How To's How to build a cryptocurrency business

Cryptocurrencies are the buzzword of today. Ever since Bitcoin was launched in January 2009, it painted a picture in people’s minds that cryptocurrencies have a bright future. That’s because cryptocurrencies offer a lot of advantages over traditional currencies and traditional banking systems which we’ll see in detail now.

Advantages of cryptocurrencies

Cryptocurrencies offer these benefits over traditional currencies and traditional banking systems. They are:

Security

Cryptocurrencies cannot be counterfeited, unlike traditional currencies. Hence, they are safe to use. Users in a blockchain network appear anonymous to other people in the blockchain network. All cryptocurrency transactions are carried out anonymously. This feature provides a great deal of privacy and security to cryptocurrency users.

No convenience fee charged

If you transfer money via the net banking system of your bank, they’ll definitely charge a convenience fee for the transaction. The convenience fee can vary from 0.1% to 1% of the transaction amount/volume. This might be a hindrance to some people. It is also an unnecessary expense.

Cryptocurrency transactions do not involve a convenience fee. You pay and receive the exact amount for things or services. You don’t want to waste your hard-earned money, do you?

Uninterrupted service

Since cryptocurrencies are decentralized (they are not owned and distributed by a single person, committee, or organization), cryptocurrency transactions are not affected by events like government holidays, bank holidays, changes in the government, etcetera. This feature is really convenient to those who transact in cryptocurrencies every day.

They are not prone to inflation

Traditional currencies can be demonetized or devalued by the national government. This can cause a lot of hassles and inflation among the people. An example of this is the demonetization of the Rs. 500 and the Rs. 1000 currency notes that happened in India during November 2016.

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It caused a lot of turmoil in the country. Since cryptocurrencies are decentralized, they are not prone to devaluation or demonetization. Cryptocurrencies are mined and distributed using a complex computer algorithm and not by people or organizations.

They are a tradable commodity

If you’re not comfortable with transacting in cryptocurrencies, you can invest (buy) in them and sell them off when their value goes up significantly. Buying, selling, transferring, and exchange of cryptocurrencies can be done via cryptocurrency exchange websites.

One just needs to register in them or create one’s own cryptocurrency exchange website. If you’re planning to create your own Cryptocurrency Exchange Software then you get the cryptocurrency exchange script at BitExchange’s website.

How to create your own cryptocurrency

If you have faith in the future of cryptocurrencies and you want to found your own cryptocurrency, then these are the steps that you must follow:

Be fully convinced about your business

Only if you strongly believe that cryptocurrencies have a bright future, found a cryptocurrency of your own. Only then you’ll do the hard work necessary to make your cryptocurrency robust and popular. Also, Do check out How does cryptocurrency work?

Starting a business just because that particular domain is popular right now and having very little or no knowledge about it will only lead to the failure and closure of your business.

Choose an authentication protocol

Whenever a new user (computer/node) is added to your blockchain network or whenever a new cryptocurrency transaction takes place in your blockchain network, all the nodes in your blockchain network must determine if that transaction or user is genuine or not.

Authentication Protocols also known as Consensus Mechanisms do just that. There are myriad authentication protocols on the internet to choose from. Kindly choose an Authentication Protocol that best suits your network’s requirements.

Choose a blockchain platform

Blockchain software or blockchain platforms give the necessary network infrastructure for your cryptocurrency. They can be considered as your cryptocurrency’s operational backbone. There are myriad blockchain platforms on the market to choose from. Some of them are:

Etherium (has 82% market share).
Waves.
Block Starter.
IBM blockchain.
HydraChain.
Chain Core.
IOTA.
Openchain.
Multichain.
BigChainDB.
Every blockchain platform gels better with one type of authentication protocol than the others. So, kindly choose your blockchain platform according to your authentication protocol or vice versa.

Choose the OS for your nodes

The computers in your blockchain network must have a common OS. Only then they’ll be able to work together efficiently. Hence, your cryptocurrency exchange website must only be supported by one OS. It can be Windows, Red Hat, Linux Ubuntu, Linux Fedora, Debian, etcetera.

You must also decide if you want to host your blockchain network on a cloud platform or not.

Decide on your blockchain’s working mechanism

You must decide the following factors regarding the operation of your blockchain network. They are:

1. How will your blockchain network authenticate new cryptocurrency transactions and new user registrations? (Choosing the appropriate authentication protocol).
2. Choosing the format of your network’s nodes’ addresses (Will it be alphanumeric, QR, etcetera).
3. What will be the format of the digital signs on your blockchain network?
4. How will the private keys be protected on your network? What encryption and access granting mechanism will you use?
5. Your cryptocurrency exchange website needs to have a feature called ‘Smart Contract’ which will enable buying, selling, transacting, and exchange of cryptocurrencies on your cryptocurrency exchange website. This is one such facility that your users will find really convenient.
6. You must employ an appropriate computer algorithm to mine your cryptocurrency and distribute it. The integrity of your cryptocurrency rests on the accuracy of your mining algorithm. You must also employ appropriate incentive models if more of your cryptocurrency is mined.
7. Your blockchain network must have an appropriate ‘HandShake’ protocol that determines how the nodes in your blockchain network communicate with each other and pass information on to each other.
8. Your blockchain platform must employ the appropriate API to make doing cryptocurrency transactions on your blockchain network a breeze for your users. 9. There are a number of APIs in the market that you can employ in your blockchain network. Some of them include: ChromaWay, Bitcore, Neuroware, Gem, Coinbase, etc.

Smooth communication

There must be smooth communication and transfer of data between your blockchain server and the nodes in your blockchain. This can be established by employing the File Transfer Protocol (FTP), creating and storing the required database for your blockchain network, and coding your network protocols with languages like PHP, JavaScript, Python, Ruby, etcetera.

Complying with government laws

You must launch your cryptocurrency in countries where it is legal to do so. You must also launch your cryptocurrency in countries that widely use cryptocurrencies to get a good head start in popularity and usage. Only this strategy can make your cryptocurrency business profitable.

Conclusion

Cryptocurrencies are in a dicey position today. They may either replace traditional currencies and banking systems in the future or they may be abolished altogether. The privacy and security provided by blockchain networks is a double-edged sword. It is of great convenience to people but can be misused by terrorists, criminals, or their organizations.

This serious flaw in the model of cryptocurrencies must be addressed soon for them to be globally used. Also, cryptocurrencies can only be used by literate people who have a stable internet connection. This limits their usage as the majority of the world’s population is poor and illiterate.

So, only start your own cryptocurrency if you truly believe they have a bright future. Only then you’ll do the hard work necessary to make them robust and popular.

FAQs

How much does it cost to found your own cryptocurrency?
To set up a blockchain network for your cryptocurrency, you need at least US $135,000!

What are cryptocurrency tokens?
Cryptocurrency tokens are sub denominations of a cryptocurrency. Generally a cryptocurrency will have 5 to 10 sub denominations.

How many Bitcoins are mined in a day?
As of today, 13 bitcoins are mined in a day.

How can you buy, sell, transact in, and exchange cryptocurrencies?
You can buy, sell, transact in, and exchange cryptocurrencies via a cryptocurrency exchange website. You can either create your own cryptocurrency exchange website using a cryptocurrency exchange script or you can register on an existing cryptocurrency exchange website.