There is another way to launch a new cryptocurrency.
Certain blockchains are designed with the ability to host other cryptocurrencies.
Developers can thus launch new cryptocurrencies on top of these existing blockchains, with the newly created currency referred to as a “token.” A token can act as digital money and not be native to the blockchain on which it operates.
While some tokens are launched with high degrees of customization, which can take expertise and time, others come online with a few clicks. It doesn’t require technical knowledge to launch a token on top of another blockchain—merely a few minutes of their time.
There are even services online that help you launch a new token in minutes.
As of June 2023, the number of cryptocurrencies listed on CoinMarketCap sits at over 25,000. A large portion of these will have been mere copies of existing tokens.
Ethereum-Based Cryptos
The world’s second-largest cryptocurrency by market cap has only been around since 2015.
Despite its youth, Ethereum is the most popular blockchain to launch cryptocurrencies. It has become a playground for developers, swiftly expanding to become one of the most popular blockchains for decentralised apps and tokens.
You may have even heard of some of the popular tokens launched on Ethereum like meme token Shiba Inu (SHIB), which is an alternative to Dogecoin (DOGE); DAI and the metaverse game ,The Sandbox (SAND).
Binance-Based Cryptos
Instead of being launched on the Ethereum blockchain, another popular option is instead the BNB blockchain.
BNB stands for “build and build” and is the blockchain launched by the world’s biggest cryptocurrency exchange, Binance, and contained within the Binance Smart Chain ecosystem.
Proponents of BNB Chain enjoy its lower fees and higher speed. The main criticism of Ethereum is its onerous transaction fees, known as “gas,” which can make it inaccessible to the average user.
But BNB Chain’s lower fees and higher speeds do not come without a trade-off. Binance is a centralised company, so users of BNB Chain sacrifice an element of decentralisation.
This has led some cryptocurrency “purists” to decry that it goes against some of the core pillars of cryptocurrency.
The low fees, high speeds and ease at which cryptocurrencies can be launched means that there were some highly speculative assets trading on BNB Chain during the pandemic boom especially.
One such example was Safemoon, launched in March 2021. It immediately surged upwards, trading at a market cap of $10.9 billion in May 2021.
However, as with many of these copy-paste tokens, the fall has been just as dramatic. Safemoon has lost 99.9% of its value, trading close to zero, with a market cap of $3.5 million, at the time of this writing. Safemoon, according to CoinMarketCap, has been migrated over to a new version: SafeMoon V2.
The embroiled crypto has also faced accusations of being a Ponzi scam, with its founders controlling large amounts of the token. In addition to fraud allegations, a class-action lawsuit was filed, roping in celebrities, such as Jake Paul and Soulja Boy for taking part in an alleged pump-and-dump scheme.
It is a poignant reminder that given the ease with which these new cryptocurrencies can be created, it is important to stay vigilant.
With new cryptocurrencies, the underlying code can be vulnerable on certain new projects, Chris Zaknun, CEO of blockchain project launchpad DAO Maker.
“Hackers and malicious actors can exploit bugs in the contract code to dupe investors and steal user funds,” Zaknun says. “It is important for investors to verify if a reliable third-party company has independently audited the code.”
Solana-Based Cryptos
Solana is another popular blockchain on which developers can launch tokens.
It is another alternative that offers faster speed and lower fees than Ethereum. Again there are trade-offs, however, as Solana has been besieged with problems regarding its reliability, with several major outages occurring.
Despite the problems, interest in Solana over the last year has risen, with a growing number of non-fungible tokens (NFTs), apps and tokens launched on the blockchain.
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