Coins vs. Tokens

We already learned about the difference between coins and tokens, but let’s repeat it for clarity. Coins are the result of creating a whole new ecosystem, including a new blockchain and network of nodes. Some coins also become a platform for creating tokens. The most known example of a token platform is Ethereum, which has its coin Ether (ETH). But there are others, less known but sometimes more efficient and less expensive, such as Solana (SOL), Polygon (MATIC), and Klaytn (KLAY).

As a token platform, Ethereum carries many custom-created tokens that can be generated by recording a transaction containing a smart contract in a blockchain. Designing smart contracts requires programming skills outside this book’s scope. But fortunately, some tools allow nontechnical people to create smart contracts and their own tokens.

How to Create a Token Without Coding

Even though the token generation process requires writing a smart contract code, there are applications created by third-party developers that allow unsophisticated users to make their own tokens with no coding at all. ERC-20 is the most popular standard for custom fungible tokens, that is, tokens that can become a cryptocurrency.

As you probably realized already, there is almost nothing free in the crypto world, so if you want to create your own token, which can become your own money, you better get ready to pay some money for it up front. To simplify the task, we will refrain from creating a token directly on the mainnet and do it on the testnet instead. Using a testnet is the best practice for any software development activity, and a smart contract is nothing but a new code deployed on the distributed blockchain network. Therefore, creating a new token means new software development and deployment, so it’s better to be tested on the testnet before mainnet deployment.

Another reason for using a testnet first is financial, as you don’t want to spend real money on something you haven’t tested yet. Testnet tokens , which you need to pay for your token’s smart contract, can be obtained for free. Unlike real Ether, getting a testnet Ethereum coin is very simple. Let’s use the Ropsten testnet for our experiment. The Ropsten testnet has a functionality close to the Ethereum mainnet, so you can get a similar experience for free.

Setting Up the Wallet and Getting the Testnet Coins

Let’s use the MetaMask wallet as that’s the one that can contain both test tokens and our future real crypto. I have installed MetaMask as an extension to the Chrome browser. Do not forget to switch from the mainnet to the Ropsten testnet – the current network’s name is on the top of the MetaMask wallet screen, so it is difficult to miss (Figure 12-1).

A screenshot depicts the MetaMask wallet connected to the Ropsten Ethereum testnet. The following are present: Ropsten test network, not connected, personal account, 10.02 E T H, buy, send, swap, assets, and activity.

To get Ropsten Ether, you go to the Ropsten testnet faucet ¹ and specify your wallet address. You get 10 ETH within a few minutes (Figure 12-2). I wish getting ten real Ethers was that easy!

A screenshot depicts the Ropsten testnet faucet. The following are present: your Ropsten address, give me Ropsten E T H with an exclamation symbol, a checked box on successfully queued 10.0000 to, and please expect r E T H to your address within half an hour.

Generating ERC-20 Token

Now, when we get more than enough test coins to pay for Ethereum transactions, we can create a smart contract . To do that (without coding), you go to the Student Coin website.² Despite its .org domain, which is typically supposed to mean that this is a noncommercial organization, Student Coin is actively promoting its own token called… Student Coin (STC) .³ I will not comment on it because the only thing we care about now is their ability to generate an ERC-20 smart contract without a single line of code, which they do well.

So, you just go to the Student Coin website and find Create your token button and click it. Welcome to the centralized, incorporated world of decentralized, free cryptocurrencies: you will be prompted to create a user account. Okay, we’ll get through this to make our lives easier. But in fairness, I must note that you can make a token without sacrificing your privacy; however, you will have to write the code.

After creating an account, you will be prompted to connect to the MetaMask wallet , so just click that MetaMask logo. Once the wallet is linked, you will be prompted to enter the token name and other token parameters. Table 12-1 shows the parameters I chose for my experiment and explains why I made those selections.

