How to Create a Cryptocurrency

 Once you’ve determined the way you want to create a cryptocurrency, here’s what to consider in development and the general steps of going through the creation process.

1. Determine the Use for Your Cryptocurrency

The first step in creating a cryptocurrency is obvious but essential: Developers (the term used for cryptocurrency creators) must find a compelling use for their proposed digital currency. Traditional and cryptocurrencies can serve many purposes:

Transfer of money

Alternative wealth storage

Smart contract support

Data verification

Smart asset management

Wise developers define attractive uses for their currencies before launching them on the digital currency markets. Dogecoin, for example, was a cryptocurrency that was created based on a meme that was popular at the time; IMPT is a token that rewards users that want to reduce their carbon footprints to better help the planet.

2. Select a Blockchain Platform

All cryptocurrencies are anchored by a blockchain platform. This ensures that every transaction is recorded and distributed across the blockchain, creating a system of accountability. This approach makes it impossible for outside parties to hack, trick, or change the digital ledger.

Platforms vary depending on the consensus mechanism used. At its core, a blockchain is a kind of digital ledger that permanently lists every cryptocurrency transaction. However: not all transactions are considered. Some, for example, might be fraudulent. Therefore, a screening process is required. In the world of blockchains, that’s what a consensus mechanism provides. 

3. Prepare the Blockchain Nodes

Once you’ve selected a blockchain, the nodes that work in the blockchain must be created. Nodes are, usually, fast computers that connect to a blockchain network to verify and process transactions. Nodes keep the currency running while recording and sharing the data that eventually gets added to the digital ledger.

There are four key considerations when setting up nodes:

Determining who has access to nodes. Some ledgers are publicly accessible; others remain private.

Determining where nodes are hosted. A cloud network can host a node, but local nodes may be preferred in order to provide on-premise support for computers that act as nodes.

Choosing which operating system is ideal. An open-source operating system like Ubuntu or Fedora is usually preferred, as developers can reconfigure the OS to their cryptocurrencies’ unique needs.

4. Choose a Blockchain Architecture

When it comes to sharing data, blockchains don’t all operate the same way. Digital architecture is a lot like building architecture: It must not only consider design but also how everything fits together to work best. Consider these three prominent blockchain architecture formats:

Centralized. One central node on the blockchain receives information from multiple other nodes.

Decentralized. Nodes on the blockchain share data together.

Distributed. The blockchain ledger moves between nodes. A publicly distributed ledger system allows users to review the content; a privately distributed system lets the users adjust the ledger data.