Note: This post has been written by Ranjan D. Yadavas a part of the “WazirX Blog Contest”.
Inclined towards developing your own cryptocurrency? Wondering what is the process and the allied considerations? Delve deeper for a qualitative directional insight into cryptocurrency development.
The aura of the cryptoverse is omnipresent and lustrous. Bitcoin’s (world’s first distributed Blockchain) 2008 Whitepaper to the 2021 activation of Ethereum’s London Fork. DeFi dominated headlines across all media channels. With cryptocurrencies (digital assets) being the talk of even the towns from Wall Street to the Silicon Valley. You might be wondering: What all actually goes into developing a standard cryptocurrency, yes?
Cryptocurrencies’ – Features
An essentially foundational aspect of cryptocurrency development is the existence of a solid use-case (or utility). Cushioned by a core idea behind its development, a proposed cryptocurrency can have variations of these basic features:
1. Fixed supply versus mint (or burn) features
2. Deflationary or not (burning tokens upon being taxed)
3. Other taxes and features, viz.:
- Automatic liquidity accumulation
- Same token reflections
- Rewards in other tokens
4. Launch strategies:
- Stealth launch
- Fair launch
- Private sale
- Whitelist pre-sale
Your proposed cryptocurrency can have a myriad of features. Mixing NFTs (Non-Fungible Tokens) in the cryptocurrency is also trending these days. NFTs can be an isolated feature or tied into the cryptocurrency. The development process commences with defining the specifications: what do you intend to achieve from the cryptocurrency. This is then followed by writing the smart (thoughtful) code and deploying it to the Blockchain.
In the cryptoverse, developing a crypto is only one aspect. The project’s success depends a lot upon teamwork, proficiency, and optimal resources’ availability. A multitude of tokens/coins create hype (usually costing a healthy amount of money). But only a handful of them can actually maintain the hype. There is quite a lot to consider during the entire course of the lifecycle of your cryptocurrency. Solid brainstorming of ideas (and a thoroughly well-researched conceptualization) on what you want to achieve is a vital prerequisite.
Coding Platforms, Blockchain Selection, and Cryptocurrency Development
Yes, optimal Blockchain development framework selection is central to successfully deploying a cryptocurrency project. At this front, a lot depends upon what level of privacy (centralized or decentralized) does your dApp (decentralized application) require. In a centralized Blockchain, a single authority is in control of the network with the required information.
A decentralized Blockchain has data shared throughout the network. When hosting sensitive information (such as names, credentials, residence addresses, etc.) for the users, consider using a private network. On the contrary, if your business operates on transparent trustlessness, a decentralized Blockchain framework helps. Cryptocurrency development also calls for healthy investments at development and launch levels.
The type of audience you are targeting determines Blockchain selection – If you want to do it all on your own. Developing on all or either of these Blockchains would primarily require strong Solidity programming language skills. Familiarity with Blockchain development fundamentals, Solidity, C++, Python, coupled with NoSQL and RDBMS (distributed technologies) should suffice. Blockchain platforms for token development are Ethereum (primary standards: ERC20 and ERC721), TRON (TRC10 and TRC20), Tezos, EOS, etc.
Cryptocurrency Branding and Packaging Decisions:
4. Total supply
5. Balance and transfer
6. Approve delegate account
7. Allowance and transfer
Top Blockchains: Estimated Transaction Costs (Deployment Fees):
1. Ethereum (expensive but futuristic: $500 – $700)
2. BSC (Binance Smart Chain – affordable, widely used: $24$)
3. Polygon MATIC (affordable: $10 – $15)
Scalability needs also matter when selecting a Blockchain technology platform for cryptocurrency development. Ethereum and Bitcoin still need to stack up to the likes of PayPal in terms of transaction speed. Choose quality, cost, and usability if a regular escrow agreement fits your less transaction-intensive dApp’s objective. If that’s not the case, the sidechain should be explored whilst staying mindful about liability and security. Evaluating the network transaction fees is also suggested in this case.
Selection of a fitting Blockchain framework also summons considering these vital factors:
2. Support for the community
4. Multiple functionalities
While all chains generally use ERC20-compliant tokens, BSC BEP20 (Smart Chain) is also almost identical with a little bit of additional metadata. It’s also true that you don’t need to know coding to develop your own token. Hiring a professional (trusted) developer is advised if you don’t want to get into cryptocurrency coding. Since cryptocurrencies are developed via smart contracts, there is money involved – leave no room for errors.
The “if/when…then…” statements are executed by smart contracts (SCs). The terms and conditions stipulating the functioning of your cryptocurrency happens via the features stated in a smart contract. A smart contract builds trust among the parties. Smart contracts are blockchain-stored programs running upon fulfillment of predetermined conditions. These SCs are generally written in Turing-complete programming language on Ethereum (on Bitcoin, it’s Turing-incomplete programming script language). Essentially self-executing in nature, SCs are buyer-seller agreements embraced into lines of code. You can release funds to the intended recipients or send them notifications. To which the Blockchain then gets updated upon transaction completion. The results are solely visible to approved parties, and changing the transaction is not possible (upon execution). You can also resolve disputes via a defined framework and specify exceptions. Deciding the nature of data and transaction representation is also done via SCs. SCs are also supported by these Blockchain platforms: Cardano, EOS.io, Tezos.
Incorporating NFTs into Cryptocurrency
NFTs have gone mainstream (with decentralized gaming) of late. NFTs are one-of-a-kind, collectible digital assets that cannot be copied. These digital assets can also be metaverses (where space can be bought by users to build or companies for product marketing). NFTs permanently exist on the Blockchain, but their ownership is transferable. Incorporating NFTs into your cryptocurrency would require creating unique (thought-provoking and awe-inspiring) artwork: text, video, or any media format. These NFTs could be created in either of the services or can also be coded. Then investors can pay via BNB to mint NFTs (or buy from the service, if you used one). You can use NFTs as a fan engagement medium and for generating fresh revenue streams. Incorporate NFTs into cryptocurrency via:
1. Identifying its use case (collectibles, art, gaming)
2. Select the right Blockchain
3. Mint the NFTs
4. Determine digital assets’ strategic and sustainable storage plan
5. Setup a system for NFT storage and access, and
6. Distribute NFTs across relevant marketplaces
7. Engage fans via novel avenues
Fun Fact: Twitter CEO Jack Dorsey’s first ever tweet was sold as an NFT for US$ 2.5MN.
Tip: Depending upon the complexity of your cryptocurrency, an audit might be or not be necessary.
Author: Ranjan D. Yadav
Ranjan is a veteran Crypto Writer and Editor. He has studied economics and public administration.