Crypto Assets Beginner's Guide: Build Your Digital Assets from Scratch

Introduction

For many blockchain enthusiasts, the idea of developing their own cryptocurrency is an exciting thought. However, knowing where to start can often be confusing. In reality, there are various ways to create a cryptocurrency, and the costs and technical knowledge required vary depending on the complexity of the project. This guide will take you through the core elements of getting started with cryptocurrency.

Basic Concepts of Cryptocurrency

What is cryptocurrency?

Cryptocurrency (Crypto) is a type of digital asset with diverse application scenarios. It primarily transfers value between individuals in a digital manner, encompassing monetary value, proof of ownership, and even voting rights. Unlike traditional digital payment systems, cryptocurrency is built on the foundation of blockchain technology. This innovation allows cryptocurrency to break through the restrictions of central authorities such as governments or banks, achieving a higher degree of freedom.

Bitcoin is the most famous example, and its application scenario is quite intuitive: it allows value to be transferred to anyone globally without intermediaries. The blockchain is responsible for recording all transactions, ensuring security, and maintaining network stability.

The core differences between currencies and tokens

Cryptocurrencies can be broadly divided into two categories: currencies and tokens, which have fundamental differences.

Currency has an independent native blockchain, with Bitcoin and Ethereum (ETH) as typical examples. Ethereum can not only be used to pay transaction fees but also supports various functions such as staking and governance voting, operating entirely on the Ethereum blockchain.

Tokens are built on existing blockchains. Although tokens are similar to currencies in some functions, they primarily serve the ecosystem of specific projects. Taking PancakeSwap's CAKE as an example, this is a token built on the Binance Smart Chain (BSC) that can be used to pay certain transaction fees, mint non-fungible tokens (NFTs), or participate in project lotteries. However, CAKE does not have its own blockchain, so it cannot be universally used throughout the BSC ecosystem. The same goes for ERC-20 tokens on Ethereum, where each token is tied to a specific project and has its own application scenarios.

Development Path Selection

Currency vs Token: Difficulty and Cost Comparison

Creating tokens is much simpler than creating currency. Here is a specific comparison of the two methods:

When creating a currency, you must develop and continuously maintain the blockchain infrastructure. While you can speed up the process by forking an existing blockchain (creating a copy), this does not solve the challenge of attracting users and validators to keep the network running. The success probability of a new currency may be higher than that of a simple token, but the required investment also increases exponentially.

In contrast, creating tokens on existing blockchains can leverage the inherent reputation and security. While you cannot fully control every detail, there is still a significant amount of customization possible. Many websites and tools can assist users in easily creating tokens, especially on BSC and Ethereum. Bitcoin Cash (BCH) is a currency case created through the fork of Bitcoin.

Choose token or currency?

For decentralized finance (DeFi) applications or play-to-earn games, tokens are usually sufficient. BSC and Ethereum provide developers with great flexibility and freedom.

If you want to break through the limitations of existing blockchains and explore new functionalities, creating a currency with an independent blockchain would be a better choice. The development of a new blockchain is indeed more challenging, but if implemented correctly, it will bring innovation and new possibilities. Emerging blockchains like Solana and Polygon have already proven this.

No matter which path you choose, it requires more effort and a combination of technology, economics, and market knowledge to succeed.

Best Blockchain Platform

Popular Choice Comparison

Ethereum, Binance Smart Chain, and Solana are currently the most popular cryptocurrency creation platforms. These networks provide methods for creating various tokens based on established standards.

The ERC-20 and BEP-20 token standards have become industry norms. ERC-20 belongs to the Ethereum blockchain, while BEP-20 is the standard for Binance Smart Chain. Both allow users to create and customize smart contracts, thereby developing their own tokens and decentralized applications (DApps). DApps can build ecosystems for tokens, providing more use cases and functionalities.

Sidechains and Layer 2 Solutions

Sidechains are another popular option that offers customizable features while enjoying the security advantages of the main blockchain. The Polygon network is a typical example - as a layer two solution for Ethereum, it provides a similar user experience but at a lower cost and faster speed.

After selecting a blockchain, you need to prepare a token creation tool. For blockchains based on the Ethereum Virtual Machine (EVM), the entire process is relatively simple. Ready-made tools automatically generate tokens based on the parameters you provide. These tools usually require a fee, but they are most practical for users who are not familiar with using smart contracts.

If you want to establish your own blockchain and currency, you will likely need to assemble a team of blockchain developers and industry experts. Even simply forking a mature blockchain like Ethereum or Bitcoin still requires a tremendous amount of work to build the network infrastructure, including encouraging users to act as validators and run nodes to maintain the blockchain's operation.

Key Considerations in the Design Phase

Before deciding which blockchain to adopt and issuing currencies or tokens, other important matters should also be considered:

Clearly define the use of cryptocurrency

The uses of cryptocurrency are diverse. It can serve as a key for accessing services and can also represent stocks or other financial assets. Clear application scenarios are crucial for the success of a project.

Carefully Designed Token Economics

Token economics manages the economic characteristics of cryptocurrencies—including total supply, distribution mechanisms, and initial pricing. If the design of token economics is flawed, users will lack the incentive to purchase, and even a strong core concept can fail. For example, stablecoins require special economic mechanisms to ensure price stability.

