Minting crypto

• Minting is the making of new coins

• Before the advent of digital money, coins made of precious metals existed first, followed by paper money and fiat money made of cheap material

• Central banks today keep track of the money supply, aiming for about 2% inflation per year

• At Proof of Work, you create new coins by solving difficult cryptographic puzzles

• Because Proof of Work uses so much energy, it has received a lot of criticism, which is why most new coins no longer work with it

• With Proof of Stake, new coins are created by nodes or validators

• Most coins are created by users with many coins at stake, often the delegates in a Proof of Stake network

• Becoming a validator in a Proof of Stake network is usually too expensive or difficult for the ordinary user

• Creating a new coin used to be very difficult, but with the advent of token standards, it has become much easier and more are being added at an increasing rate

• Presales have made marketing new coins a lot faster and easier

• Creating an NFT is fast these days and new tools and token standards for it are coming on the market all the time

• It is expected that more and more token standards will emerge and that mining crypto and creating new cryptocurrencies will become faster and easier

The origin of minting

Minting is actually the English term for coining. Because of the many meanings of "coin," we have used the term minting because it is more appropriate for the content of this article.

What a coin is everyone knows. Coins have been in use for a very long time and have evolved quite a bit.

Minting coins in ancient times

In ancient times, coins were mostly made of precious metals, with the value of the precious metal being almost as high as what was on the coin. For a gold coin, of course, you could buy much more than for a silver coin. Paper money did not exist back then.

Coins were minted (geminted) by an official body that ensured that all coins had the same weight and thus were worth the same amount. An example of this is the U.S. Mint, which was established in 1792, but the Romans and other ancient peoples also had such a body.

The rise of modern money

After the Middle Ages, several types of paper money also emerged. First they were bills of exchange, later came fiat money and fiduciary money on, where the value of the paper no longer had any relation to the print. For example, in terms of paper, a dollar bill was obviously not worth a dollar.

(Central) banks were established to coin (print) and circulate this paper money. Little by little, the use of precious metals also disappeared and change was made from cheap materials. After the abolition of the Gold Standard, precious metals disappeared completely from the money supply.

In the 21st century, money is becoming increasingly digital and money in the form of paper and change is falling out of favor. Via the rise of debit cards toward a CBDC money is increasingly becoming a virtual phenomenon. This is much safer than walking around with a lot of money in your pocket.

The brake on mints

However, banks still need to monitor the money supply so that fiat money largely retains its value. Even though nowadays coinage is done digitally, the value still depends on the total amount in circulation. Central banks will hopefully keep a close eye on this, so that there is not a sudden major devaluation or even hyperinflation in which fiat money effectively becomes worthless.

Mining crypto by Proof-of-Work.

The classic way to add new coins to a blockchain was by Proof of Work and was introduced as mining Bitcoin by Satoshi Nakamoto. By proving that you had "worked for it," you received as a reward a number of Bitcoins plus the transaction fees in the past block time.

Bitcoin Proof of Work

Approximately every ten minutes a new block is made on the blockchain of Bitcoin. If you want to add such a block and reap the block rewards, the first thing you need to do is get a cryptographic puzzle solve that has become increasingly difficult over time. The more people try it because of the increased rate, the more difficult it becomes.

Whoever the so-called hash guesses gets to add a new block to the blockchain, booking (validating) all transactions from the past ten minutes, making the blockchain ledger true again. As a reward, the miner today gets 3,125 Bitcoins for his "work." Every 4 years, the reward for making a new block is halved at Bitcoin.

So when you add a new block, you are creating new Bitcoins, minting that is. The new block is distributed to thousands of computers that keep track of the state of the Bitcoin blockchain and check that it is a correct block, creating a decentralized ledger that keeps running forever and is highly secure.

Declining popularity Proof-of-Work.

There are still a number of cryptocurrencies that work with Proof-of-Work and where new coins can only be coined by mining. Due to the overuse of energy from mining rigs, this consensus mechanism is starting to become less popular after criticism from the outside world and most new coins work with Proof of Stake or some other way to mint new coins.

Some cryptocurrencies have switched from Proof-of-Work to Proof-of-Stake, the best known of which is Ethereum.

Minting crypto by Proof of Stake

At the Proof of Stake (PoS) consensus mechanism new coins are minted by pinning cryptocurrency for an (un)definite period of time. This process is called staking.

Validate transactions and create a block via blockchain technology

Also at Proof of Stake, new coins are marketed by the validator of transactions and completing a block on a blockchain. Therefore, the new block consists of all transactions from the past block time (this varies a lot) plus the new coins. The revenue consists of the coins minted plus the transaction fees from the past block time.

One big difference, however, is how this comes about. Usually PoS networks work in such a way that whoever has the most coins at stake is also the most likely to form a new block, including block rewards. Some blockchains work with professional, self-selected validators. Often users with few coins have no chance of creating a new block, putting decentralization at risk.

