A popular term making waves in the Cryptocurrency industry is ERC20. It refers to the technical standard for all smart contracts used on the Ethereum blockchain network. It helps in the process of developing a cryptocurrency. Certain functionality can be added in form of a token symbol, transfer restrictions or to stop transfers to invalid accounts.
The ERC 20 implementation from OpenZeppelin, a tool for operating decentralized applications has three contract variables and 13 methods. Contract variables help in storing the data in the contract. The methods will be used to create tokens, destroy tokens, check account balances of users, and transfer tokens.
The tokens should be used to perform a particular action such as initiating payments, voting rights, and managing assets.
Hence, the businesses that aspire to create a cryptocurrency need to avoid complexity to get their ideas to be understood by the team involved in Cryptocurrency Development Services.
What is a Cryptocurrency
It is a decentralized digital currency used in the transfer of funds by utilizing encryption techniques. It cannot be tracked or regulated by authorities such as governments and banks. Examples of Cryptocurrency include the likes of Bitcoin, Ripple, Ethereum, etc. There are more than 1600 different types of cryptocurrencies available in today’s market. A reliable Cryptocurrency software development company would be able to incorporate those cryptocurrencies in your operations.
Meaning of Blockchain Technology
It comprises various data blocks and powers the usage of cryptocurrencies. Information is stored about transactions and a protocol is adhered to for communication between different nodes about creating new blocks. It ensures immutability, as the data recorded cannot be altered or removed.
The Mechanism by Which a Cryptocurrency Works
It uses a distributed ledger technology that is built on consensus algorithms. Several types of consensus exist such as Proof-of-Work, Proof-of-Stake, Delegated Proof-of-Stake, and Proof-of-Authority.
Cryptocurrency is used as a reward for every blockchain participant who takes part in the consensus mechanism. They allocate their processing power, give their stakes of coins, and support the transparency of the blockchain network to verify new blocks being created.
The cryptocurrency held by the holders can be transferred between different wallets and blockchain addresses seamlessly. It can be exchanged for fiat currency or other cryptocurrencies in the market. The identities of the people executing transactions will remain anonymous as they are encrypted by private keys that connect individuals to their respective accounts.
Understanding the Difference Between Coins and Tokens
A coin typically operates on its own blockchain network where all transactions occur. Examples of popular crypto coins are Bitcoin, Ethereum, Neo, and Emercoin. Hence, a blockchain network is needed for making a coin.
On the other hand, a token works on top of an existing blockchain network and is used to verify transactions and make them secure. It is used just like smart contracts. Tokens are commonly utilized in an STO (Security Token Offering) where startups fund their operations using a crowdsale.
Benefits of Cryptocurrencies
Cryptocurrency creation promotes a decentralized mode of operations without much interference from authorities such as governments and banks. The transactions are processed quickly at low charges compared to fiat currencies which take a couple of days for settlement. They are accepted internationally without being affected by geographical barriers, time zones, and currency conversion rates. A Cryptocurrency development company ensures transparency and anonymity for users while executing their operations.
Limitations of Cryptocurrencies
Some countries have banned the usage of cryptocurrencies viewing it as a threat to financial stability. Hence, the business of cryptocurrency development suffers from limited acceptance due to the huge risk involved in the investment. Their prices are highly volatile with frequent incidents of upswings and downswings. If the users happen to execute a transaction by mistake or enter an incorrect cryptocurrency address, they would lose the funds and never be able to recover it as transactions made in cryptocurrencies are irreversible in nature. There are a lot of problems in the storage of cryptocurrencies especially when owners forget their private keys.
The Different Methods Used in Developing a Cryptocurrency
- Creating a coin – An experienced developer who understands how decentralized technologies work should be hired. They must know how the code functions and how it can be changed. Periodic maintenance and promotion of the coin would be needed. It requires a functional blockchain network. Hiring professionals who have in-depth knowledge of blockchain technology and coding is better as it would save time.
- Establishing a token – It is a feasible way to create a cryptocurrency. It involves significant spending and increased development time. The consensus mechanism and trust of the blockchain technology can be used to fork a cryptocurrency. The token runs on a secure network and is protected from fraudulent attacks. It is relatively easy to operate using open-source codes.
The Well-Known Solutions Available in the Industry for Making Use of Cryptocurrency Development Services
- Ethereum – It is one of the pioneer blockchain networks offering a reliable token creation service. Since developing a cryptocurrency in Ethereum has a strong position in the market, it enjoys a lot of trust. Tokens are built following the ERC-20 standard that governs smart contracts. They have an exclusive programming language named Solidity for coding a token on Ethereum. It allows the creation of decentralized apps using any language with the help of the HTTP API.
- NEO – It is primarily targeted at the smart economy and utilizes the NEP-5 standard. Programming languages such as C#, Java, Python , and Kotlin can be used to create a token on top of it. Interaction is available with the blockchain network through an HTTP API.
- EOS – EOS.IO, a blockchain protocol can be created with programming languages such as C++. It has a couple of advantages as it is highly scalable, has a speedy transaction processing system, and is cost-efficient as it lacks a truncation fee.
Key Processes to Follow While Developing a Cryptocurrency
- Define your idea clearly – Develop a strategic plan for knowing your target audience and determining the problem that you will solve for them using your business. Hence, create a value proposition to make your cryptocurrency to get investors interested.
- Hire a reliable development team – Make sure to deploy experienced cryptocurrency developers who understand your business requirements to bring your idea into life. They should be updated with the latest trends on how to make a cryptocurrency in the ever-changing blockchain world.
- Establish rules for smart contracts – Smart contracts play a key role in the smooth execution of your operations. It has a significant impact on the success of a project. They are self-executing programs that operate automatically.
- Utilize the help of an external audit company – Since investors do a lot of research before investing in a project, hire an external audit company to ensure that your project is legitimate enough. Use the services of a trusted company with an established reputation of credibility.
- Prepare a professional whitepaper – It discloses the vision of the project. Disclose the problem that you are trying to solve, plan regarding fund usage, exchanges that the token will be listed on, benefits offered to investors, distribution strategy for tokens, the roadmap of the project and the background of the team members and how they bring value to the overall project.
- Indulge in promotional activities – Utilize different forms of marketing tools such as social media, press releases, email marketing to promote your cryptocurrency far and wide and increase its value.
- Interact with your community – Be in touch with your community 24×7 and answer all their queries on how to make your own cryptocurrency swiftly. Share timely updates regarding project development.
Hence, follow all the above-mentioned steps for getting a high place in your target market. Hire qualified specialists to walk you through this challenging task smoothly.