual cash for their treatments.
Some coding background will be necessary for creating the source codes. Satoshi Nakamoto was the man behind creating the crypto coin. He had released his original white papers after launching Bitcoin. Going through Satoshi’s original white paper can also be very helpful for making the smart contracts
Step 2: Define your Currency
Do you want your cryptocurrency to be like Bitcoin? Or do you want it to be better?
If you want to replicate a very popular and widespread currency, it is advisable to make some changes in your tokens. Any shortcomings of the original currency can be replaced by adding new features in the smart contract. To make this exercise fruitful, it best to study Bitcoin to the core. The source code of Bitcoin is publicly available and can be downloaded from different websites. You can create a new coin in your name and keep upgrading it with new improvements. This is the step which differentiates your coin from other virtual currencies out there.
Step 3: Initial Coin Offering
The first step helps in building the architecture for the virtual currency. The second defines the currency. These two steps are the most technical parts of creating your own virtual currency. The third step involves raising funds through the Initial Coin Offering or ICO. This step is all about marketing your coin. The ICO process is totally reliant on building trust with the users. No one is going to fund your coin if the purpose behind the coin issue is unclear.
There are many coins which failed to raise any funds. They were definitely built on a good system but the coin definitions were not attractive to investors. Investors should never get the impression that the promoters are raising funds for their own vested interests. The investors should be offered a coin which fulfills their own personal interest. One of the crypto coins called as Mastercoin was raised by tying up the initial corpus to existing bitcoin ownership. However, this approach was not successful because it seemed as if Mastercoin was trying to replace bitcoins. So, a poor definition can be the reason for the failure of a cryptocurrency.
Step 4: Promote your Coin
Market your coin in a way that you attract a larger investor base. Satoshi was able to bring Bitcoin to such lengths mainly with a well-timed and well-executed marketing strategy. The only way your coin will be successful is only if you are able to come up with a compelling pitch. The coin must be indicative of a low-risk investment which offers a high value. Many critics in the virtual community are aware of viral adoption by new coin issuers. Your coin should represent a source which creates value for investors. Why your coin is better than the others should seem obvious to the skeptics. Offering value is the only way to successfully promote a token in the virtual currency space.
We hope that this guide will be useful to you. Follow these steps strictly, but try to get deeper into the meaning of words and the process in general.