Delegate Proof of Stake.

For this reason, many PoS networks work with delegates. These are participants who usually have to have a lot of coins and pin them down. They also often have to have specialized software and hardware and keep them up to date to meet the requirements of the network. You have to be pretty knowledgeable as a delegate. The idea is that these participants coin the new coins and distribute them.

The delegate must create the new blocks according to the rules of the PoS blockchain he becomes a validator of. He has a number of coins at stake, which means he can also lose them. If he regularly creates incorrect or corrupt blocks, he can be fined (a slash) or he can lose all his coins at stake and lose his role as validator and delegate.

This setup makes a PoS network very secure, because a delegate or validator has far too much to lose. So he does make sure that he creates knocking blocks, the economic setup of a PoS network is a very logical and working one.

Staking through a delegate

A familiar setup of delegates and "customers" is encountered on exchanges. You can stake your coins as a customer of an exchange, but then you are not validating and creating new blocks. The exchange does that for you as a delegate. You get a portion of the proceeds from the staking on the exchange, where you can expect about 80% of the PoS proceeds.

Delegates get to choose how much of the proceeds they keep for themselves, but if they keep too much for themselves they don't get customers, which is why the quantities you get as customers are pretty similar.

Becoming a validator yourself on a Proof of Stake network

So if you want to join a PoS network and become a validator yourself, you have to have a lot of coins and buy expensive hardware. Moreover, you have to know very well how to set up the software and you have to be online constantly and deliver correct blocks. For the average user, this is not recommended. Before you know it, all your coins are gone due to slashing.

With Ethereum, for example, you already need 32 ETH to activate validator software. That's almost €100,000 at the moment, which not everyone has lying around. The more coins you have at stake, the higher your chances of being chosen to mine a new block. You need to have quite a bit of knowledge on Ethereum to validate for yourself, although over time they have made this easier with all kinds of tools and there are opportunities to buy into a validator if you can't get 32 ETH together.

Creating a new coin

Over time, quite a few new cryptocurrencies have been put into circulation. All of these cryptocurrencies start with 0 coins, of course. So someone has to start mining these coins.

It was long common practice to market these coins through an ICO and sell them bit by bit over time.

The team then got a portion, investors bought a portion and then it was offered on exchanges and at brokers. Through users, it then spread around the world.

Developing a coin

When creating an entirely new coin, for a long time it was difficult to create such a thing, and the number of cryptocurrencies was growing only slowly. Open source was used, but having a copy of something is a long way from success.

Minting new coins was a developer's job, along with everything else programmers were responsible for. Putting together a team to be paid from the sale of a newly minted cryptocurrency is far from simple and can be done much more simply these days.

Mints via token standards

With the arrival of token standards, such as ERC-20 (Ethereum Request for Comments - Proposal 20), BEP-20 (Binance variant of ERC-20) and Runes (Bitcoin variant of ERC-20), bringing new coins and tokens to market had suddenly become much easier, and since then we have seen an explosion of new cryptocurrencies.

ERC-20 tokens on the Ethereum blockchain

Some time ago, Ethereum conjured the ERC-20 token out of its top hat. Creating a new cryptocurrency was suddenly a piece of cake. You specify some required fields, such as how many coins you want to mine, number of decimal places, the name, et cetera, and voila. You created another cryptocurrency within 5 minutes.

Since then, an awful lot of coins have been created using this standard because it was so easy and because your tokens could be used directly on the immensely popular Ethereum network. Indeed, ERC-20 tokens can interact on the Ethereum blockchain with smart contracts.

Other token standards

Binance did not want to be left behind and developed its own similar token standard, BEP-20, which you could use on the Binance Smart Chain via PancakeSwap.

Meanwhile, there are already many different platforms with their own token standards for the most common things, such as smart contracts or the NFT. These crypto currencies are also minted in no time at all, allowing smart contract platforms to become popular faster.

Some of these networks have become mainstream very quickly, such as Solana and Coinbase's Base blockchain. These networks are producing many new cryptocurrencies every month.

Presale as a marketing tool

A new development is the convenient distribution of tokens through presale. Where before you had to rig up a whole system, through the ICO (Initial Coin Offering), the investment rounds, the IEO (Initial Exchange Offering) and the final path to individual users, it can be done instantaneously these days. Before you could trade with such a cryptocurrency, you were quite some time away.

You can use a presale to specify how many of the tokens you want to sell to new investors, say half within a week. That way, creators of a new coin not only already have high liquidity in the token, but it is immediately distributed to many users. The token immediately already has a nice market cap and can be high in CoinGecko in a short time. This therefore happens frequently, especially with meme coins or with platform tokens from popular networks like Solana or Base.

