Cryptocurrencies are no more a buzzword in this digital era. Some tech people might confess that cryptocurrency development is still in its infancy. But, the real fact is that cryptocurrencies are hitting the mainstream in many countries, and the brands have dived in to build their crypto coins with high-value and utilities. Let’s kick-start the blog post with interesting facts about cryptocurrencies!
The first-ever cryptocurrency “Bitcoin” inventor is still a mystery. Even though many sites list inventors with proof, there is no appropriate information on “Satoshi Nakamoto.” The crypto users must be beware of cryptojacking- malicious crypto mining by utilizing their resources. Another interesting fact is China tops the crypto mining than other countries. The cryptocurrency development companies have evolved with advanced technologies to backup and recover wallet applications; thereby, securing your crypto assets.
Now, let’s dive into the talk of cryptocurrency development and its technical aspects in detail!
What is Cryptocurrency?- A quick layman glimpse!
Let’s get straight into the definition of cryptocurrency!
Cryptocurrencies are decentralized digital money that utilizes cryptographic hashing algorithms to store its transaction data and regulate the assets’ circulation. The cryptocurrency transactions are recorded on the distributed ledger known as “Blockchain.” Every crypto transaction is verified and approved by the community members authenticated as validators or miner nodes. Cryptocurrency is completely governed and managed by its network members, and any central authorities or federation does not regulate it.
The cryptocurrencies are equipped with features such as decentralization, cryptographic encryption, consensus community governance, immutability, and much more due to the underlying blockchain technology. Now, let’s take a look at the gist of blockchain technology.
Blockchain is the distributed ledger technology that records data transactions with the timestamp in chronological order. Data transactions in the ledger are stored as cryptographic hashes that can never be decoded to the input string. Blockchain network supports P2P transactions and avoids intermediaries in the transaction process. This avoids huge transaction costs and cumbersome processes of traditional currencies. The blockchain network members validate every transaction and then add it to the data chain by resolving the consensus protocols. Every data block comprises pre-hash, hash, data, and nounce values. This enhances the security and immutability features of crypto transactions.
Around 8000+ cryptocurrencies are in the crypto marketplace as of now. The growth of cryptocurrencies is tremendous, and the price of a Bitcoin has hit around $50k. You’re never too late to launch your brand cryptocurrencies!
Some people may confuse between crypto coins and tokens! Let’s understand the differences between them!
Difference between Coins & Tokens- A brief investigation!
Cryptocurrencies are categorized into coins and tokens. Even though they both fall under cryptocurrencies, there are huge differences in their base-level architecture. Coins are built with a dedicated blockchain ledger to record the transactions. Crypto coins such as Bitcoin, Ethereum, and NEO have their blockchain ledger to record network transactions. If you\’re thinking about launching a crypto coin, so your first process would be blockchain development!
Tokens share the blockchain infrastructure of open-source blockchain platforms like Ethereum, NEO, and other ledgers. The tokens are used for rewarding smart contracts and other utilities of the brands. The predominant use of crypto tokens is in the realm of ICO, IEO, IDEO, STO, and other investment opportunities to kick-start the crowdfunding campaigns of the business.
Let’s move on to the working principle of cryptocurrencies!
Working principle of Cryptocurrencies
Cryptocurrencies operate on top of the distributed ledger system. These distributed ledger systems are built with consensus protocols to accept a data block. Every transaction in the blockchain ledger is verified by abiding these consensus rules. Top blockchain networks operate with PoS(Proof-of-Stake), PoW(Proof-of-Work), DPoS(Delegated-Proof-of-Stake), PoA(Proof-of-Authority) protocols in their framework.
The blockchain network community members are incentivized with crypto coins to take part in the consensus governance. This can be considered as the reward for the allocation of high-power computers, human efforts, and other resources to support the trustability and transparency of the network transactions.
Cryptocurrencies are stored in wallet applications, and this software comprises public and private addresses. Public addresses are similar to email addresses, and private addresses or keys are like passcodes. The crypto owners can send and receive crypto coins with the wallet’s public address by authenticating the application using private keys. Once the crypto owner initiates a transaction, the private key interacts with the blockchain network, and the transaction awaits the approval of miner nodes. When the miner nodes approve the transaction, the crypto coins are deducted from the sender’s wallet and credited to the recipient’s wallet address. In the public blockchain network of cryptocurrencies, every network member can view the transactions by preserving their anonymity.
Crypto owner initiates a transaction
Authenticates the wallet with private keys
The wallet interacts with native blockchain network
The transaction is visible to the entire network
Miner nodes validate & approve the transaction
Transactions are recorded as a block
Miner nodes are incentivized for supporting consensus goals
Merits of Cryptocurrency
Let’s start with the merits of cryptocurrency development!
The major advantage of cryptocurrencies is their decentralized nature, which is powered by the underlying blockchain technology. The cryptocurrencies are traded with P2P transactions in the network without any central authorities, which attracts the community audience, developers, and brands.
The cryptocurrency users can trade their assets despite the geolocation and could utilize them for purchases or investment. This saves transaction and exchange costs of the fiat currencies and can be intuitive than cross-border banking transactions.
The blockchain network promotes P2P transactions within the community audience. This transaction process cut-off the middlemen and hierarchical structure in the centralized infrastructure, making the crypto transactions super-quick. Even cross-border cryptocurrency transactions would take only around 10-15 minutes.
