Cryptocurrencies such as Ethereum, Bitcoin and Tether have been gaining increasing popularity over the past few years as individuals and businesses speed up their digitization efforts. In fact, the cryptocurrency market size is anticipated to reach $2.2 billion by 2026.
As a result of this high demand, there has been great interest in Bitcoin software development and how it works. Some businesses have even begun to invest in creating their own cryptocurrency.
Before considering cryptocurrency development, you want to understand exactly how cryptocurrency works, the pros and cons involved and the steps required for cryptocurrency development.
How Cryptocurrencies Work
Cryptocurrency is digital money that is decentralized and based on blockchain technology. It is also secured by cryptography. To fully understand cryptocurrency, you need to first consider the terms blockchain, decentralization and cryptography.
Simply put, blockchain is a digital ledger whose access is shared among different authorized users. This ledger exists to record transactions involving a range of assets. Any information shared between users is completely transparent.
Centralized money is a term used to refer to regular money used, which is governed by different authorities such as the Reserve Bank. Decentralization means there is no authority responsible for supervising the rise and fall of cryptocurrencies.
Lastly, cryptography is the method used to secure data from unauthorized access through the use of encryption techniques.
Cryptocurrencies run on a blockchain, which holds a record of all transactions by currency holders. Transactions cannot be faked or overwritten.
Units of cryptocurrency are made through a process called mining. Users can also buy currencies from brokers and stores and spend them using digital wallets.
When you own cryptocurrency, you own a key that enables you to move a unit of measure from one person to another without a third party such as a bank.
Let’s now consider a few facts around cryptocurrency to understand its incredible influence today:
The Pros and Cons of Cryptocurrency Development
Even though cryptocurrency has been dominating financial headlines in recent years, Bitcoin development and crypto development for business, in general, is not a very explored topic yet. As a result, many businesses are unsure if they should take the leap. Therefore, it’s important to consider the pros and cons before investing in cryptocurrency development.
The pros of cryptocurrency development
Because cryptocurrencies skip the middleman when it comes to transactions, fees are significantly reduced. Businesses no longer have to pay for the involvement of banks. Of course, there are still some fees, but they are typically lower compared to fiat transactions.
With fewer parties involved, the amount of tasks required to process transactions is reduced. Therefore, instead of waiting a few days to receive money, the payment is carried out faster to anyone with an available crypto wallet.
When using cryptocurrency, purchases are discreet and aren’t associated with a specific user’s data. It’s very difficult to trace money back to the sender or receiver. While it isn’t completely untraceable, it is much less so than traditional forms of payment.
One of the biggest advantages for businesses is the security of cryptocurrency. It involves advanced coding. They are also encrypted, with underlying blockchain technology that verifies and secures the whole process.
The cons of cryptocurrency development
Cryptocurrencies can be extremely volatile. These drastic changes in value make some users skeptical and nervous about the resilience of the market.
Cryptocurrency isn’t supported everywhere and, in general, there is a major lack of supervision. The technology is still in its developing stages and controllers haven’t caught up to it completely.
The irreversibility of crypto transactions can be troubling since any small mistake can cause big losses. For example, if you use an incorrect address, you cannot reverse the transaction.
How to Make Your Own Cryptocurrency
There are three important steps in the development of a new cryptocurrency. Let’s explore:
Choose between creating a coin or a token
The first step is to decide which development route to take. Creating a new coin is a more difficult choice, and requires a team of experienced professionals that offer specific firmware and embedded software development services. Maintaining the functioning of a coin also needs additional resources. But you can also choose to follow a custom development route that your software vendor with a Bitcoin development team will be able to handle.
Token creation is typically more achievable for businesses to start. Here, you simply build a token on top of an existing blockchain. Most companies tend to go with tokens when starting their cryptocurrency creation journey.
Select a platform
Next, you have to choose a blockchain platform on which the token will be based. This choice depends largely on the consensus mechanism you’re wanting to have. There are many popular solutions to consider. Some examples include:
Create the token
The next step is to decide on the token amount, the name, its symbol, and its decimal places. Afterwards, you have to create a transfer event to notify wallets whenever token transfers occur. After your blockchain technology development team has fully tested and verified your token, it can finally be launched!
Many factors affect how the cryptocurrency development process works. For example, is a coin or a token a better choice? And will you attempt to handle the development yourself or use a company offering cryptocurrency development services?
The Bottom Line
While the amount of work that goes into developing a cryptocurrency is significant and requires a vast range of knowledge, the benefits are plenty. Cryptocurrency has a very promising future and if you plan to run a thriving business, you can start by looking into creating your own cryptocurrency with the help of a blockchain technology development company.