After a decade of explosive growth, cryptocurrencies have truly gone mainstream. Alongside the big, established names, new altcoin projects are launched almost daily. Forbes examined the creation stages of altcoin projects and the cryptocurrencies selected for 2023.
How to create new cryptocurrencies?
Cryptocurrencies can be created easily. Because instead of building your own blockchain from scratch, the code of an existing blockchain can be copied. Changes can be made according to the creator’s wishes, and the code of a blockchain is usually copied unchanged. Later, a new cryptocurrency is born with the same basic techniques as the original, but a separate blockchain. Another way cryptocurrencies were born is through a controversial “fork”. A fork is simply a change in the blockchain protocol.
A high-profile example of this occurred with Bitcoin (BTC) between 2015 and 2017. Controversy around Bitcoin’s design-related scalability issues eventually led to a hard fork that created Bitcoin Cash, a completely different cryptocurrency from Bitcoin. Vitalik Buterin, the creator of Ethereum (ETH), said in a tweet in January 2022:
I would call BCH mostly a fail. My main takeaway: Communities formed around a conflict often have a hard time in the long run, even if they have good reasons. Because they value courage over competence and unite around resistance rather than a consistent path forward.
Creating a new blockchain…
Of course, it is also possible to build a blockchain from scratch, but it is a much more challenging task. Aptos (APT) is the latest example of building an entirely new blockchain. – The Tier 1 altcoin project was started some time ago by former employees of Meta Platforms. Tier 1 indicates that crypto has its own blockchain that can be used as a building block. A few well-known Tier 1 altcoin projects are; Ethereum has Cardano (ADA) and Solana (SOL). After the many rumors surrounding Aptos, its price dropped along with the listing.
Crypto has faced criticism over the allocation of tokens, nearly half of which is reserved for developers and private investors. This token distribution, known as tokenomics, is the primary factor when evaluating a new cryptocurrency.
New cryptocurrencies on existing blockchains
Some blockchains are designed with the ability to host other cryptocurrencies in their ecosystem. Developers thus launch new cryptocurrencies on top of this existing blockchain. Thus, the newly created currency is called a “token”. A token can function as a cryptocurrency and may not be specific to the blockchain it is running on.
Some tokens are launched with a high degree of customization, which can take expertise and time, while others are activated in a few clicks. It does not require technical knowledge to launch a token on top of another blockchain. It can also be created in just a few minutes. There are even online services that help you launch a new altcoin in minutes.
Ethereum-based altcoin projects
The second largest cryptocurrency in the world by market capitalization has only existed since 2015. However, in a short time, Ethereum has become the most popular blockchain for launching cryptocurrencies. You may have even heard of some of the popular tokens launched on Ethereum, such as the memecoin Shiba Inu (SHIB), an alternative to Dogecoin (DOGE). Examples are DAI and metaverse coin The Sandbox (SAND).
Binance-based cryptos
Another popular option is the BNB blockchain. BNB is the blockchain launched by Binance and included in the Binance Smart Chain ecosystem. Proponents of BNB Chain take advantage of its lower fees and higher speed. Ethereum’s main criticism is its “gas” fees, which can make it inaccessible to the average user. But BNB Chain’s lower fees and higher speeds don’t come without a tradeoff. Binance is a centralized company, so users of BNB Chain sacrifice the element of decentralization.
This has led some cryptocurrency supporters to argue that it goes against some of the fundamental pillars of crypto. The low fees, high speeds, and ease of launching cryptocurrencies mean that there are some speculative assets traded on BNB Chain, especially during the pandemic boom. One such example was Safemoon, which was launched in March 2021. It immediately rallied upwards, trading at a market cap of $10.9 billion in May 2021. However, as with many of these copy-paste altcoin projects, the decline has been just as dramatic.
Ponzi accusation against this altcoin project
Safemoon currently has a market capitalization of $4.4 million (US$3.3 million). Its price, on the other hand, traded close to zero, losing 99.9% of its value. According to CoinMarketCap, Safemoon developers have ported the token to a new version. This version is called: SafeMoon V2. This altcoin also faced a Ponzi scam accusation. Its founders controlled a large amount of tokens. In addition to the scam allegations, the community has sued celebrities like Jake Paul and Soulja Boy for allegedly participating in a dump-pump scheme.
Solana-based altcoin projects
Solana is another popular blockchain where developers can launch tokens. It is another alternative that is faster and offers lower fees than Ethereum. However, despite issues with Solana’s credibility, interest in Solana has been growing over the past year. With a growing number of NFTs, applications and tokens launched on the Solana blockchain.
Should I invest in newly created cryptocurrencies?
Investing in new currencies shortly after launch is extremely risky, according to Forbes. For many cryptocurrencies funded by venture capital (VCs) firms, a public launch is the first chance for the firm to drain liquidity and cash out its investments. Combined with the lax regulatory environment for crypto and the often anonymous nature of founding teams, this has led retail investors to use it as exit liquidity in the past.
Some cryptocurrencies are nothing but scams that are launched within minutes. The founders hope they can make money quickly while hiding behind the anonymity of the blockchain.
Beware of cryptocurrency scams
According to Forbes, some of the newly launched altcoin projects are being launched for fraudulent purposes. In addition, the prices of these projects rose before the collapse. These gains often make headlines and fuel “FOMO” even if they are the exception to the rule. As we have also reported as Kriptokoin.com, there are more than 20,000 cryptocurrencies currently available in the market. According to Fobes, it should be said that there are scam projects that still retain their power, even if they are in the Minority.
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