How to Start a Cryptocurrency
The Crypto Market is Just Beginning
If you haven’t already joined the cryptocurrency fanbase, here’s a quick breakdown:
It’s a decentralized currency that is constantly created by computer programming. You can invest in the currency to appreciate in value or purchase it as an alternative currency to buy goods + services.
The upside: they’re not backed by a government so it can be used internationally and without access to a bank. Also, they are verified by a blockchain (think public ledger) so they can’t be counterfeited.
The downside: they’re highly speculative and unregulated so investors + purchasers need to be careful of volatile price changes and outright coin theft. Also, not that many places accept cryptocurrency so they’re hard to cash in for goods + services.
Here’s how to create your own cryptocurrency!
1. Start your company
If you’re operating a business without registering as an LLC or Corporation, you’re taking a big risk. Your personal assets can be taken to pay your business debts. That means you can lose your car, house, and bank account on a product injury, a bad business deal, or a freak accident.
This is so important for fintech companies because you never know who will use your product, who will invest too heavily, or who will accuse you of stealing their tech. If someone files a lawsuit against you for ip infringement or fraud, you can be sued personally for damages.
Youʼll start by completing the state paperwork to register your entity. First, you'll need to decide what kind of entity is the best fit for you. If you haven't decided yet, check out our guides to Sole Proprietorship, Partnerships, LLCs, C Corporations, and S Corporations.
Now you're ready to register. If you are registering an LLC, the form is usually called Articles of Organization. If youʼre forming a Corporation, the form is called Articles of Incorporation. You can find these on your stateʼs corporation agency website. Youʼll also need to choose a registered agent, principal place of business, and business purpose. Keep in mind that all of this information, including your address, will be public.
Tip: If you’re looking for investors, call in your business attorney to help you choose the correct entity.
2. Lock down your brand
Trademarks give you the exclusive rights to use your company name nationally. So if someone else registers your trademark, they’ll own the rights to your name nationally. You'll only be able to use it in your geographic region (typically your city). That's not ideal!
Think about how many brand pieces feature your company name: your website, social media, business cards, products, marketing materials, press links, inventory, etc. If you want to operate nationally, you'll need to change all of that + pull back all inventory with the brand on it, or possibly pay monetary damages. You'll lose customers, money, and valuable momentum.
Bottom line: if you’re building a brand, you need to own your trademark.
3. Create your Code
According to developers, coding your cryptocurrency is the fastest part! Apparently, every cryptocurrency on the market is based on the open source code of Bitcoin or Litecoin available on GitHub.
Take a look at the current cryptocurrencies on the market + see what features they do/don’t have. Then, work with a developer to create your code base and any additional features you want.
4. Pitch Investors
If you’re looking for investors, you’ll need to have your company setup properly from day one. Investors usually require that you’re registered as a company and have your intellectual property locked down. They’ll also want you to have a solid business plan with financial projections and a valuation. Lastly, you’ll need to develop a pitch deck that describes your currency and why investors should fund you.
Cryptocurrency is an area that investors + the securities and exchange commission are starting to look at closely. So consult with an attorney to make sure that you comply with all securities laws.
Fun fact: I’m actually a published author in the area of digital currency regulation. If you want to know more about the area, you can check out my article: Bursting the Bitcoin Bubble: The Case to Regulate Digital Currency as a Security or Commodity.
5. Promote your company
It’s time to find your miners. In addition to discovering your currency, they’ll raise awareness and gain value for the company. Once you have a steady stream of miners, you’ll want to start marketing your currency to retailers so your currency holders have a place to spend their money. The more options your users have in converting the currency to goods + services, the more value your currency will have.