Skip to content

Creating your own Cryptocurrency Business Plan

Home » Creating your own Cryptocurrency Business Plan

Creating your own Cryptocurrency Business Plan

Cryptocurrency Business Plan

In the review, we will consider the creation of a cryptocurrency, we will give a short business plan. The phenomenal success of bitcoin and the widespread use of blockchain technology are of interest even to entrepreneurs who are far from fintech. Cryptocurrency and related developments like NFTs seem like a new way to make money out of nothing. How difficult it is to launch your own digital currency, and whether it makes sense – we will figure it out in the article.

Pros and cons of cryptocurrencies

Before creating another digital currency, it is worth weighing all the advantages and disadvantages – they are common to most developments.

Pros:

• decentralization;
• fast and unlimited transactions;
• low cost of transactions;
• ease of conducting international transactions;
• transparency of transactions and anonymity of counterparties.

Minuses:

• limited reception;
• marketing costs;
• complex state regulation;
• very high volatility;
• impossibility to cancel transactions;
• the need for physical storage.

Cryptocurrency – Differences between coins and tokens

Cryptocurrencies appeared 13 years ago, but the terms “coin” and “token” are still used interchangeably. Understanding the differences will help you choose the type of digital currency that suits your business needs.

Tokens, on the contrary, operate on existing platforms (most often Ethereum), are used to confirm and protect transactions. For this reason, tokens are often used as smart contracts – to represent anything from physical objects to digital services. The closest analogy to a token from the offline financial world is a company share.

Creating a coin

Launching a new coin is a rather difficult task that requires programming skills (or the involvement of specialists). The platform for the coin is created from scratch, or cloned. The Polkadot and Cosmos frameworks allow you to create your own blockchains with minimal knowledge of cryptography.

Blockchain platform codes are publicly available: if you wish, you can simply copy the bitcoin code, make a few changes and come up with a new name for the coin. Such blockchains and coins are considered “forks”, almost identical copies of existing developments. The Litecoin network and coin, for example, is one of the 50 forks of Bitcoin.

Creating a token

Developing a token is a simpler task, but in addition to manuals from the network and technical documentation of the platform, knowledge of programming will also be required to solve it. Tokens are created on the basis of popular platforms – Ethereum, NEO and EOS. The reputation and technical authority of a particular blockchain automatically increases the credibility of the token.

Cryptocurrency startup business plan

The number of cryptocurrencies is growing at an impressive pace – data on 9757 types of digital currencies is available on the CoinMarketCap portal in real time. At the same time, most of the market belongs to bitcoin (41.7%) and ether (19.6%). Obviously, the popularity and value of the currency is influenced by certain factors that need to be taken into account before development begins.

1. Idea.
A coin or token attracts interest if it is based on some interesting idea. For example, the sharp increase in the popularity of Chia is explained by the fact that the currency is positioned as an environmentally friendly, “green” alternative to bitcoin.

Bitcoin itself gained public attention as it became the first cryptocurrency used to make anonymous black market transactions on the dark web. And the parody cryptocurrency Dogecoin has achieved popularity simply because it is based on a meme that seemed funny to enough users, including Elon Musk.

2. Originality and practicality of technology.
The demand for ether is associated with the practical application of the Ethereum blockchain platform in fintech and smart contracts. The popularity of chia is based on the novelty of technology and consensus – the free disk space on hard drives is used to prove it. Ripple is used as a payment platform by many traditional financial companies and banks, including JP Morgan and American Express.

3. A set of rules for concluding smart contracts.
The system of rules for smart contracts is a software implementation of the idea of ​​a token. For example, a smart contract can save the participants in the transaction from the costly services of a third party – a lawyer or a notary. Smart contracts allow you to set up automatic payments and auctions; help to prove the source of the object, the existence and change of ownership, and so on.

4. White paper.
The creation of the white paper of the project is the most important stage in the development and promotion of a new cryptocurrency. This is a detailed technical presentation, from which it should be immediately clear to investors and users what the uniqueness of the new currency is and what problems it will solve; what specialists are included in the team and how they plan to develop the project.

The documentation should also contain explanations about the use of funds that the startup will receive during the ICO / STO (Initial Coin Offering or Token Offering). The details of ICO/STO should also be covered – where the startup plans to offer coins or tokens, when and in what volume.

5. The conclusion of an independent audit company.
Several cases of initial offer fraud have made potential investors very wary. Therefore, for the successful promotion of a new currency, it is advisable to receive an audit report on the project by an independent and respectable company.

The policy of advertising on Russian resources also depends on the specific site. For example, Yandex Direct does not accept advertisements for cryptocurrencies and related services; Vkontakte allows advertising of cryptocurrencies, services and start-ups that do not contradict the law; Telegram does not provide any restrictions.

7. Building a community.
Community support is at the heart of all successful projects – Bitcoin, Ethereum, Ripple, NEO and Dogecoin, for example. Communities spontaneously spring up around interesting ideas, but they need a connection to a startup to develop. For this, a separate specialist must be on the staff of the project.

The cost of developing and promoting cryptocurrency

Creating and advertising an innovative cryptocurrency is an expensive process. The average cost of developing an ordinary “turnkey cryptocurrency” in Russia ranges from 5 to 9 million rubles, an advertising campaign is paid separately.

To implement such a project, a startup will need to attract venture capital investments. According to the calculations of the MLSDev portal, the average cost budget will look like this:

• technical development – from $1,000 (fork) to $200,000 or more (from scratch);
• independent audit for ICO/STO – from $3000;
• white paper and documentation – from $5000;
• promotion – from $10,000 per week;
• initial placement on the crypto-exchange – from $5000.

Is it worth creating another cryptocurrency

According to the unanimous opinion of crypto industry analysts, the commercial potential of forks is close to zero, and the development of a truly innovative and practical blockchain project will require several years and tens of millions of dollars.

Thus, it is optimal for a startup to issue its own tokens, the value of which will be determined not by the technological excellence of the platform, but by the potential of the company itself. By analogy with stocks, tokens will help attract investment. At the same time, the reputation of the company’s products and services will help minimize the costs of promoting the currency.

Source | StrategiNext

Leave a Reply

Your email address will not be published. Required fields are marked *