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Ready to create YOUR own Cryptocurrency!!!

Part - 1: Introduction

Anantha Perumal
Coinmonks
Published in
7 min readOct 3, 2020

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I have a question for you before creating your own cryptocurrency have you got a name for your cryptocurrency? is it cool?. because nobody wants to eat a burger in ‘Swarna bakery’(a bakery name) when McDonald’s is opposite. So choose yours wisely.

There are many Cryptocurrencies some you may become aware of names like bitcoin, ethereum etc will also heard the name blockchain which is the technology behind blockchain, The most valuable cryptocurrency is bitcoin and is worth about $0.003 USD as of Mar 2010 but now(Oct 3, 2020) it worth10542 USD now can you believe that!!!!…

This blog is an introduction part which doesn’t include any coding so just take the hand from keys and enjoy scrolling.

So how to start there are many terms like

  • Blockchain
  • Cryptography - Types of Cryptography - Digital Signature
  • Hashing
  • Nodes
  • Ledger - HyperLedger
  • Merkle tree
  • Smart Contract, etc., etc.

haa it goes too long don’t worry I am not gonna disclose it in this blog we will see in a way that it will make interest in my upcoming blogs. as I said we are gonna see things that you heard but doesn’t know deep into it.

Let me tell you a story that only a few people know, cryptocurrencies emerged as a side product of another invention, Satoshi Nakamoto, the unknown inventor of Bitcoin, never intended to invent a currency. His goal was to build a decentralized digital cash system. In nineties, there have been many failed attempts to create digital money.

Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority. — Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.

… after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we’re trying a non-trust based system. — Satoshi Nakamoto in an E-Mail to Dustin Trammell

The cryptocurrency born when Satoshi tried to build a digital cash system without a central entity.

Let me explain with a simple example between the system existing now and satoshi invented. Let us take the example of the transaction of amount, I am having an account in a bank and I am making the transaction from one account to another account, this transaction history was maintained in central server owned by bank right? now if anything bad happens. let us guess for our bad, some hacker change the transaction amount as 10000 instead of 1000 and takes all 9k amount then how can I prove that I am hacked it will be clearly recorded as 10K there but I have done a transaction of 1K only.

Now imagine the situation where the proof of your transaction is stored in many servers that is decentralized now if a hacker attempts to change the data in a server, then the data in that server alone will be changed but in remaining all server the original data is maintained so in this way that we can identify that there is something wrong happened in that server and its actions will be rollbacked… now this is blockchain everybody!!

What is Cryptocurrency (maybe The Money Of The Future)?

If we remove all the hype for cryptocurrency and look into the word, it is just a number in your account as you check the balance in your account which will be appended with the name of the currency(USD, EURO, INR etc) while cryptocurrency will be appended with bitcoin,ethereum etc. Cryptocurrencies are digital cash meant to be quicker, cheaper and more reliable than our government-issued money. Instead of trusting a government to create your money, bank to store, send and receive it, users transact directly with each other and store their money themselves as there is no middle man the transaction is very fast and affordable. Every user of a cryptocurrency can simultaneously record and verify their own transactions and the transactions of everyone else. The digital transaction recordings are known as a ledger and this ledger is publicly available to anyone. With this public ledger, transactions become efficient, permanent, secure and transparent, hence fraud and manipulation are prevented. With ledger i.e. public records, cryptocurrencies don’t require you to trust a bank to hold your money. This system requires no trust. This unique positive quality is known as “trustless”.

What is bitcoin?

Bitcoin is the first digital cash created in 2009 by an unknown person or group who went by the name, Satoshi Nakamoto. Bitcoin is unique because it does not rely on government/bank-created money, meaning there are no banks or middlemen. In addition, transactions occur directly between people their real names are not known. Each transaction is recorded on a digital record as public and kept by many people across the world known as the blockchain. Because there are so many copies being simultaneously maintained, the transaction is very safe and virtually impossible to manipulate. Individuals protect their bitcoins using their digital wallet

What is blockchain?

Blockchain is a technology for creating permanent, secure digital recordings that are decentralized. Blockchains can record any information like medical information, banking, etc. Imagine the blockchain as a book of records. Each page in that book is a block and can record anything. Blocks are created one after the other, chained to each other by means of hashing what we know as the blockchain. Multiple blockchain records are maintained simultaneously by many unrelated individuals and their computers, making it cloud storage on steroids. Updates are seen immediately and manipulation is extremely difficult/impossible. This positive quality known of many people keeping their own copies of the blockchain is known as “distributed”. But if a blockchain is not distributed among many individuals and instead run by one government, organization, group or person, then it is not at a blockchain at all. A centralized system like that is simply a database.

What is a smart contract?

A smart contract mixes blockchain technology with contracts to make a more efficient and affordable system of doing business. In a smart contract, two people doing business agree to exchange money for something else. if the requirements set by both parties of the contract are met on a date, it activates, delivering what was purchased. If the requirements are not met, the contract deactivates and returns whatever it was storing.

For example, Alice wants 1 bitcoin from Bob and Bob wants $11,000. Both Bob and Alice agree that on Oct 7, 2020, both the bitcoin and cash will be deposited to the accounts linked with the smart contract. On October 7th, the contract looks to see if both people fulfilled their obligations. If so, it will release the payment and bitcoin to their new owners. If not, the bitcoin and money are returned to their original owners.

Because the contract is publicly available and unalterable, it is very easy to keep both Bob and Alice responsible for their end of the deal. If anyone somehow violates the agreement, the proof of what they should have done is easily obtained.

What is mining?

Mining is the computer process of recording and verifying information on the digital record known as the blockchain. Because mining requires computer power, people do this work in return for money. Each computer that fulfils this process can earn a reward in digital money and sometimes brand new, virgin coins.

To keep the blockchain network running smoothly, only one block can be created at a time. There are several different ways to do this:

  1. The most common is known as proof of work and it required computers to work hard at solving a math problem. The first computer to solve this problem would discover a new block and could record information on the blockchain. This earned them a reward in brand new digital money plus fees paid for each transaction.
  2. The next mining technique was called proof of stake. With this system, people who represent large ownership of coins are selected by the software to create new blocks. Competing people are selected on a lottery system based on chance. With proof of stake, no new coins are created. Instead, fees for verifying and recording transactions are collected.

With over 1,000 cryptocurrencies and many more being created each month, new ways of mining are being explored and discovered.

You can find the next part creating blocks and chaining it up together to create a blockchain.

The content above is referenced from various online articles and resources that are available online and the pic source is from here

Please rate my blog from 0 to 50 claps and give me suggestion to improve by commenting below. Thanks for your precious time to read my blog. Have a great day:)

Also, Read

Blockchain Cryptocurrency
Cryptocurrency
Cryptocurrency Investment
Technology
Bitcoin

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Anantha Perumal
Coinmonks

Written by Anantha Perumal

29 Followers
Writer for

Software Developer | Tech blogger

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