Table 12-1

Crypto Basics Token Parameters

Parameter Name	Parameter Value	Reason
Token name	CryptoBasics	That’s the name of the book! You can choose any name but try to find the unique one that was not taken before
Token symbol	CRBT	This is the abbreviation for Crypto Basics Token. You can select any capital letters; typically, it’s three to five letters. You can check if yours is the unique one by looking it up at the CoinMarketCap website. If you choose the token name or token symbol that is in use already, it will create a lot of confusion for you and the users
Capping	Capped supply	This is typical for IXO tokens as investors don’t like uncertainty. The uncapped supply can lead to inflation and abuse. The max supply can be any number. Bitcoin has 21M so I simply set it to 21M
Supply	Initial supply	This is the simplest and most straightforward one. You can choose vesting to appease your potential investors
Initial supply amount	21000000	Can be any number between 0 and the max supply. But if you set a number less than the max supply, you will have to come up with a tricky way to issue the rest
Sale	No sale	You can sell it later using Uniswap or other exchanges
Supply adjustments	Unchecked	Using those options will make things too complicated. Keep it simple and transparent
Transaction tax	Unchecked	It would be very tempting to get paid for every transaction with your token, but I don’t think it is suitable for most use cases, especially for IXO

Now you are ready to hit the Contract summary button to get to the next screen, which will show the summary of the token parameters you have selected, the network (which should be set to Ropsten Test Network), and the Transaction Fee (shown in Figure 12-3).

A screenshot depicts the transaction fee for token generation on the Ropsten testnet. The wallet balance and deployment fee are shown.

Note that the actual fee will be much higher, and you can see it if you switch to the mainnet. On the mainnet, it would ask me to pay ~0.1435 ETH, which is around $287 at current prices. So, I better go back to the testnet, click the Deploy Token button, and confirm the transaction in the MetaMask wallet (Figure 12-4).

A screenshot depicts the confirmed token generation transaction in the MetaMask wallet. The following are present: Ropsten test network; personal account; new contract; contract deployment and a web address given; details; data; estimated gas fee; total; reject; confirm.

Viewing Your Token in Wallet and Block Explorer

That’s pretty much it; you have got your own token. Of course, it’s not real, but it could be very much concrete if you switched to the mainnet and paid 287 real bucks. Write down and store the Token and Transaction addresses – you will need them later. Then click the Add tokens to wallet button to see the new token balance to your MetaMask wallet . You should see your token in the MetaMask wallet now, and not just see it but be able to send it to anyone who also has a wallet like MetaMask that supports ERC-20 tokens (Figure 12-5).

A screenshot depicts the CryptoBasics balance in the MetaMask wallet. Send and swap labels are visible in the screenshot.

To check the status of your token’s smart contract, you can use the Ethereum blockchain explorer, for example, Etherscan. Note that since we use the testnet, you should not go to the main Etherscan website but open the test one⁴ and enter the Transaction Address. If you switch to the Contract tab, you should see the smart contract details (Figure 12-6), including the source code.

A screenshot depicts the C R B T token smart contract view in the Etherscan block explorer. It is divided into three sections.

You still need to do a couple more things to make your token “alive,” like registering it with the CoinMarketCap and CoinGecko⁵ websites and listing it on exchanges. We will see how to do it in the next chapter because some preconditions should be satisfied before you can apply for those listings .

Token or Coin?

Before starting your own crypto project, you need to answer the central question of whether you should create a token or a coin. You just learned about one of the possible options to generate a token. As we discussed already, a new coin means creating a new blockchain, which sounds scary, but let’s see how difficult it actually is.

The fact is that there are two main ways to create a new blockchain. The first one is designing and writing the new code from scratch, which is the most challenging method, but it might give your project a better chance to become successful if it’s based on an original, brilliant idea. Most successful platforms are coded from scratch. Most top coins on CoinMarketCap are original designs such as Bitcoin (obviously), Ethereum, XRP, Cardano, Solana, etc. To code from scratch, however, you must have a good team of engineers with a deep understanding of blockchain tech, a unique vision, and original ideas. Note that core development (another fancy name for coding from scratch) also requires a lot of time and funding, so be prepared for serious fundraising.

The second way – forking – is also common and sometimes very successful. Forking has a dual meaning as some crypto projects fork the source code, enhance it, and start a new blockchain, while other projects fork the existing blockchain while starting from some point on the original chain. The main idea of forking is reusing the design and source code of the existing, often already successful cryptocurrency such as Bitcoin.

Some well-known examples of cryptos created by forking are Bitcoin Cash (BCH) and Ethereum Classic (ETC) . Forking can be as easy as just copying the code repository of the original project, renaming some functions, and adjusting some constants. For experienced programmers, it can be, if not a weekend project, at least something that can be done within a very reasonable time.