Ensure legal compliance

Different regions around the world have their own cryptocurrency regulations, and some jurisdictions even prohibit the use of cryptocurrencies. It is essential to fully assess legal obligations and prevent potential compliance risks.

Seven Steps to Complete Cryptocurrency Development

The following steps pertain to the complete currency development process. If you only want to create a token, the first three design steps are the most critical.

1. Choose a blockchain platform

If creating a token, choose the appropriate blockchain for issuance. BSC and Ethereum are popular options, and sidechains can also be considered. To create an independent currency, you need to design or commission someone to develop a custom blockchain.

2. Determine Consensus Mechanism

If you are developing your own blockchain, you should consider which consensus mechanism to adopt. Proof of Stake (PoS) and Proof of Work (PoW) are common choices, each with its own advantages and disadvantages.

3. Design Blockchain Architecture

This step is only necessary when creating a currency. A choice must be made between private, public, permissioned, or permissionless blockchains. Your choice should depend on the specific goals of the currency and the project. For example, currencies issued by governments or enterprises typically use private blockchains for greater control.

4. Blockchain Development

Unless you have professional development knowledge, you need to seek external assistance to realize your ideas. Once the formal environment is online, it is difficult to change core rules, so it is recommended to first verify that all functions are operating normally on the test network and to work closely with the development team.

5. Code Audit

Auditing companies like Certik can examine your blockchain and cryptocurrency code to identify vulnerabilities. Public audit results can provide security assurances for creators, potential users, and investors.

6. Legal Review

After the blockchain is successfully running, it is advisable to seek legal expert advice to confirm whether a license application is necessary before issuing cryptocurrency. This step usually requires external professional assistance.

7. Minting Cryptocurrency

Regardless of whether creating a currency or a token, minting must ultimately take place. The specific method depends on the design of the token economics. Tokens with a fixed supply are usually minted all at once through a smart contract, while currencies like Bitcoin are gradually minted as miners validate new transaction blocks.

Practical Guide: Creating BEP-20 Tokens

Creating a simple BEP-20 token requires basic programming skills and deploying a smart contract to the Binance Smart Chain. First, install the MetaMask wallet and deposit some BNB (Binance Coin) to pay for gas fees.

Preparation Stage

1. Make sure to add the BSC mainnet to MetaMask (refer to the official guide for connection).
2. Go to Remix IDE
3. Right-click on the contract folder and select “Add File”
4. Name the file “BEP20.sol”
5. Confirm that the programming language is set to Solidity (click the icon in the lower right corner to complete)

Programming

6. Copy the BEP-20 smart contract code to the file (detailed parameter descriptions are available on GitHub)
7. Modify the currency name, symbol, decimal point, and total supply. For example, set it to Binance Academy Coin (BAC), with 18 decimal places and a total supply of 100,000,000 (remember to add 18 zeros).
8. Click the compilation icon on the left, check “Auto Compile” and “Enable Optimization”, then click the “Compile” button.
9. Click the “ABI” button to copy the contract ABI

Deployment Stage

10. Click on the deployment icon on the left, select “Injected Web3” as the environment, and allow MetaMask to connect to Remix.
11. After confirming the selected BEP20 contract, click “Deploy” and pay the transaction fee through MetaMask.

Verification and Publication

12. After successful deployment, copy the contract address to BscScan.
13. Select Solidity (single) as the compiler type, corresponding to the compiler version in step 8.
14. Right-click on BEP20.sol in Remix and select “Flatten”.
15. Copy the flattened code into the code field on BscScan, ensuring that the optimization setting is set to “Yes”.
16. Click “Verify and Publish” to complete the verification

Minting Tokens

17. After successful verification, go to the contract address on BscScan, click “Write Contract” and “Connect to Web3”.
18. Enter the amount of tokens to be minted in the “Mint” section (remember to include the decimal places, in this case, 18 places).
19. Click “Write” and pay the gas fee via MetaMask
20. After completion, the tokens will be minted to the wallet that created the smart contract.

Cryptocurrency Listing Process

Listing your currency or token on cryptocurrency exchanges (such as Binance) can introduce it to a broader audience. If you successfully create a solid project, you can fill out the exchange's online application form to apply for direct listing or participate in the Launchpad/Launchpool program.

Each cryptocurrency must undergo a rigorous due diligence process. During the application period, progress must be regularly updated to the exchange. In addition, the cryptocurrency ecosystem must recognize BNB (Binance Coin) and BUSD (Binance USD Stablecoin) as liquidity providers, or accept them during the Initial Coin Offering (ICO).

Cost Analysis

The total cost is related to the method and configuration you choose. If creating a currency and blockchain, you may need to pay several months of development costs for the entire team. The cost for a professional code audit team is about $15,000. The most economical way is to create a simple token on BSC, with costs as low as $50. On average, to establish a cryptocurrency with a chance of success, you need to invest thousands of dollars in development, marketing, and community building.

Beginner Recommendations

When deciding to develop your own cryptocurrency, this guide serves merely as a starting point. This is a deep field that requires a long time to learn. In addition to creating a token or currency, you also need to think about how to ensure its success after issuance. Studying the launch processes of other projects and learning what practices worked and what did not will help you create your own cryptocurrency entry plan.