Cryptocurrency is increasing in popularity making the market very active. There are terms called “coin” and “token” which are both cryptocurrencies. Both of them are different in particular ways despite working on the same blockchain system. Cryptocurrency possession is a thing everyone can access however, even though we have the knowledge of the technique, it still takes a lot of time, money, and resources to do so. Therefore, cryptocurrency creation is also an alternative that can be done but maintaining and growing over time is also difficult.
Cryptocurrency Coin
A cryptocurrency coin is a digital currency with its own Blockchain. It works like real money, and you can trade it for goods or services, which makes it valuable. However, since the system doesn’t exist in the real world, it is not centralized.
Coin Usage
Coins operate like real-world money. They are used to exchange goods and services Coin prices fluctuate according to market demand. The price of coins will go up if more people want to buy them. The price will also go down if they don’t want it. The rising demand also contributes to the increased number of coins in the market. Some of the coins are also used to pay fees to access the Blockchain as well.
How to Create Cryptocurrency Coins:
There are two methods of generating crypto coins:
1. Create your own blockchain and cryptocurrency
With some coding skills and a basic understanding of Blockchain, you can write your own code to make a new blockchain that works with traditional cryptocurrencies. This gives you the most design freedom. If you want to make a new cryptocurrency, you might be best off making your own blockchain to support the coin. You can make your own coin the way you desire. If you want to make a new blockchain, you need to do the following:
– Selection of the most commonly used consensus mechanism: Proof of work (PoW) and Proof of Stake (PoS) are the two most common ways to reach a consensus mechanism.
– Blockchain design: When you’re designing your Blockchain, you have to make choices according to your preferences, and it’s up to you to make those choices. It depends on why you want to make your own cryptocurrency.
– A review of the new Blockchain and your code: The code for Blockchain should be checked for mistakes by the software developer.
– Inspection for Legal Compliance: Before you make a new cryptocurrency, you should check with a legal expert.
2. Modify the code of an existing blockchain
You can use the source code (programming instructions) of another blockchain to make a new blockchain and the original cryptocurrency. To use this option, you still need technical skills. This is because after you download and change the existing blockchain source code, you may decide to change the source code to meet your design goals. You will also need to work with a blockchain investigator and get legal advice from a professional. After that, you can start making your own cryptocurrency.
Token
Crypto tokens are a category of cryptocurrency that symbolizes an item or specific use and exist in its own blockchain. However, tokens are not money, unlike coins, and they are not a fundamental aspect of the blockchain’s security model (they are not used to compensate miners).
Tokens are different because they run on the blockchain of other coins, use smart contracts, can move from one place to another like NFT, and can represent assets or deeds.
To explain this simply, think of a video game arcade at a mall where you have to trade money for a coin. That coin will represent the token. You can use any coin to play video games or pay for services inside the arcade, but not outside. Similarly, crypto token functions in the same way within a specific blockchain.
Example token: Tether (USDT), Yearn Finance (YFI), Uniswap (UNI)
Types of Tokens
1. Utility Token
A token is used for trading and exchange within a specific system.
2. Security Token
A token functions like stock or security authorized by the government.
How to Create Token
You can make a new cryptocurrency on a Blockchain that already exists which doesn’t require making or changing a blockchain first. Platforms like the Ethereum blockchain create tokens based on existing blockchains. This may require technical knowledge, but anyone with a basic understanding of computers can easily make their own tokens.
The Process of Creating a Token on an Existing Blockchain:
– Choosing a Blockchain Platform: You decide which blockchain should host your tokens. You have many options but the most popular are Ethereum and Binance Smart Chain.
– Token Creation: The process required to generate your token varies depending on how much you want to customize tokens. In general, creating a highly customizable token requires advanced technical knowledge but there are free online tools like Wallet Builders that will facilitate the token creation process more easily.
– Creating Your New Cryptocurrency: After the cryptocurrency creation, you are now ready to generate new tokens. By using the highly secure Binance Smart Chain or Ethereum platforms, you do not have to spend time verifying your account before generating the Token.
Token creation is the fastest and cheapest way to generate cryptocurrencies. Your token can benefit from the established blockchain security requirements. And linking it to an established blockchain platform can add value. Token Reliability
Types of Tokens within Blockchains
Tokens in the blockchain are things like reward tokens, money tokens, utility tokens, security tokens, and asset tokens.
Coin and Token Relation
Like coins, you can buy and sell goods and services with tokens.. However, it has unique features such as granting access to DeFi services, or tokens that correlate with other asset classes to provide Stablecoins.
Even though cryptocurrency coins and tokens are digital currencies, but the implementation is different. Cryptocurrency coin can be exchanged like money in the real world and has their own Blockchain. Some coins are also spent as gas fees, while tokens have different properties. In terms of usage, they can be used as special privileges that might be received, the reduction of trading fees, etc.
Pros and Cons of Creating Cryptocurrency
Pros
– You can customize any digital currency as you want.
– In the future, Blockchain is likely to play a bigger role in our lives, so you can learn more about how it works now.
Cons
– Creating a cryptocurrency requires a high level of technical knowledge, cost a lot, and takes a long time.
– Created cryptocurrency need constant care.
Lastly, there are different kinds of cryptocurrencies with different properties. There are 2 types of them: Crypto Coin and Token. Both are digital currency coins, but their uses and other properties are different for each type. Cryptocurrency coin works like real-world money, so you can buy goods or services with them. Tokens, on the other hand, are more practical because they can be used for both discounted fees and pre-paid credit, art, etc. Additionally, the popularity of making money from cryptocurrency these days has led to a lot of people getting involved in the regulatory process and passing laws to tax the state. If we understand this part, it can help us see the whole picture better and help us decide how to invest. But every investment has risks that come with it, so people who want to invest should always do research first.
Related Articles:
Read more: Cryptocurrency
Source: Investopedia, Medium