The comparison shows that probably the easiest way to create your crypto is the ERC-20 token, while designing it from scratch is the most difficult one, although it has some benefits that other methods lack. If you fork an existing project and plan to enhance it, such a move can attract supporters and investors from the original project if they like your ideas.

The bottom line is that if you decide to launch your own project, you should use the method that best fits your goals, capabilities, and circumstances. My mission is just to show that a variety of options are available.

Doing It the Hard Way

If you still decide to do it the hard way, that is, create your own coin by forking the existing crypto or writing a new code, you should be aware of several important things.

First, you will need to decide whether to go PoW or PoS. In previous chapters, we have reviewed the advantages and disadvantages of both consensus algorithms. If you are going to fork, the decision would be as simple as just selecting your project of preference based on other features. The consensus algorithm will be just one of those features, perhaps not even the most important one.

If you select to write your own code, however, I suggest going PoS or DPoS as they are more promising than the widely desecrated PoW. The PoS coin is also easier to manage as you don’t need to fight the continuous emission. Still, on the other hand, without mining, you will need to solve the problem of motivating the node operators. In PoS, the node operator can get rewards in the form of transaction fees.

Another essential factor you need to consider is node hosting expenses and maintenance effort. When you create a token, you piggyback on the existing network, such as Ethereum, which does all the hard work of managing the nodes for you. But if you start your own coin, you must establish a new distributed network of nodes.

Each new crypto network starts from the seed nodes that are the primary go-to sources of truth for new nodes which just joined the network. You will have to host and maintain those seed nodes for the entire period of the project. For redundancy, there should be at least three to four powerful servers as seed nodes. In case one or two nodes go down due to hardware failure, hacker attack, or overwhelming from the network traffic jam, you should still have some redundant backup nodes up and running.

For PoS and especially DPoS projects, you may need more than four nodes to ensure the initial quorum and network stability. In general, the more seed nodes you have, the better for network safety. When the project gets traction, you can rely on other node operators and gradually reduce the number of your nodes. But ensure that somebody still hosts the seed nodes whose addresses are typically hardcoded in the node initialization code.

The easiest way to host the nodes is using a public cloud such as AWS or Azure. You can get a free tier from either provider, but it will not be enough to host multiple nodes. AWS also provides significant credits to startups (up to $100,000). They used to give those credits directly, but now the only way to do it is to join their Activate program through third-party providers. You will need to apply for a membership with one of such providers.⁶

How to Create NFT with No Coding, for Free

A chapter called Creating a Token would not be complete without mentioning NFT, which has become a superhot thing nowadays. Although NFT is not directly related to creating a crypto project, why can’t we still see how to create NFT? Maybe building your own cryptocurrency, which must always be a fungible token or coin, is too heavy a lift for you. But you still want to join the army of clever people who benefit from crypto differently but also creatively by designing their own non-fungible tokens .

NFTs are different from coins and fungible tokens by their uniqueness. Each NFT instance has some unique properties, for example, a unique image associated with it. By the way, imagery NFT is the most popular and sellable category. Many artists today sell their artwork attached to NFT, and buyers are paying a lot of money – sometimes, millions and tens of millions in a dollar equivalent!⁷

Creating NFT is as easy as creating regular fungible tokens such as Ethereum’s ERC-20. And similar to ERC-20, NFT is a smart contract, which can also be generated without a single line of code using special tools provided by third-party developers. Let’s use OpenSea,⁸ a popular NFT marketplace, to develop our own NFT.

The NFT generation process is even easier than the ERC-20 one, and OpenSea developers managed to do it off-chain without paying a fee. They call it lazy minting, which means the token is only recorded in the blockchain when it is sold or transferred for the first time. This is an excellent feature because it allows you to create an unlimited number of NFTs without spending a dime. You only pay a one-time fee to initialize your account.⁹ To implement the lazy minting functionality, OpenSea developers used a special type of NFT token standard called ERC-1155.¹⁰

The NFT Artwork

To make the long story short , let’s create an NFT together. For example, I decided to create an NFT that would contain the picture of my previous book cover as an artwork component. Since such artwork is not unique as it’s used in multiple books, I added an image of my signature to add some uniqueness to my NFT, making it a digital equivalent of a signed book. To make it even more unique and reserve an option to create more NFT instances in the future (more “copies” of the signed book) while keeping each one of them exclusive, I added a number to the signature (Figure 12-7).

