Getting into crypto for the sole purpose of converting it back into fiat currency may be limiting your financial options. The success of Bitcoin, Ether and other altcoins points to a much deeper truth about the world we live in and how we express value in our lives.
You could get Bitcoin and convert it into a bunch of Subway sandwiches as well. That’s also not the value I’m talking about. Digital currencies do trade on crypto exchanges, but the cryptocurrency market is much deeper than that.
The true value of cryptocurrency is the path it opens for savvy individuals to create their own store of value and present it to the world as useful. Using tools in reach of the average person, you can create your own cryptocurrency, and with it, your own financial system and philosophy of value. Digital assets, then, can transcend their original purpose or the money spent on them. But, how do you build virtual currencies with meaning?
Creating a Simple Cryptocurrency
Creating a cryptocurrency to compete with Bitcoin or Ether would require a substantial amount of financial resources and manpower and is beyond the scope of any single text. You can only access the cryptocurrency market when you have built the token properly. You can get started, however, with these steps.
- Define your objective. The reason your money exists is known as your “use case” and will define many things about your cryptocurrency. The way you verify transactions, the way people earn your coin and the way you market your coin all depends on your use case.
- Agree on a consensus protocol. To function properly, your coin will need a blockchain. Blockchains rely on a consensus protocol or an agreement between users on how coins are mined and transactions verified.
- Choose a blockchain. Save yourself the work of creating a blockchain from scratch — there are plenty of reputable platforms to choose from. Here is a list of the most popular blockchain platforms, each with their own specialty.
- Decide on a node design. Your nodes are the online devices that will connect and support your cryptocurrency. You will need to decide if your nodes will be private or public, hosted on-site or in the cloud, how powerful they must be and the base OS they will run on.
- Create your blockchain architecture. Your architecture includes defining permissions and block signatures, addressing address and key formats, establishing the rules for issuing assets, developing key management security, connecting your nodes, enabling atomic swaps and estimating parameters for transactions.
- Choose an API provider. Your chosen blockchain application programming interface (API) will connect your blockchain nodes with exchanges. Different APIs have different advantages, so choose your API provider based on your original objective.
- Design a user interface. The interface you design is your first impression to the world. You will decide on mail and web services, external databases and the front-end programming language.
Marketing Your Currency
Most crypto traders have a few coins in a portfolio that have no real use or value — they just kind of sit there. These financial products may be the result of a stagnant idea, or they may be the victim of an unfortunate marketing campaign. No matter how well-formed your network and how progressive your idea, it means nothing if you can’t get other people excited about it.
There are no hard-and-fast rules about how to market crypto. You will find some ideas used over and over again, which seems to imply they are at least somewhat effective. We’ll list those strategies here.
- White papers and roadmaps: Successful cryptocurrencies all start with a use case. Developers use the whitepaper to discuss the philosophy behind the money to a nontechnical audience. The roadmap is the plan for the more technically involved.
- Product-market fit: Your use case must address a market need. You will find it difficult to market a cryptocurrency that does not actually fix something, or worse, tries to copy a more established coin with fewer resources.
- Building a community: Crypto may be esoteric to the majority of the population, but the people who will form your core audience are technically and financially savvy. You will need to build a community around authenticity and knowledge of the space. Telegram and Discord seem to be the platforms of choice for crypto communities.
- Reaching out to influencers: You can put positive attention on your coin through good reviews and podcast performances.
- User-generated content: Ideally, your crypto is a source of inspiration for others to build from. This is especially important if you don’t have a huge marketing budget to work with.
Crypto is just as much about the people you serve as the coin you produce. Plus, they will want to keep those assets in a digital wallet, and that is only possible when it is built properly and the public knows the cryptocurrency token exists.
More Money, More Problems
We have enough information from the history of established cryptocurrencies to predict some of the problems that new crypto will have.
- Regulation: Governments around the world are doing their best to catch up with crypto. The U.S. has grudgingly taken an attitude of adoption, but its major financial organizations — the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), Internal Revenue Service (IRS), FinCEN and Treasury Department — have yet to agree on the definition of cryptocurrency, much less decide how to regulate it. That hasn’t stopped them from trying. Regulation will undoubtedly increase over time, making the development and expansion of new currencies more difficult.
- Malicious actors: Crooks and scammers follow the money. Both individual amateurs and professional trading platforms have experienced the issues that come with inadequate security and structural weakness. Billions of dollars worth of crypto have been stolen from unsuspecting (and suspecting) victims. As your crypto grows, it pays to invest in updated security to protect yourself and your investors.
- Technical disagreements: Be ready to accept criticism and disagreement from within. The nature of cryptocurrency is consensus. As your currency grows, some of the people who run your nodes may disagree with you on how to continue to move forward. When this happens, coins may experience a fork — a software update — but it can also represent a difference of opinion in how a network should be run. Litecoin, Bitcoin Gold and Bitcoin Cash are examples of successful forks.
The True Value of Cryptocurrency
The first widely used cryptocurrency, Bitcoin, became popular as a rebellion against the flaws of central banking during the 2008 banking crisis. The most popular blockchain and currency today, Ethereum, is rising because of its trustless system of smart contracts. Yes, you can buy trinkets with Bitcoin and Ether. The true value in these coins, however, lies in the conviction underlying them.
If you take the time to create your own crypto, make sure you are doing it for the right reasons. Should you become successful, you will likely run into regulators, hackers and competitors looking to take value from you. You will need the courage of convictions far deeper than money to take on the world. If you realize this deeper truth, as they say, the money will come.
Trade Cryptocurrency
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