All about Token Development and its features.
Over the past few years, cryptocurrency has come a long way, you may have frequently seen headline-making crypto coins like Dogecoin and tokens like Aave making a profit for users or being adapted to more and more platforms. This may have sprouted an idea in your head, “Maybe I can pursue this too.”, but then you come across your first roadblock, how do you go about making a crypto token?
We’ll take you step by step through the process, including how it works, what resources you’ll need, the average costs this venture will incur, and the risks involved.
Let’s get you up to speed on the nature of crypto tokens. I have referred to Dogecoin and Aave. The first is a coin, whereas the second is a token. What is the distinction, and why is it significant?
Currency coin is the primary currency on a blockchain. Ether (ETH) for instance is the underlying currency on Ethereum, the most popular blockchain. Every blockchain requires a cryptocurrency that can be used to fund transactions and other interactions.
Some advanced blockchains, such as Ethereum and Binance Chain, support crypto tokens in addition to currency. These tokens can be issued by anyone according to the specifications of a blockchain. When lending, exchanging, sending, or doing any other action with a crypto token, the blockchain coin is used as payment.
Click here for more on the distinctions between crypto coins and tokens.
Anyone who has enough knowledge of blockchain can build their crypto token on nearly any blockchain, except for the bitcoin blockchain, which only supports its operations with Bitcoin – the crypto king of all digital monies.
Consequently, we currently possess between 6,000 and 7,000 crypto tokens. A major cryptocurrency tracking portal counts slightly more than 7 thousand tokens.
Tokens exist to facilitate the movement of value within certain blockchain initiatives that give rise to them. As an example, BAT (basic attention token) is a crypto token that anybody can acquire by using the Brave web browser and then spend it by tipping content creators or trading for fiat currency or other crypto tokens on the blockchain.
Tokens are Unique to the Blockchain
You can generate a new cryptocurrency token for many blockchains. Initially, there appear to be a variety of chain options. As of July 2022, there are over 1,000 blockchains and at least four types of blockchain networks on the market.
Each has its own set of rules and guidelines for the development of crypto tokens. Moreover, crypto tokens may have distinct characteristics based on their origins. How do you determine which blockchain will house your token?
Logically, you would go where there is widespread usage, but the blockchain ecosystem as a whole is still evolving, as well as its user base, thus we propose using a chain explorer platform.
By visiting a chain-exploration website such as Blockchain. You will immediately realize that Ethereum is currently superior to all other blockchains in terms of total transactions and transactions per second. In addition, the Ethereum blockchain has almost the same number of active wallets as Bitcoin.
This is why most crypto tokens (also known as ERC-20 tokens) reside on Ethereum. This is also where many successful coins began. As an illustration, the Binance Currency (BNB) was initially produced as a crypto token on Ethereum before migrating to its chain and becoming a crypto coin — the queen of the Binance chain.
There is a good probability that you will want to construct your token on Ethereum, as the chain has already attracted a large number of users.
Distinct Cohorts
The second thing you must understand about tokens is that they can also be unique. In general, there are three major categories of crypto tokens:
Payment tokens are the most straightforward type of crypto tokens. As their name suggests, its only purpose is to facilitate transactions between users.
You might believe that security tokens are utilized to increase the security of blockchain applications. However, these crypto tokens belong more to the financial instruments category. A security token can be any token that is regarded as an investing tool. Users can frequently stake cryptocurrencies, which involves freezing a portion of their holdings to earn income.
Among crypto tokens, utility tokens are likely the most intriguing. Typically, they serve the goal of a decentralized application (dApp), such as granting customers access to dApp services.
For example, Helium, a decentralized IoT network, requires users to acquire its HNT token in addition to purchasing and configuring a wireless hardware station before they can begin mining Helium blocks.
Tokens can also be distinguished by the development guidelines that govern their intrinsic properties. Take Ethereum, which uses ERC-20 as the gold standard for a crypto token, defining its specifications and operation. There are several formats available for development than ERC-20.
Non-fungible tokens, or NFT, are currently a popular sort of crypto token. Non-fungible stands for one-of-a-kind, which means that you cannot swap an NFT for an identical item because each NFT is unique.
NFTs are digital art tokens with confirmed and public proof of ownership at the elementary level. This can be an animated image of your cats, a collecting item, an access key, a lottery ticket, and so on. If you were to create an NFT, you would need to adhere to the ERC-721 standards.