Low Transaction Costs
Unlike the traditional fintech sector, cryptocurrencies do not take up huge transaction costs. It takes only a minimal transaction cost to reward the miner nodes involved in verifying and approving the transactions.
Privacy & Transparency
Whenever a transaction is initiated, the blockchain network members are notified of the verification and approval process. Miner nodes verify the transaction and get incentivized with a very less amount of cryptocurrency. Even though the transaction is transparent across the network, the crypto owner’s anonymity is preserved within the community.
Now, we have to look at the downfalls of cryptocurrency too!
Demerits of cryptocurrencies
Many countries have not legally accepted cryptocurrencies for trading and finance in the mainstream. Only a few people have adopted cryptocurrency utilities in developed countries, whereas the majority sticks to fiat currencies.
The cryptocurrencies are recorded on the blockchain ledger; hence the transactions become immutable. However, there are possibilities to raise a refund request, but there is no way of getting back the crypto coins if it is declined.
With the limited supply of cryptocurrencies in the marketplace, the price volatility is higher. It becomes the best feature for traders, but not for every crypto owner. Crypto marketplace never sleeps, and the price hikes and downfalls happen round the clock. It is risky to trade in the crypto marketplace without professional advice.
Cryptojacking & Hacks
Crypto owners must be aware of the hacks and cryptojacking that can swallow their crypto coins or their high computing resources for mining the coins in the network. This, in turn, causes potential losses to the crypto owner in terms of authenticity and assets.
With a lot more understanding of cryptocurrencies, their working principle, benefits, and downsides, we can jump into the real technical details on how to create a cryptocurrency!
How to create a cryptocurrencies?- A technical dive in!
Cryptocurrencies are developed by two major techniques: Creating a native cryptocurrency and blockchain ledger; Forking the existing coin, and developing a token. Even though open-source libraries infer the cryptocurrency codes, it is advised to seek technical help from blockchain and cryptocurrency developers.
Native Cryptocoin Development takes immense effort, time, and money to build a dedicated blockchain network and the cryptocurrency advanced features. Even though you can grab the resources from open-source libraries, it requires expert support for guidance and audit of blockchain framework and crypto coins source code.
Some libraries may infer that creating a crypto coin takes only 5-10 minutes with source code and modifications. The true fact is that to change the features or any variable, you need to understand the coding of the existing cryptocurrency completely.
Once the crypto coin is created, you’re not done! The major daunting task ahead would be promoting it to the community audience and listing them in the marketplace. If you have a dedicated team of blockchain developers, it’s better to hand over the marketing and listing tasks to other cryptocurrency marketing services!
Creating tokens can be quite easier than developing a crypto coin from scratch. Forking a cryptocurrency and leveraging the underlying blockchain framework’s benefits can be a great idea for start-ups. On forking the crypto token from top blockchain frameworks such as Ethereum, Bitcoin can help you in security and community support to a greater extent.
Token Development requires less time and effort than coin development, as the business leverages the existing decentralized architecture and consensus protocols.
Now, you’d have got an idea on which way of creating cryptocurrency suits your business! However, be it a coin or token, you need a professional roadmap to create a cryptocurrency. Here’s it from our expert team!
Professional roadmap for Cryptocurrency Development
While kick-starting the idea of cryptocurrency development, you must discuss with your partners and teams to confess the purpose, utility, target audience, capital investment, and other aspects. Depending on the business domain, the target audience, or utility, you must then proceed with development plans.
2. Find a tech partner
Get ready with your pre-requisites and find the top cryptocurrency development services company. Discuss your requirements and find the tech partner meeting your budget and deadlines. Hiring expert professionals with niche expertise can help you save huge investments spent on development, testing, and external audits.
3. Develop consensus protocols/ Smart Contracts
When developing a cryptocurrency with a native blockchain framework, the framing of consensus protocols plays a vital role. In the case of tokens, smart contracts built on native blockchain networks matter a lot. You must give a clear idea and the supporting documents to design the consensus protocols and smart contracts to your tech partner.
4. External audit
Even though you fork cryptocurrencies and blockchain infrastructure, when you launch a token or coin, it is mandated to audit the code base with a team of test engineers. The audit may seem like a tedious and expensive process but it will avoid potential risks in establishing your cryptocurrency.
5. Craft Whitepaper
A whitepaper becomes the first technical impression of your project with overall details. Compelling whitepapers may draw the attention of investors, community audience, and other stakeholders without any need for paid marketing. But, believe it or not, the whitepaper, which is not well-written, can completely underestimate the project idea too!
Hence, hiring a professional content writer to pen down your idea is a wiser choice!
6. Launch ICO
Once your tokens or ICO is developed, it must be launched in the listing sites and promoted on the appropriate community channels. The crypto business marketers will have their wide list of crypto community channels that helps you grab hard cap values of the estimated capital investment.
The success of a product lies in consumer support and marketing. Assemble the community audience and render the tech support until the community seeks it. Hire a professional team to support cryptocurrency transactions round the clock at the initial phases. Once resolved with around 80-90% of bugs, you can get your teams trained to maintain the cryptocurrency transactions.
Based on your utility and target audience, have a strategic plan to outreach your cryptocurrency in the marketplace!
Launching cryptocurrency for your business at the early stages of evolution may help you lead the marketplace without chaos. Your business can attract the global crypto audience and hold them with rewards and incentives to govern your crypto transactions. If your business does not have a blockchain tech team, then it’s a wiser choice to get in touch with a cryptocurrency development company to build your crypto coin!