Ethereum remains the king of smart contracts

Ethereum still remains by far the most widely used network to mine new smart contract tokens on, but other networks are now knocking on the door. Here, speed and cost are particularly important considerations. Ethereum continues to struggle with scalability, a network like Solana has much less trouble with this and could well start to catch up quickly in the near future due to their high speed and low cost.

Bitcoin Runes

A dark horse among these token standards is the Bitcoin Runes token (and to a lesser extent BRC-20, the NFT Ordinals). In fact, this token is just as useful as the others in the list above; you have it created in no time. Because Bitcoin is still by far the highest market capitalization you might think Bitcoin Runes could rise in popularity very quickly.

Bitcoin, however, has the same problem as Ethereum. It is difficult to scale and expensive. It has another problem. Bitcoin does not have a team with a leader, as other large networks do with Vitalik Buterin or Anatoly Yakovenko. The Bitcoin blockchain lacks direction.

Another problem is the low number of transactions it can process and its cost. If Bitcoin Runes suddenly become very popular, these costs can add up quickly and the speed can drop rapidly. Bitcoin has almost no support for layer2 roll up networks, as Ethereum has quite a few. Therefore, many people who want to mine a new cryptocurrency will look at other networks first.

The simplicity of minting a new token

Creating a new token is very simple these days. For this purpose, the most important and popular blockchain networks have created all kinds of pages, where creators have quick access to their favorite platform after filling them out.

Within a day, they can already be selling their token, unless they want to reserve some time for a presale. The latter is not a luxury, as it is not that easy to sell tokens unless the creators already have a large network. After the presale, they made sure that many different people already have their token and that there is quite a bit of liquidity in the coin, so it already has enough value to have a chance.

NFT minting

NFTs (non fungible tokens) have been an integral part of the crypto landscape for some time now. What started out as an obscure toy that hardly anyone did anything with has become a regular part of cryptocurrency networks.

What is an NFT?

An NFT is a smart contract captured on a blockchain, allowing anyone to know that this NFT is in your possession and that is easily transferable. Mining an NFT over time has become as simple as creating an ERC-20 token. You can do all sorts of things with it, too, such as capture ownership of digital art, digitally capture and sell a house, create a series of collectibles, basically anything whose value you can capture on a blockchain.

History of the NFT

The first NFT was a digital artwork by Kevin McCoy called "Quantum" in 2014. Since then, this phenomenon has been on the rise and used for all sorts of things in the crypto world.

The craze of CryptoKitties is still on many people's minds. Not because it was so great, but because Ethereum was completely flooded with transactions and their network came to a halt and gas fees were huge.

After that, all kinds of series of collectibles became popular, such as the CyberPunks or the Bored Ape Yacht Club. For some NFTs people ask incredibly high prices, but you can always find people who will pay it, considering the $70 million Beeple got for his artwork "Everydays: The First 5000 Days." Especially really unique NFTs can fetch a lot, like the first Tweet or so.

How do you make an NFT?

Mining an NFT is actually simple. You open a crypto wallet with enough content for gas fees. You create an account on an NFT marketplace and upload the digital file. You specify some parameters and voila. You can offer your NFT on a marketplace like OpenSea or Solanart.

You can also choose to create your NFT through a self-selected network using the token standard associated with that network. For example, Ethereum has the ERC-721 token standard for NFTs, Bitcoin has Ordinals or BRC-20 via Inscriptions, and Solana has a multifunctional technique called SPL that can produce both fungible and non fungible tokens. Once you have tokenized the NFT you can start selling it on its associated marketplace.

Types of NFTs

As the capabilities of blockchain networks expand, increasingly functional NFT minting capabilities are also needed. For example, ERC-1155 was created to enable the minting of large series of NFTs with batch commands. This was especially necessary because of play to earn games, in which non-unique NFTs were produced. For example, if 1 million pickaxes have to be made for a game numbered 1 - 1,000,000 you can't sit around making them manually. Before you know it, you'll also be at the Bored Ape Club, but without the Yacht.

Thus, there are more and more opportunities in the area of minting the NFT, as the need to do so provides.

The future of minting crypto

Minting different currencies is getting easier and easier. Where blockchain networks used to have to work hard to prepare, market and make a cryptocurrency popular, this can now all be done within a day. It used to take years.

For someone or a group of people who want to create a new cryptocurrency quickly, this is obviously good news. A downside to this is that the number of tokens is growing so fast that you can't see the forest for the trees. As a result, a large portion of the new tokens are purely designed to make your move quickly and then leave things as they are.

Fortunately, it is very difficult to penetrate the top 100 cryptocurrencies in the world, otherwise it would become a coming and going of crypto currencies that picked up some popularity for a while only to silently disappear again. Then crypto trading might have become pointless gambling.

Now that crypto mining has become so easy, more and more token standards will be added. The big advantage is that new developments no longer have to take years and if something is good it can break through immediately. The number of newly minted cryptocurrencies will certainly rise significantly, but the quality of the top need not suffer.