Using an existing blockchain saves time and money, provides access to established ecosystems, and ensures security and scalability without building a blockchain from scratch.
Creating a New Crypto Token on Existing Blockchain
- Jakob Brezigar
- Last updated: 5. September 2024
- Reading time: 5 min
In recent years, the rise of cryptocurrencies has brought about a significant transformation in finance and technology. One of the most intriguing aspects of this evolution is the creation of new cryptocurrency tokens, particularly on established blockchains. This approach has gained popularity due to its accessibility and cost-effectiveness compared to building an entirely new blockchain from scratch. However, there are several factors to consider when creating a new cryptocurrency token on an existing blockchain.
Table of Contents
Can I create a cryptocurrency token without coding skills?
Yes, you can create a token using platforms like Ethereum’s ERC-20 standard or Binance Smart Chain’s BEP-20. These platforms offer tools that require minimal coding knowledge, but for more customized features, technical expertise is recommended.
Key Takeaways - Creating a New Crypto Token on Existing Blockchain:
- Leveraging an existing blockchain is cost-effective but limits customization and control over your token’s features.
- Ethereum is popular for token creation but has high fees; Binance Smart Chain and Solana offer cheaper, faster alternatives.
- Transaction speed and scalability are vital for ensuring a smooth user experience and supporting future growth.
- Blockchain fees impact your project’s accessibility, with lower-fee options like BSC and Solana being more user-friendly.
- Partnering with a market maker like Orcabay can enhance your token’s liquidity, stability, and long-term success.
Should You Create a New Crypto Token on an Existing Blockchain?
Creating a new crypto token on an existing blockchain might seem like a straightforward path to entering the cryptocurrency market. But is it the right move for your project? The decision largely hinges on your project’s goals, resources, and technical expertise.
For most startups and small projects, leveraging an established blockchain like Ethereum, Binance Smart Chain, or Solana offers a plethora of advantages. These blockchains provide a secure, tested infrastructure that supports smart contracts and decentralized applications (DApps), making it easier to develop, launch, and maintain your token. Moreover, these blockchains come with built-in communities, tools, and liquidity, allowing your token to gain traction more quickly.
However, there are trade-offs. When you create a token on an existing blockchain, you are subject to that blockchain’s rules, limitations, and scalability issues. Your token’s success could also be affected by any security vulnerabilities or forks within the blockchain. If your project requires highly customized features or complete control over the blockchain’s operations, developing your own blockchain might be more suitable.
Making Your Own Blockchain vs. Using an Existing One
Choosing between creating a new blockchain and using an existing one is a pivotal decision. Each option has its pros and cons that need to be weighed carefully.
Building your own blockchain allows for unparalleled customization and control. You can design your consensus mechanism, transaction structure, and even governance model to perfectly fit your project’s needs. This approach is ideal for projects with unique requirements that cannot be accommodated by existing blockchains. For instance, if you’re developing a token for a decentralized finance (DeFi) platform with innovative features, a custom blockchain might be necessary to implement your vision fully.
On the flip side, building a blockchain from scratch is a complex and costly endeavor. It requires a highly skilled team, significant financial resources, and a considerable amount of time. Moreover, once your blockchain is live, you’ll need to maintain it, fix bugs, and continuously upgrade it to fend off security threats—this could divert attention from your core business objectives.
Using an existing blockchain, on the other hand, eliminates these burdens. It allows you to tap into a well-established ecosystem with existing tools, wallets, and exchanges that support your token from day one. This approach is particularly advantageous if your project needs to launch quickly or lacks the resources to develop a new blockchain. Additionally, you can benefit from the blockchain’s existing security features and avoid the potential pitfalls of running a new network.
Top Blockchains for Launching a New Token
When it comes to choosing the right blockchain for your new cryptocurrency token, several platforms stand out. Each has its strengths, making them suitable for different types of projects.
Ethereum
Ethereum is perhaps the most popular choice due to its mature ecosystem, extensive developer community, and robust smart contract functionality. ERC-20 tokens have become the standard for most new tokens, offering interoperability across various decentralized exchanges and wallets. However, Ethereum’s high transaction fees, particularly during periods of network congestion, can be a drawback.
Binance Smart Chain
Binance Smart Chain (BSC) has emerged as a strong contender, offering lower fees and faster transaction times compared to Ethereum. BSC is fully compatible with Ethereum’s Virtual Machine (EVM), allowing developers to port their projects seamlessly. It’s a great option for projects focused on DeFi and those that require frequent, low-cost transactions.