Volatile
A further characteristic of any crypto token is its price volatility, which can fluctuate by 50 percent or more in a couple of days. Stable currencies, such as USDC or USDT, are an exception; nevertheless, you must back consistent coins with the same amount of fiat currency to keep the price stable.
What volatility means for you as a business owner is that your token-based business model will be highly market-dependent. If individuals can freely purchase and trade your crypto token for other assets, they will, regardless of the product’s popularity.
Therefore, it may be advantageous to integrate your crypto token features as closely as possible with the functionality of your digital product.
Anonymous
Lastly, crypto tokens offer transactions with anonymity. Simultaneously, all transactions are accessible to anyone via blockchain explorers like as EtherScan. Therefore, if someone knows your wallet’s address, they can view your whole transaction history.
Misconceptions around Crypto Tokens
Let’s also briefly examine a handful of crypto token fallacies that you should consider if you wish to develop a blockchain token.
Security
Crypto tokens exist on blockchain networks, therefore they should be extremely secure, right? Wrong. These are the two most typical attack vectors:
It is true that once a crypto token is stored on a blockchain, it cannot be altered since it is encrypted, but the frontends and backends with which it interacts must still be protected.
Anonymity
I’ve already mentioned that anyone who knows your crypto wallet’s public address can immediately access your transactions. Just remember this and educate your users.
No Transaction Fees?
Currently, Ethereum is the most popular blockchain, and users spend between $100 and $500 for basic transactions. This is because Ethereum has scaling issues (they are working on it with Ethereum 2.0). Nonetheless, it remains true that a crypto token does not guarantee zero or minimal transaction fees.
That relies entirely on the blockchain you choose to utilize. You may even create your blockchain to enable free transactions for your clients.
Transactions are Done Immediately
Readers should know that Ethereum transactions may take several hours, granted this does not take days like foreign bank transactions, but neither is it immediate. Occasionally, a transaction may fail, but the fee must still be paid.
These are the primary points I wished to emphasize. You may, however, use some of these flaws to your advantage (transparency is not necessarily a bad thing) and improve other parts of your crypto token to make it more feasible.
Cases for Developing a Cryptographic Token
Raising Capital
Using initial coin offers (ICO) or just by selling promise coins, businesses raise a substantial amount of capital. The total is in the billions of dollars, all of which were raised to help entrepreneurs develop their products.
Today, the cryptocurrency sector likes to speak of airdrops, which are the same as coin contributions in that organizations pledge to give a specified number of coins or crypto tokens in exchange for donations.
Promote the Adoption of your dApp.
This is the most prevalent practical use case for developing a crypto token, which requires a great deal of technical expertise. Consider a dApp, such as a decentralized exchange (DEX), which qualifies perfectly as a DeFi product. And you wish to develop a token to promote this product and attract additional users.
This was done by UniSwap, the largest DEX currently operating on the Ethereum network. They issued a UNI crypto token that can be traded on both centralized (CoinBase) and decentralized (Binance) markets. However, UNI has no bearing on the operation of UniSwap. Consequently, this is a completely speculative asset (frankly, much like any crypto). Some of them, who are a bit more astute, seek long-term investment (or staking) opportunities.
Consequently, it is difficult to connect a token function to a DeFi or other sort of dApp. And not just connect, but also make it crucial to the operation of the entire dApp. In reality, if you examine any crypto token, you will see that it is a highly speculative digital asset with a veneer of “utility.” The true utility tokens resemble diamonds, such as BAT, which compensates users for their attention.
Consider yourself a successful founder if you can solve this challenge because everything else is simply a technological riddle.
Constructing a Blockchain
When establishing a blockchain, it is impossible to avoid creating a coin. As previously explained, the token will serve as the primary medium of exchange for all transactions on the chain.
Creating a blockchain, or replicating and changing an existing one, is outside the scope of this blog. Therefore, let’s continue to focus on how to create a cryptocurrency token.
Prefabricated Options for Making Your Token Coin
Using DIY platforms to produce your cryptocurrency token is the simplest method. Why can’t there be tools for creating tokens if there are SaaS platforms for creating web and mobile apps from scratch using a drag-and-drop user interface?
You are correct! Such tools are available.
If you only require a crypto token to raise funds, you have numerous options:
We guess that you are developing an ERC-20 token, which can take advantage of the established Ethereum blockchain ecosystem. The majority of ICOs operate there:
After selecting a platform, you must still choose the core attributes of your crypto token, such as whether it should be able to:
All of this is accomplished without writing a single line of code by selecting various choices and providing minimal input where necessary. A perfect scenario for rapidly developing an ICO token.
