Cryptocurrency is a buzz word for many. Most people who are already part of the bitcoin or any altcoin community have a fundamental knowledge about these digital currencies (if not in-depth technical knowledge and know-how to create or manage on their own). However, this article is apt for those who are either new to cryptocurrencies or still seeking more information about it.
Cryptocurrency — Well the name says it all! These are digital tokens built over cryptographic functions. In other words, cryptocurrencies are sequence of encrypted bits transmitted and stored over a network. Just like the way we have multiple fiat currencies in the real world (eg. USD, GBP, EUR, INR, RMB etc), there are multiple cryptocurrencies as well. These digital currencies are developed using different cryptographic functions and have different values based on its creation date, number of users, extent of the network and transaction volumes. Bitcoin is the USD of cryptocurrencies, it is the gold standard or more like the reserve currency in crypto-world. There are many other cryptocurrencies like dogecoin, litecoin etc which are valued in relation to bitcoin.
Creating a Cryptocurrency
Creating a cryptocurrency is not a hard task for those who have an understanding of coding. They can easily build it upon existing codes, as most of the platforms are open source and the source code is readily available for download and modification on code sharing platforms like GitHub. Developers can choose the algorithm they wish to develop upon and make use of respective source code to create a fork and develop their own altcoin. SHA-256, CryptoNight and CryptoNote are some of the algorithms used for the development. Those who are not so familiar with coding and still want to have their own cryptocurrency can always make use of services to create, host and maintain it for a fee.
Some of the cryptocurrency generating services includes Cryptolife and Wallet Builders for example. With majority of altcoins (a reference for cryptocurrency other than Bitcoin) being decentralized, it is very important to have a good network of users contributing the processing power and conducting transactions of the new altcoin.
However, the hardest part of creating a cryptocurrency is to gain adoption. Without adoption, or a network affect any cryptocurrency is worthless. Most of the altcoins are built around an idea, to encourage something, or solve some real world problems or problems associated with other cryptocurrencies itself. But without people using it, it is never going to work out. This means, a lot of time, effort and even resources have to be dedicated towards gaining traction and adoption.
Once the altcoin gains enough traction and people start making transactions with the new cryptocurrency, it can be listed on various exchanges. These cryptocurrency exchanges will allow users to sell and buy the new altcoin against a trading pair(s). These trading pairs are other cryptocurrencies or fiat currencies which others can spend to obtain the new altcoin from these exchanges.
Once all the required parameters are met, and the altcoin can be used for the purpose it was intended for.