The word brings up images of the dark web and questionable dealings.
Well, that reputation is half deserved for sincere innovations and false exit schemes represent cryptocurrencies.
A well-researched person on the subject would no doubt have heard of successes like Bitcoin and Ethereum.
How can people enter the market so easily and start their cryptocurrency projects?
In this article, we will broadly delve into the subject of creating a cryptocurrency.
Without further ado, lets explore the wild, wild west that is crypto.
It has nowadays been regarded as crowdfunding, the creation of a digital asset.
However, this implication is both a boon and bane for the cryptocurrency industry.
However, this low barrier of entry is a double-edged sword.
Anyone can launch a cryptocurrency project as a front for malicious schemes.
These ICOs started from websites with a stipulated time and set of participation rules.
These parameters provide assurance and fair participation.
It is difficult for stakeholders to differentiate legitimate cryptocurrency projects from elaborate schemes.
This is because there is a lack of history and track record given since the project is new.
These cryptocurrency projects often have no working product or technology before having their tokens released unto the market.
It is better than having a team of completely fresh individuals.
Having a vague and poorly written white paper is a warning sign for many potential investors.
This is because the public has very little historical data to assess the project.
Grammatical errors, copied information, and vague project description are all sloppy writing.
They can hinder the traction of a promising project.
This must involve activities such as bounties for bugs, translation, etc.
In recent times, ICO has taken on a variation called IEOs or initial exchange offerings.
With IEOs, the fundraising takes place on an exchange platform instead of the projects website.
What Are Cryptocurrencies?
When creating a cryptocurrency, the developer or issuer has to consider the practical program of the cryptocurrency.
There has to be utility and purpose for the token.
As the creation of a cryptocurrency mimics an actual economy, numerous factors must be taken into consideration.
These are mainly token schedule and token allocation.
What Are The Token Schedule And Token Allocation?
This token allocation will have an impact on cryptocurrency development.
Also, the high concentration of tokens in an area might increase the risk of token dumping.
This will have a drastic impact on its market value.
Building your cryptocurrency means starting an economy from scratch.
There is a grey and abstract price discovery process.
The determination of value for a freshly launched cryptocurrency is hard to aggregate.
For this reason, the price of that cryptocurrency differs from one medium of exchange to another.
Besides, the speculation and utility value of a cryptocurrency is vague to interpret.
This is because the willingness of the market to pay for it determines the price of the token.
The aspirant seeking to create a cryptocurrency will also have to take note of regulations in the region.
Launching A Project
The hype that the media gives highly romanticized the idea of launching a cryptocurrency.
Earlier in the article, we briefly discussed the subject of white paper.
An actual white paper is a piece of documentation that details various aspects of a project.
Many cryptocurrency projects are trying to solve issues that dont need solutions.
Additionally, they are tackling a low technology problem with a high technology solution.
This solution needs to be realistic in development and implementation.
Point Of Differentiation
Moreover, this solution needs to provide points of differentiation for the cryptocurrency project.
Technological Innovation
There has to be a clear description and explanation of the technological innovation under development.
The coding of the cryptocurrency will constitute a large part of starting a cryptocurrency project.
Moreover, it is the cornerstone of the entire cryptocurrency project creation process.
Projects being developed on the Ethereum data pipe are ERC-20 tokens.
They require Ethereums native token, Ether, to power.
During the ICO craze back in 2017, there were a lot of cryptocurrencies launched on Ethereum.
Seeing the potential for decentralized applications, many other cryptocurrency projects have been developed to tackle this market niche.
The new cryptocurrency on Ethereum cannot be used as payment or resource for gas.
This usually happens after the launch of the cryptocurrency and developments have been sufficiency made.
Being an ERC-20 token and built on Ethereum subjects, the newly created cryptocurrency has its advantages.
Creating a cryptocurrency on Ethereum will make it compatible with wallets that allow for ERC-20 tokens.
Also, there is a large community around Ethereum, the second-largest cryptocurrency by market capacity.
Thus, the newly created cryptocurrency will have an established ecosystem around it when building on the Ethereum connection.
That question is difficult to answer, for there are still success stories despite the market downturn.
During the ICO craze, there was a lot of interest in cryptocurrency and ICOs.
As a result, the creation of a cryptocurrency in that bull market will have access to more funds.
The hype brought a lot of public participation.
Consequentially, the likelihood of a successful ICO was higher in the positive atmosphere.
This, in turn, affects ICOs as the tone of the market became more conservative.
A lot has changed since the ICO hype.
And despite the bearish market, the style of fundraising has evolved to favor IEOs over ICOs.
In an ICO, conducting fundraising is at the website.
It belongs to the cryptocurrency creators where the project itself manages the smart contracts.
After which, it has to engage an exchange for listing the newly launched cryptocurrency.
With an IEO, the exchange does the fundraising and smart contracts on its platform.
Besides, marketing cost is relatively low as the exchange will have its advertising of the IEO.
ICOs, while a crucial step, represent only the initial part of creating a cryptocurrency.
It is a means to an end.
As the market and blockchain technology matures, the methodology for coding for a cryptocurrency will change.
For more cryptocurrency-related articles, c’mon stay tuned to Robots.net.
