There are many things to consider before starting on the journey of creating your own crypto and selecting a coin development company to build it for you. So let us start by understanding the basics of the different types of coins and what they can be used for.
What are the main types of crypto?
Bitcoin
This was the first type of cryptocurrency to be introduced. It pioneered the concept of a record of transactions that are chained together (blockchain) so that once a link is added, nothing prior to that link can be changed.
Altcoins
Or alternative coins, this is all the new crypto coins that have been introduced since bitcoin. Note that to be a coin it must have its own blockchain. But there are many different flavors and technologies that solve different problems. They are also not all simple chains; some are decentralized but they all still generate a permanent record of the data they store. If you are planning to create your own coin, you should be aware that this is a very large and costly project. You can speak with your coin development company about the available technologies and what your objectives are before getting started.
Tokens
Tokens can function as a coin, but they don’t have their own blockchain, they use an existing blockchain to provide most of the hardware and software requirements that are needed to make a crypto work. This is the easiest and lowest-cost way to get started with your own crypto because there is no need to build the underlying chain technology or manage all the servers required. It is still possible for your coin development company to build your own blockchain later if required but that may never be needed and in many cases, there are great benefits in building on a blockchain that is already widely supported by exchanges and wallets.
So why do you need your own crypto?
It is important when discussing your project with a coin development company that you are clear about what problem you will be solved by building your own coin. Broadly this fall into 2 categories, financial and technical.
Solving a technical problem with blockchain
In order to determine if you need blockchain to solve a technical problem, you should ask yourself the following questions.
• Do you need to store data in a way that can’t be changed?
• Do you have multiple users entering data at the same time?
• Are you looking to remove the third party in your data management?
• Do you want to create a safe way for parties to interact where they don’t need to trust each other?
• Will your data management have fixed rules and virtually no updates?
• Do you need to maintain the privacy of your data?
• Do you need to mine your data?
If you answered yes to some of these questions, then blockchain technology can help to solve your problem. Your coin development company will provide a consultation with you to identify all the nuances of what you are trying to achieve.
Raising finance with blockchain
You can use crypto to finance your software project in the same way that businesses launch on the stock market (IPO) or sell bonds. These are just forms of crowdfunding where multiple investors buy a part of the project and benefit from its success. Crypto allows that to be done at a much lower cost way than was ever possible in the past. These are the main ways that this can be done. But you should talk to your coin development company about the finer details of these and other options, they will help you decide what is best for your business.
ICO
This is an ‘initial coin offering’ this was the first form of financing that was introduced, where you launch your coin on the market and investors buy your coins in the initial launch. It was massive in 2017 with $6 billion of investment generated, but it is estimated that up to 80% of them were not what it claimed to be.
STO
2018 brought the ‘security token offering’ which provides a great deal more protection to the investor. Securities are defined as a financial instrument that represents actual assets like stocks and bonds. STOs are not cryptocurrencies or tokens but are digitized conventional securities and so are subject to all the compliance checks and balances offered by conventional investment vehicles. Your coin development company will be able to help you decide if this is the best option for your situation.
IEO
This is an ‘initial exchange offering’ it is the next evolution in raising capital on the crypto markets. In the case of an IEO, an exchange overseas the launch to make it safer for the investors. They can handle the vetting and due diligence processes to ensure that the project is what it claims to be. BitTorrent recently raised $7 million in 14 minutes when it listed its new token via IEO on the Binance Launchpad platform.
How do you select a coin development company?
When selecting a coin development company, it is most important that they help you plan your project correctly, so you make the right choices before you start development. Selecting the wrong technology for your project can be an extremely expensive mistake to make. It could result in the complete failure of the project to address your objectives.
NextHash can provide expert advice on your project and our team of developers can execute the project on time and without the headaches associated with launching your own coin. They can produce a white paper, with all the compliance documentation that is required to launch and gain the trust of your investors. NextHash also has its own exchange infrastructure that can be utilized to handle the launch of your coin in whatever form it takes.
Speak with the team today to find out how to get started.