Solana
Solana is another rising star, known for its high throughput and low fees. With its innovative Proof of History (PoH) consensus mechanism, Solana can process thousands of transactions per second, making it ideal for projects that require scalability, such as gaming tokens or NFTs.
Other notable blockchains include Polygon (which enhances Ethereum’s scalability), Cardano (known for its peer-reviewed research foundation), and Avalanche (offering fast finality and low fees). The choice of blockchain will ultimately depend on your project’s specific needs, target audience, and development resources.
Evaluating Transaction Speed and Scalability
Transaction speed and scalability are crucial factors that directly impact your token’s user experience and long-term viability. A blockchain that handles transactions quickly and efficiently can provide a seamless experience, especially for applications requiring real-time interactions, such as gaming or DeFi platforms.
Ethereum, despite its popularity, has been criticized for its relatively slow transaction speeds and high gas fees, which can deter users and developers. Solutions like Ethereum 2.0 and layer-2 scaling solutions (e.g., Optimism, Arbitrum) are in the works, but they aren’t fully implemented yet. In contrast, blockchains like Solana and Binance Smart Chain offer much faster transaction times and greater scalability, making them more suitable for high-transaction environments.
It’s also important to consider how your token might perform under network stress. For example, during periods of high demand, can the blockchain maintain its transaction speed without significantly increasing fees? Some blockchains, like Avalanche and Algorand, are designed with scalability in mind, utilizing unique consensus mechanisms to handle higher transaction volumes without sacrificing speed.
Choosing a blockchain with the right balance of transaction speed and scalability is vital for the long-term success of your token. It ensures that as your project grows, the underlying infrastructure can handle the increased demand without compromising performance.
Considering Blockchain Fees and Costs
Blockchain fees, often referred to as gas fees, are a significant consideration when launching a new cryptocurrency token. These fees are incurred whenever transactions are processed or smart contracts are executed on the blockchain. High fees can be a barrier to entry for users, especially in DeFi or microtransaction-heavy applications.
Ethereum, while being the most widely used blockchain for token creation, is notorious for its high gas fees. During peak usage times, fees can skyrocket, making it costly for users to interact with your token. This can be particularly problematic for projects with smaller budgets or those targeting mass adoption, where lower transaction costs are crucial.
Alternatives like Binance Smart Chain and Solana offer more predictable and lower fees, which can be a boon for your project. These blockchains provide a cost-effective solution, enabling frequent transactions without the burden of excessive fees. However, it’s essential to consider the trade-offs, such as potential centralization concerns with Binance Smart Chain or the relatively newer ecosystem of Solana.
In addition to direct transaction fees, consider the costs associated with smart contract development, auditing, and ongoing maintenance. Using an existing blockchain can significantly reduce these costs, as the infrastructure is already in place, and there are plenty of resources and tools available. However, these savings must be balanced against the potential need for custom features that might not be supported on the chosen blockchain.
Other Considerations for Your Token Launch
Launching a new cryptocurrency token is an exciting venture, but it requires careful planning and consideration of various factors to ensure success. Beyond the technical aspects of choosing the right blockchain, transaction speed, and costs, there are strategic elements that can make or break your project.
Market making is one of the critical aspects that should not be overlooked. Having reliable market makers, such as Orcabay, before launching your token can significantly impact your project’s liquidity and stability. Orcabay’s expertise goes beyond mere automation; we offer a personalized approach, continuously monitoring trading activities and providing insights to enhance your token’s performance. Our fully compliant and transparent operations ensure that you have full visibility of your token’s market dynamics through detailed reports and a live dashboard.
Moreover, Orcabay’s in-house developed trading algorithms are equipped with protection mechanisms designed to safeguard your token from market manipulation, a common concern in the volatile world of cryptocurrencies. By partnering with such a market maker, you not only improve the initial launch but also ensure the long-term success and sustainability of your token.
In conclusion, while the idea of creating a new cryptocurrency token on an existing blockchain is enticing, it demands a thorough understanding of the various technical, financial, and strategic elements involved. Whether you choose Ethereum for its vast ecosystem, Binance Smart Chain for its cost efficiency, or Solana for its speed, each decision will have far-reaching implications for your project. And, with the right partners like Orcabay, you can navigate these challenges more effectively, setting your token on the path to success.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, investment, or other professional advice. All opinions expressed herein are solely those of the author and do not represent the views or opinions of any entity with which the author may be associated. Investing in financial markets involves risk, including the potential loss of principal. Readers should perform their own research and consult with a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results.
Jakob Brezigar
Jakob, an experienced specialist in the field of cryptocurrency market making, boasts an extensive international presence. With Orcabay, he has skillfully managed major operations and deals for a wide array of global stakeholders.
