How can you create your own cryptocurrency? Depending on what you're trying to do, the answer might surprise you by how simple it can be. While several types of cryptocurrencies have been created over the years, some of the more popular ones include Bitcoin, Dogecoin, and Ethereum. Cryptocurrency is digital currency, with coins and tokens, both of which are different from each other. So how does one create crypto tokens and how is it different from a crypto coin? We break down everything that you need to know about creating your own cryptocurrency.
Both coins and tokens are cryptocurrencies, but the difference is that coins like Bitcoin, Dogecoin, or Ethereum all run on their own blockchain technology. Blockchain is a digital ledger that stores data related to transactions in blocks. Each block is connected to the previous one with a unique hash code.
Tokens are a digital class asset that runs on top of a pre-existing blockchain. For example, Ethereum is a blockchain technology, and its native token is Ether. Just like Ether, there are several different types of tokens that run on the Ethereum platform.
Coins run on their own digital ledgers and hold value in the sense that they are used to transfer wealth. Tokens, on the other hand, rely on an existing underlying network to operate. Unlike coins that only exist digitally, tokens represent contracts for almost anything, even physical objects like tickets to a concert or redeemable flying points.
Tokens are released through a process known as an initial coin offering (ICO) which is similar to an initial public offering (IPO). The token is introduced via crowdsales, and one can buy publicly available tokens even after the ICO has ended. Any new token that is to be created is introduced through crowd-sales and anyone can create them. Interested people will invest in or fund the token using existing coins. This can, however, be a risky affair as anyone who runs a crowd-sale can simply run away with the money from investors.
The common perception is that creating your own token can be a long and complicated process that requires intricate technical knowledge about coding. However, this is no longer true as there now exist several platforms that allow people to create their own tokens. For example, a user-friendly application called CoinTool allows people with relatively no knowledge of coding to create their own tokens. The application allows you to pick a name for your token as well as pick a symbol.
As mentioned earlier, tokens represent contracts that can essentially be anything. One can also create a token without a public initial coin offering and just have a small community or your own friends invest in it. Tokens are relatively easier to create when compared to coins — coins require their own blockchain to operate. Tokens operate on pre-existing networks which make them faster to build, easier, and far more pocket friendly.
Also, creating a token has no penalty attached to it, so if you choose to create one just out of curiosity, you will not lose any money on it. Tokens have no monetary value as such since they can pretty much represent anything. However, it is best to keep in mind that if you do choose to create a token just out of curiosity, do not crowd sale it, as it may lead to repercussions in terms of severe penalties for misrepresentation and even fraud.