How to Create Your Own Cryptocurrency
If you haven’t completely shunned the news in recent months, you’ve probably heard of the frenzied ride in the cryptocurrency market. Bitcoin and Ether experience huge fluctuations in price every day, while Dogecoin, created as a joke in 2013 , has become a very real (albeit volatile) asset thanks in part to Elon Musk’s Twitter feed and its recent SNL appearance.
Meanwhile, China is taking tough measures on cryptocurrency trading, and the IRS is tracking down investors who have not reported profits from cryptocurrency holdings, so if you sell or trade coins, you could be hooked on capital gains or income taxes.
If the thrill of playing armchair or hobbyist investor isn’t enough for you, you may be wondering if you can take part in the action by creating your own cryptocurrency. The short answer is yes, but there are quite a few different options to consider – and remember – before you dive.
Know the difference between a coin and a token
First, it is important to understand the difference between coins and tokens. Both are cryptocurrencies , but while the coin – Bitcoin, Litecoin, Dogcoin – runs on its own blockchain, the token lives on top of an existing blockchain infrastructure like Ethereum.
In the simplest case, a blockchain is a record of transactions made and protected by the network. Thus, while coins have their own independent transaction ledgers, tokens rely on backbone technology to verify and secure transactions and ownership. Typically, coins are used to transfer wealth, and tokens can represent a “contract” for almost everything from physical objects to event tickets and loyalty points.
Tokens are often issued through a crowdsale known as an Initial Coin Offering (ICO) in exchange for existing coins, which in turn fund projects such as gaming platforms or digital wallets. You can still receive publicly available tokens after the ICO is complete – similar to buying coins – using the base currency to make the purchase.
Anyone can create a token and conduct a crowdsale, but an ICO can be confusing if the creators take investors’ money and launch. Some ICOs are considered securities and are therefore regulated by the Securities and Exchange Commission, which cautions investors against doing research before purchasing tokens launched as part of an ICO. The SEC is increasingly fighting fraudulent ICOs.
At the time of writing, CoinMarketCap lists over 5,200 coins and tokens available on public exchanges. However, not all tokens made it to exchanges – Etherscan, which provides Ethereum analytics, has over 403,000 contracts in its archive. In April 2018, there were only 71,000 of them.
The idea behind cryptocurrency is that the underlying code is available to everyone, but that doesn’t mean it’s easy to understand. Here are the ways to create your own coins and tokens.
Create your own blockchain or fork an existing one
Both of these methods require a little technical knowledge or the help of an experienced developer. Since the coins are on their own blockchains, you will have to either build the blockchain or modify the existing one for your new coin.
The former requires serious programming skills, and while there are tutorials and online courses that will guide you through the process, they assume a certain level of knowledge and you usually don’t end the process with a fully functioning coin ready for public exchange.
Alternatively, you can fork the existing blockchain by taking the open source code found on Github, making a few changes, and launching a new blockchain with a new name ( for example, Garlicoin based on Litecoin). Again, this requires you to understand the code in order to know what needs to be changed and why .
Launch a coin or token on an existing blockchain.
For the average person not versed in the intricacies of coding, one option is the creation service, which does the technical work and delivers the finished coin or token to you. For example, WalletBuilders has a free coin launcher for those who just want to experiment with the process, as well as a paid package (0.0023 BTC at the time of writing) that creates a functional coin. Rally is an invitation-only coin creation platform built on the Ethereum blockchain.
You can also create a token – which is essentially a smart contract – with or without a public ICO. Since tokens can represent any asset, you can even create a token with no real value or serious purpose other than being exchanged between friends.
It is faster, easier, and cheaper than creating a coin as it does not take the time and effort to create and maintain a new or forked blockchain, but instead uses the technology already used for Bitcoin or Ethereum.
A common product is the ERC-20 token, the standard for those built on the Ethereum blockchain. The code for these token contracts and crowdsale is also available for very ambitious people, and there are handy tutorials and YouTube videos, as well as platforms that walk you through the token creation process in just a few clicks.
This generator on Github , for example, simply requires you to install MetaMask (a blockchain utility for buying, exchanging and storing tokens) and enter a few details as outlinedin this video tutorial about the token you are launching. There is a free option if you don’t really care about setup, and plans with higher management costs up to 0.75 ETH at the time of this writing.
If you are curious about cryptocurrencies, experimenting with token contracts does not require any penalties. Start with an ERC-20 token that you can give out to your friends and then cash out those who buy drinks at the bar. No monetary value or commitment is included, but it will help you understand the technical aspect as well as how the tokens work. ICO is probably not suitable for the casual observer due to SEC rules and high fines for misrepresentation.
Not all cryptocurrencies are worth real money
The technical creation of a cryptocurrency is actually not the hardest part of launching a successful crypto project. The real work is to add value to your coin or token, build the infrastructure, maintain it, and convince others to get involved, which requires a development team and staff. With the right support and promotion, even memcoins can gain real value (again, think about Dogecoin).
However, many cryptocurrencies are unsuccessful or even legally questionable because the ICO was not created in good faith or the coin failed to generate sustained interest.
Before going to the bank for a possible shitcoin , study all the details of the project yourself. Don’t rely solely on what’s trending in the news or what your friends have to say. Crowdsourced online forums are a worthy place to find the latest information on what’s real and trustworthy and what’s not, although, in the end, common sense is most important . This article was originally published in April 2018 and was updated on May 24, 2021 with updated context about the cryptocurrency market, up-to-date statistics, additional links and more details on the coin creation process.