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Cryptocurrency offers many benefits, such as the ability to make transactions without restrictions, high security, ease of use, and a publicly accessible ledger. While not all cryptocurrencies have widespread usage, many are designed to have unique advantages over traditional fiat currencies and banking systems.
Have you ever considered creating your own cryptocurrency? And have you ever imagined using it in a system you designed? This guide will explore the steps to building your own cryptocurrency. But first, reviewing some basic concepts and refreshing your knowledge before diving into the process is important.
Crypto coin Vs. crypto token
Coins and tokens are forms of digital cryptocurrency that share similar functionality but are often mistaken as the same thing. The key difference between the two lies in their origin.
- Coins are native to their own blockchain networks. For example, the ETH coin is based on the Ethereum blockchain network, and the BNB coin is based on the Binance smart chain network.
- Tokens are created on existing blockchain networks.
Steps to create your own crypto
Ready to create your own cryptocurrency (which is essentially a token using a blockchain network)? Hop along:
BEP-20 vs ERC-20 standard
Let’s get familiar with the fundamentals first.
- BEP 20: It is a primary token standard used for Binance smart chain.
- ERC 20: It’s a primary token standard for Ethereum blockchain
To create a smart contract for our token, we will use Remix online IDE available at https://ethereum.org for writing code. Sample source code can be accessed on Github, including code snippets for publishing a token on the Ethereum blockchain network using the ERC20 standard and publishing a token on the Binance Smart Chain network using the BEP20 standard.
When creating a token on the blockchain, you can choose between the Ethereum blockchain or the Binance Smart Chain. Gas fees vary depending on which blockchain you select. Ethereum blockchain fees tend to be higher than Binance Smart Chain fees. Once the token is deployed, you can view details such as all the transactions and addresses associated with the token by visiting https://bscscan.com and searching for the unique blockchain contract address.
Click here to find the public ledger for a token.
How can people buy or sell your token?
Once your token is published on a blockchain, you must host this token on a crypto or digital exchange where people can buy/sell the token. For example, one popular exchange where people trade tokens and coins is PanCakeSwap.
It would be best if you put some liquidity against your token to persuade people to buy or sell it. Here is a snapshot of a liquidity pool with BNB as a liquidity amount.
How does liquidity work?
The initial supply limit of our coin/token has been set in the smart contract that was recently deployed. The supply is fixed at 1 million tokens and cannot be changed later. If a change is desired, a new smart contract must be created. This is because deployed smart contracts cannot be altered.
The price of your coin/token is determined by its liquidity. Therefore, adding more liquidity will increase the price. To add liquidity to your coin/token, you must add a portion of your fixed supply to a Liquidity Pool, where it will be available for trading. The remaining supply will remain in your account. You must also add liquidity to the pool in the form of another coin/token. The price of your coin/token is determined by the ratio of the quantity of your coin/token remaining in the pool to the value of the coins/tokens used as liquidity.
The maximum number of coins/tokens that can be bought is determined by the number of coins/tokens in the liquidity pool. As people buy the coins/tokens, the quantity in the pool decreases while the liquidity in the pool increases, increasing the price of the coin/token. Therefore, more buying activity of your token will increase liquidity and decrease the remaining tokens in the pool, causing the price to rise.
On the other hand, if someone sells your coin, it will be added back to the liquidity pool for others to buy, and the seller will receive their stake back, decreasing the liquidity amount in the pool, and thus the price will drop. Additionally, you have some coins/tokens that have not yet been made available in the liquidity pool. When these coins/tokens are added to the pool, the price of the coin will decrease because there is now more supply available in the pool, but the liquidity amount remains the same, resulting in a price decrease.