The most comprehensive technology rocking the digital world for the past couple of years is cryptocurrency. It has come to change the traditional attitude to money and the whole behavior built around money. Being on the edge of the latest trends, we couldn’t pass by the technology. As the biggest nerds in creating new solutions, our primary goal was to find out all the aspects and factors that affect the cost of starting a cryptocurrency.
What is cryptocurrency?
Cryptocurrency already starts acting like real money, but the technology made a huge fuss around itself at the very beginning. For those who were not into the topic, cryptocurrency was unreal as long as they could not “touch” the money.
The digital currency called cryptocurrency exists online and does not have a physical form. Still, it does exist in a blockchain that stores crypto transactions and enables direct peer-to-peer payments. The critical point here is that information about transactions is saved without any identifying factor. Cryptocurrency is out of federal bank and government control. It is also not controlled by any other traditional lending institution.
What are the key features of cryptocurrency?
The key features of cryptocurrency ensure its security and privacy. The high level of protection guarantees anonymous transactions within the block.
Through complex algorithms, cryptography converts plain text into unintelligible text and vice-versa. Encryption is part of cryptography, but it is only one part of the science. Cryptocurrencies use advanced cryptography to secure communication and encrypt data. Based on a complex algorithm, cryptography uses two main elements in cryptocurrency — digital signature and hashing.
A digital signature is used to sign monetary transactions. It also proves that the account owner owns that piece of encrypted information.
Hashing is responsible for the structure of blocks in a blockchain. It encodes people’s accounts and transactions.
The decentralized public ledger (blockchain) hosts and saves transactions grouped into blocks. Every new record in the blockchain is saved and cannot be changed.
The process of attaching new records to the blockchain is called block mining. Through specific software, it is possible to produce new crypto coins.
Why do you need to start thinking about creating a cryptocurrency?
The technology has made a boom in recent years by registering unbelievable value leap. The field is both attractive for extreme profits and risky for investments. The volatility and uncontrolled cryptocurrency, the lack of historical data to predict price fluctuation make cryptocurrency risky for long-term investments. On the other hand, cryptocurrency may be a good idea for a diversified portfolio of assets.
Before starting with your cryptocurrency, it is wise to feel the soil of the global cryptocurrency market and learn the future trends.
The global cryptocurrency market valued at $1,423.95 million for 2020 is predicted to register $2,018.48 million by 2025 at a CAGR of 7.22%. The global market is still led by Bitcoin, which has registered a value of $57,000 per coin. The second popular unit is Ethereum, followed by Polkadot, Tether, Binance Coin, and Cardano, with a combined value of $422 billion.
The market moves mostly depend on demand and supply. Cryptocurrency is free from most economic and political concerns. It means the market may not react to the changes. Still, some factors move the market.
- Supply: the total number of coins and tokens with the rates they are released.
- Market capitalization: the value of all existing coins.
- Media: the way cryptocurrency is presented and the scale of coverage.
- Integration: the scale to which the cryptocurrency integrates into other technologies or infrastructures like e-commerce.
- Key events: major news and events in the segment like security breaches, regulatory updates, or economic setbacks.
Investing in a crypto coin is one thing but creating your cryptocurrency is a new business perspective with its apparent benefits.
Financial flexibility. Being out of the control of any financial institution, cryptocurrency has absolute financial flexibility that can be aligned to business needs.
Business branding. Having your cryptocurrency is beneficial not only in terms of privacy but also in terms of adding brand value and gaining an edge over competitors.
Launching crowdfunding campaigns. Own tokens can help to reach out to investors interested in a project or launch crowdfunding.
Security and savings. Using cryptocurrency is safe but having your coin gives you vast space to act and manage transactions.
What do you need to create a cryptocurrency?
To understand how to start with cryptocurrency and how much it costs to create a cryptocurrency, you should first begin defining the business purpose of having your own crypto coin. The following steps are:
1. Considering the legal implications.
2. Defining project budget
3. Hiring a professional development team
4. Hiring external auditors for security audits
5. Promote the project
Project Conception & White Paper Development
The development of cryptocurrency starts with a professionally implemented whitepaper. Initial Coin Offering (ICO) Whitepaper is a detailed description of a project that includes the visions and concepts of materializing the idea. The cryptocurrency whitepaper involves an industry overview, risk factors, token distribution roadmap, team, etc. The whitepaper is the top priority when starting with creating cryptocurrency. It should follow the following formatting rules:
- The whitepaper should be in PDF format.
- The white paper should be two versions: a light version with 2–8 pages and a regular one with 20–100 pages.
- Good grammar
- The whitepaper should be in multiple languages. Recommended languages are English, Spanish, Mandarin, Japanese and Korean.
- It should cover the following questions:
- What is your idea?
- Why does the market need your idea?
- What are the ICO funds to be used?
- When is the release date?
- When will the project be completed?
- What is the expertise of your company?
Handle Legal and Financial Matters
Before starting with creating cryptocurrency, it should be complied with international regulations and acquire legal status. As digital money is a relatively new technology, completely independent and private, it may raise a series of novel legal and regulatory risks and issues. Over time, those issues will be solved but starting a new cryptocurrency feels like swimming in dark waters.
Common legal issues related to cryptocurrencies are the following
- Contractual issues
- Jurisdictional issues
- Financial fraud
- Money laundering
- Tax implications
- Legal and regulatory concerns
- Intellectual property
Algorithm & Technological matters
At this stage, you are already deciding whether you are building a cryptocurrency with its own blockchain (crypto coin) or creating an asset on an existing blockchain (crypto token). The choice is crucial because the proceeding technology of building a cryptocurrency is different. Building a token is faster and less expensive. The top popular blockchain technologies you can use to create your tokens are Bitcoin, Ethereum, Monero, NEO, and Ripple. Each of them works on its programming language, supports a particular consensus mechanism, and has specifications on transaction speed. The choice should be aligned with business requirements.
ICO & IEO
After the development, the tokens are released through a crowdsale ICO (Initial Coin Offering) and IEO (Initial Exchange Offering) exchange for existing assets. ICO offers newly created cryptocurrency for raising capital. Investors purchase tokens in the hope of getting profit when the price for the token increases.
IEO is also a way of fundraising practiced by start-ups for selling new cryptocurrencies. The difference is that IEO involves crypto exchanges to raise funds. Investors can buy new tokens before they are released to the market and benefit when the price gets higher.
Cost of Creating A New Cryptocurrency
App development trends and costs change every year but, when it comes to cryptocurrencies, the market booms every second, and respectively, the prices for creating a cryptocurrency. The segment is growing three times faster than any other trading model so far.
Like any other type of product development, the cost depends on the components included in the product. The more complex the process, the higher the price.
Here is a rough estimation of costs for creating a currency by stage duration and price.
Aside from these instructions, Addevice is ready to provide any information and consult on creating your cryptocurrency. Our team of professional developers and market research specialists follows the latest trends of mobile technologies and shares its expertise.
Contact us if you want to know how much it costs to start a cryptocurrency.