More than a thousand cryptocurrencies live online but only the most popular, such as Bitcoin or Ethereum are generally talked about.
But at some time, hundreds of developers have looked at the success of these two digital currencies and thought about creating their own cryptocurrency.
In short, it’s possible for anyone with a little technical knowledge to set up their own initial coin offering (ICO) to raise some money from digital currency – but the odds are unless you have a huge and costly media machine promoting your brand, you are likely to fail.
ICOs are really crowdfunding in disguise – they operate in a similar way and are a platform to sell tokens to investors to raise capital for a venture, often digital wallets or gaming.
For those who want to try and create their own cryptocurrency, here are a few points to consider:
What’s the difference between a coin and a token?
A coin, such as Bitcoin or Ethereum, live on top of an infrastructure called the blockchain that tracks transactions in a peer-to-peer database.
Coins have their own blockchain, while tokens live on someone else’s blockchain.
So, coins have an independent network to record transactions, while tokens rely on a third party.
Building a personal blockchain is a serious software programming undertaking that’s not for the faint-hearted. The alternative is adapting someone else’s code.
Repurposing a blockchain is called a ‘fork’.
Some developers will act as a consultancy and do the programming work needed to by ICO-ready for you – at a price.
Slick media machine
The big day of your ICO is approaching, but coding your cryptocurrency is only half the job.
You need to build a brand, gain traction in the market and attract investors who will hand over their cash for your token.
You also must resolve the fear factor – the worry of being scammed by a fraudster that many investors have in the back of their minds.
To do this, your coin needs the backing of a slick publicity machine working for some weeks ahead of the ICO. PR like this does not come cheap and needs a skilled and experienced manager leading the way.
If you want to launch your own coin offering, then the money you need to look at the help you may need and how much this will cost in time and money – then weigh that against the likely return just like any other business proposition.