If you want to construct a cryptocurrency token with complex functionality that is closely related to a decentralized application (dApp) ecosystem, you will require a team of blockchain developers.
Step 1: Defining your Token Properties
First, you must choose the purpose of your crypto token. If the token is a conventional ERC-20 token designed to attract investors, it will possess the qualities inherent to the ERC-20 standard. You can specify:
If it is an NFT, it will have somewhat different parameters, such as the ability to define the owners of non-fungible cryptocurrency tokens.
As previously said, there are a variety of tools for creating these very simple tokens. However, if you need to create a complex crypto token, you should seek the support of a development team.
Step 2: Creating A Smart Contract
Why are smart contracts suddenly so popular? Any crypto coin is managed by a smart contract, which is a piece of software that runs on the blockchain. Thus, to create your token, you must construct a smart contract.
Ethereum was also the first blockchain to implement smart contracts. This is one of the primary reasons why most crypto tokens are designed and deployed on Ethereum.
Even when you use token-generating websites to create a token for an initial coin offering (ICO), they still develop and deploy contracts to the blockchain in the background.
What do we currently know about smart contracts? They run on a blockchain and enable DeFi and other decentralized applications, allowing users to engage through transactions.
These smart contracts can be extremely intelligent and far more sophisticated than ICO contracts. Therefore, you can generate a token with enhanced capabilities. When allocating a team of cryptocurrency developers to a project, you may want to consider the following factors:
This is significant material. Crypto aficionados adore completely decentralized dApps (and coins) that do not have admin keys enabling backdoor access to the contract. Ultimately, decentralization is the fundamental tenet of blockchain technology. Suppose, however, that you are contemplating the creation of a token for a closed community, such as a set of clinics. In such a scenario, such a solution is entirely appropriate.
When people stake some crypto coins, their thinking is unusual. For instance, the contract can destroy all staked tokens, essentially removing them from the existing liquidity pool, and issue new coins with interest after the stake is over.
There are numerous additional advanced features to explore, such as the creation of a token that simplifies the payment of services and management of subscriptions.
This pertains more to NFTs, in which an ownership property identifies the unique owner of a digital object.
Today, blockchains are the Wild West. People can discover the address of your smart contract and inadvertently transmit cryptocurrency (which the contract may not support) to it. Typically, these funds are lost forever. Nonetheless, you may choose to include a solution in your smart contract to prevent such mishaps.
When developing a smart contract for a crypto token, there are many questions to address. The most important aspect is to consider its logic — how you want it to operate and what it will do to attract more users to your dApp ecosystem. People will likely disregard an additional random speculative asset that does not encourage them to utilize your product.
Step 3: Run Quality Assurance On A Test Chain
When constructing a vanilla smart contract for a crypto token, keep in mind that replacing it in the event of a bug will be rather difficult. Conduct many tests on a test blockchain, such as Rinkeby or Ropsten.
Your developers may also utilize SafeMath, a Solidity package that safeguards your contract’s code against calculation errors. Certainly, this is one approach to avoid “mapping address uint256” issues.
Step 4: Deploy To The Blockchain
Deploying a smart contract is straightforward. Depending on the tool they use, your developers will only need to transmit a transaction containing built contract code without specifying a receiver. It’s a simple matter of a few clicks, so there’s no need for concern.
Regardless, confirm that the contract functionalities behave flawlessly on a test network (a user may send and receive crypto tokens, the contract performs the rest of its features, etc.) before deploying it on the Ethereum mainnet.
Cost to Create Your Own Cryptocurrency Token
One thing to keep in mind while producing a crypto token is that you are not just creating a simple emblem and symbol. You are developing a decentralized application based on financial design mechanics, and the crypto token functions as the petrol you put in your automobile to reach a particular destination. The token will then enable your clients to securely navigate your DeFi application.
The development cost of a medium-level dApp backed by a crypto token is roughly $160,000, whereas an MVP is doable starting at $40,000. Clearly, the price varies significantly based on the desired characteristics.
If you are interested in developing a custom crypto token you can contact us now via email or schedule a meeting. Our engineers will be happy to discuss your dApp idea and help you devise a roadmap for your crypto token development.
We create transparency for a global economy built on blockchains.
