How to float your own cryptocurrency?

Cryptocurrency is a buzzword these days. From students to seasoned investors all have shown their curiosity towards this new investment avenue. The primary reason for their popularity is the extraordinary returns they have given over the last year and so. Consider this: even after sharp correction, since the beginning of January this year Bitcoin, the oldest cryptocurrency, has given a return of 66%. Similarly, Ethereum, the second-largest in terms of market cap, has given a return of 342%.

While people invest in cryptos for returns it is interesting to learn how these cryptos work. While there could be multiple reasons for floating own cryptocurrency the primary reason is to raise funds to support the implementation of the business idea. For example Bitcoin, the oldest cryptocurrency was launched in 2009 as a payment enabler. Similarly, companies introduce cryptos or tokens for operational and transactional purposes. For example, cryptocurrencies like Binance Coin and WRX by WazirX are exchange owned currencies that are used as a utility to pay fees, create loyalty and deliver rewards.

The underlying technology for cryptocurrencies or crypto tokens is Blockchain. It is a technology that is decentralized in nature. It makes cryptocurrencies independent from any authority and makes it so that no one can dictate the rules for cryptocurrency developers and owners. Gaurav Dahake, CEO and co-founder Bitbns explains it further, “Let’s take an example of app stores of Google or Apple. To become a part of the app stores ecosystem, one needs to follow the mechanism or rules set by Google or Apple. These are controlled and centralized networks, which led to various issues that may not fit everyone’s pocket or mind. That is when decentralized networks come into play that overcomes all the significant problems in the centralized or controlled network.”

One of the factors that aid you to expand your business to the global market is the fact that it can run 24/7. “Just like artificial intelligence or machine learning that has become omnipresent today, similarly, cryptos are going to be part of everyone’s strategy moving forward,” said Dahake.

If you are wondering about the metrics behind the creation of your own cryptocurrency here are the details:

How a company creates its own crypto?

There are broadly two types of cryptocurrencies. One set of virtual tokens are backed by ideas while many are launched without any projects to back. Experts say it is important to understand the purpose and the inherent value of any cryptocurrency.

Vikram Subburaj co-founder and CEO of Giottus Cryptocurrency Exchange said, “Launching a cryptocurrency is akin to raising capital along with other metrics. It starts with identifying the idea that backs the cryptocurrency. Inherent value of a cryptocurrency is essentially how an investor perceives the value of the use cases associated it. Many tokens are launched without a backing idea (Shiba Inu for example) and most do not survive the test of time. Next is to ensure that the local jurisdiction allows for such launches – the company may be flouting certain regulatory rules with regards to raising capital.”

The next step is to decide how many tokens will be issued, who gets the initial share, when they are released and how they can be accessed by users. Moreover, for floating a cryptocurrency, one needs to write a smart contract on a specific blockchain platform. “Ethereum is one of the most popular blockchains, and the token standard to write a contract for that is called the ARC Twenty contract. The ARC Twenty contract is usually read in a language called solidity. That contract becomes the token which is called Cryptocurrency,” said Dahake.

Also Read: Float and regulate

Launching token on own blockchain can be heavy on the pocket, therefore popular blockchains such as Ethereum, Binance Chain, Tron, Solana etc are used by companies for launching their own cryptos.

Once you create the crypto the next essential step is to have a partnership with a major exchange to get drive wider adoption. “This often comes with validation of business plan, conversion to smart contracts and audits along the way. Companies can do Initial Exchange Offering (IEO) by partnering with an exchange and gifting/selling tokens to its userbase thereby instantly creating a market. The other option is to list via a DEX (decentralized exchange) where adoption is driven primarily through marketing, partnerships and other key announcements,” said Subburaj.

Stay away from fake coins

Many MLM (Multi Level Marketing) players riding on the popularity of Bitcoin and other cryptocurrencies launched their own currencies. They promised a high return of 10-15% every month apart from the contribution on adding members to the network. Many of such schemes turned out fake and many investors lost their savings. Therefore, you should be careful of agents selling you fake cryptocurrencies on the promise of delivering high returns.