How to create your own cryptocurrency

A License To
Print Your Own
Money

First in a series of three articles exploring the mechanics of launching a cryptocurrency

Everyone, apart from perhaps the Dalai Lama, wants to print their own money. The only thing that stops them is a printing press and the fear of a visit from the US Secret Service. But did you know in a matter of five minutes you can create your own currency?

Of course, we are talking about creating your own cryptocurrency. Surely it can’t be that easy, you are thinking unless you are some sort of coding genius? Well, that may have been the case a few years ago but now with many of the blockchains sharing their code on platforms such as Github and with the vast amount of code that has been written since Satoshi Nakamoto released Bitcoin, it is as easy as 1–2–3.

If it is that easy then surely anyone can do it? And if any one can do it then how can these cryptocurrencies have any value? Those are two very good questions which we will examine here as well as exploring how you can go about creating your own currency if you are that way inclined.

Distinction between tokens and coins

Let us make a distinction first between tokens and coins. An important distinction if you want to understand the cryptocurrency minting process. A coin is a crypto asset that has its own blockchain. Bitcoin is a prime example. Tokens on the other hand use another blockchain instead of their own. The most popular example is ERC20 tokens which use the Ethereum blockchain. We will explore the ERC20 token here together with the fast emerging SLP token which is a token issued on the Bitcoin Cash blockchain.

What is your currency going to be used for?

Have you a great business idea for a platform that will benefit from its own native token or currency? As with any business idea launching your own cryptocurrency is no different. You must first work out if there is a need for your project and follow the typical checks and balances any business idea has to go through to assess its viability.

The white paper and legal considerations

Once you have worked out your business model your next step is to set out your idea in what is called
a white paper. Take a look at the Bitcoin white paper here www.bitcoin.org/bitcoin.pdf

The thing to remember is a white paper isn’t a prospectus or offering document. Its purpose is to set out the problem you are solving, the solution, and the technology behind the solution. If you want people to give you money for your token, that is a whole different matter. In the early days, cryptocurrency project owners sold their tokens to investors using simply the white paper. The project owner, or more likely the scammer, then used that money to fund their project or buy themselves a boat, or perhaps both. The project owner attracted investors by offering high returns from their token once the project was launched. The problem was by offering investors a return on their money or selling tokens at a discount to the tokens’ eventual listing price made them securities and subject to regulation. Of course, none of these token sales or ICOs (Initial Coin Offerings) were regulated and most were hit with legal
action and restitution orders from the Securities Exchange Commission assuming they targeted US investors which most did.

If you are looking to raise money for your project the best thing to do is obtain very good legal advice. You don’t want to embark on any crypto venture without making sure you are bulletproof. A few pointers worth noting in this regard:

  • Never issue your tokens at a discount
  • Never talk about your token as if it was an investment — no mention of possible returns etc.
  • Don’t use the word investors, they are not investors they are users of your service
  • It is advisable that you only issue tokens to users (not investors) once the project is complete. If the money from the token sale is used to fund the project’s development your token is likely to be viewed as a security.

Choices

It is always good to have a choice. You have two possible routes you can take when deciding how you wish to create your new cryptocurrency or ‘shitcoin’ as the crypto community will refer to it.

Choice #1: You can build your own blockchain and create a coin that utilizes that blockchain.

Choice #2: You can mint your own coin on another blockchain such as Ethereum by creating your own
ERC20 tokens.

Your decision as to which choice to take will depend on your budget. Perhaps you are on a tight budget and want to test your idea first? Maybe you want to get to market fast. Or perhaps you want to issue your own currency for a few laughs with your buddies.

The first option can be expensive. Creating your own blockchain from scratch will require a team of developers. Unless you have deep pockets or are an experienced blockchain developer this probably isn’t an option for you. There is a cheaper option. This is called a fork, a technical term for copying someone else’s work. If you wanted to create your own blockchain on the cheap you would copy an existing blockchain such as Litecoin, where its code is open source, and perhaps make a few adjustments to mold it to your unique requirements. This second option is by far the cheapest but again unless you are a professional coder you will require some help.

The cheapest route to printing your own money is the token. Here you literally enter a few details into a customized program and hey presto you have your own token. Maintaining the token may require a developer’s help but that is a small price to pay to have your own currency.

Is there value in these easy to create tokens?

That is the billion-dollar question! Let’s say you wanted to create a clone of Tether’s stable coin. Their token (although it is called a stable coin technically it is a stable token) is called a Tether. These are issued as ERC20 tokens on Ethereum (and a few other blockchains such as EOS, Tron and BCH) which are supposedly backed on a 1:1 basis with the US dollar. Because these tokens are backed by fiat they obviously have a value. An opportunist could replicate the Tether in 5 minutes with the extra step of having to open a bank account in which to deposit the billions of dollars that could flow your way (not as easy as it sounds as many banks refuse to conduct business with cryptocurrency related projects).

That is the billion-dollar question! Let’s say you wanted to create a clone of Tether’s stable coin. Their token (although it is called a stable coin technically it is a stable token) is called a Tether. These are issued as ERC20 tokens on Ethereum (and a few other blockchains such as EOS, Tron and BCH) which are supposedly backed on a 1:1 basis with the US dollar. Because these tokens are backed by fiat they obviously have a value. An opportunist could replicate the Tether in 5 minutes with the extra step of having to open a bank account in which to deposit the billions of dollars that could flow your way (not as easy as it sounds as many banks refuse to conduct business with cryptocurrency related projects).

How to create your own cryptocurrency

Here we are going to focus on minting your own token. This is the quickest process to creating your own currency, an opportunity that is open to the vast majority of us.

There are a few platforms that make this job simple. Although the word simple is relative!

You can create your own ERC20 token in minutes by using one of these platforms www.walletbuilders.com and www.fondu.io with a few clicks of your mouse you can set your own token up in seconds with no help. Of course if you require some assistance you can always pay a developer for a few hours of his or her time. You can find developers on sites such as www.codementor.io

As I mentioned earlier there are many alternatives to ERC20 tokens. Most blockchains have an alternative (other popular ones are EOS and Tron). SLP tokens are proving popular right now. These are native to Bitcoin Cash which as the name suggested was a fork from the original Bitcoin blockchain. You can set your own SLP token up quickly using www.simpleledger.cash/project/electron-cash-slpedition

Of course, as the investors in the fraudulent cryptocurrency OneCoin found out to their cost a token or coin has zero value if it can’t be traded. That is your next job on the cryptocurrency journey. Get your token listed on one or more exchanges and then market it like crazy. These subjects will be the subject of our next two articles.

Conclusion

So is creating your own cryptocurrency really like printing money? It certainly was in the old days. But things have changed now that the SEC has clamped down hard on ICOs. The shrewd operators who continue to print money are the stable coin boys. Their business model involves an investor exchanging a token for a $1 bill and then using that $1 to earn a return which the project originator is entitled to keep. When you have $16bn earning 1 percent that is a lot of money!

No Financial Advice

This article does not constitute financial advice in any way. This article should be treated as supplementary information to add to your existing knowledge base.