An image depicts the N F T art with the book cover, the signature of Slava Gomzin, and a unique serial number.

Now, when my beautiful artwork is compiled and ready to be attached to the token, I will generate the NFT itself. By the way, they accept various image file formats like JPG, PNG, GIF, etc., but instead of an image, you can also use video or audio files or even a 3D model .

Linking a Wallet

Another remarkable and pleasant detail about OpenSea: Although they offer to register a user account, they don’t force you to do so. OpenSea is a peer-to-peer marketplace, meaning the tokens belong to their owners throughout token creation, listing, and selling. The process is still arranged by the centralized entity, but they use your crypto wallet address instead of your identity to link the tokens to you.

Note that you can still create your NFT using the ERC-721 smart contract directly on the Ethereum blockchain, without the “man in the middle,” but this is a pretty complex process that requires coding. Since NFTs, especially the ones created as collectibles and containing the artwork, are often loosely linked to their creators’ identities, in this particular case, I would say let’s ignore any potential privacy issues. In addition, even if you register your account entirely, you don’t have to use your primary email and your real name if you want to keep your identity private – there is no identity verification on this website.

A screenshot depicts the linking of the OpenSea account to the MetaMask wallet address. At the bottom, the sign and cancel labels are visible.

So, when you go to the OpenSea website and try to hit the Create button for the first time, it will prompt you to link your wallet and sign their terms of service (Figure 12-8). Unfortunately, unlike Student Token, OpenSea does not allow creating tokens on the testnet, so you will have to link a wallet connected to the Ethereum mainnet. But don’t get too upset about it – you can connect a wallet with zero balance because they don’t charge any fee up front and even allow you to create a token before paying the initiation fees. However, you will be prompted to pay when you try to list your NFT for sale .

Generating the NFT

After I linked my MetaMask wallet installed as a Chrome extension for the previous exercise with the ERC-20 token and signed the OpenSea terms of service, I could finally hit the Create button and go straight to the business of designing my NFT. But before doing it, I did another step, which is optional, and designed my collection where I am going to place all my tokens. You can skip that step for now and use a default collection if you just want to experiment with a single token. Once in your collection, you can hit the Add Item button to create an NFT (Figure 12-9).

A screenshot of the OpenSea site depicts the new N F T collection of books by Slava Gomzin.

So, after I clicked the Add Item button in the collection (the same as the Create button on the website’s front page), I got into the new token page. I uploaded the image I prepared and specified a few token parameters such as name, description, and properties like Author and Publisher (these are the custom properties you add by yourself, any number of them). I hit the Create button, and that’s it! I have got my NFT for free! Note that you can still edit some parameters, even the token’s name.

Listing the NFT for Sale

The next step is to sell it (if you want to). When you click the Sell button, you will be offered two options: Fixed Price and Timed Auction, which are self-explaining. With a fixed price, you set your price and wait until someone buys your token at that price. With time auction, you set an initial price and let people bid for the best price – similar to eBay. By the way, I set Creator Fees for my NFT to 10%, which means that every time my token is sold, I will be getting a 10% commission. Figure 12-10 shows the NFT’s appearance when it is listed for sale (on auction).

A screenshot of the OpenSea site depicts the N F T listed, Slava Gomzin’s Bitcoin for Nonmathematicians book cover, signed, 1st copy, which is on sale.

When you put NFT on sale, as I said, you will be prompted to pay the initiation fee (actually two fees, one after another), which can be in total anywhere from a few bucks to $30–$40, depending on how crazy Ethereum network traffic is. Once the transaction is completed, the NFT is listed, and anyone can purchase it (or bid if you selected the auction option). Note that now if you want to create more NFTs, as many as you want, as I said, you won’t need to pay anything . As promised, the NFT design and selling process is (almost) free and does not require coding!

What’s Next?

Designing your own crypto can be extraordinarily difficult or simple. Coin or token, new code or fork – there are many options. It depends on what level of technology your idea demands. The irony is that the financial success of cryptocurrencies does not necessarily have a direct link to technological complexity.

Creating a token can be easy. In this chapter, you have learned how a token can be generated without a single line of code. But developing a crypto project is a different story. Next, we will see how to start such a business.