Create A Cryptocurrency From Scratch Using Python

Blockchain is a decentralized and secure public database that authenticates and keeps records of digital assets' possession and transactions. As the name suggests, it is a “chain of blocks” in which each block stores the hash of the previous block, transactional data, and a timestamp to protect it from any manipulation or changes.

Lately, government sectors and enterprises are using blockchain technology to build their own cryptocurrencies that address their use cases and offer enhanced services to end users. Blockchain technology is popular for its three key properties:

Decentralization

It does not involve any central authority, third-party or intermediary. The participants decide based on consensus mechanisms and validate transactions

Security

The data on the blockchain is encrypted with strong cryptography algorithms that make it difficult for any unauthorized entity to access, make changes, or hack it

Transparency

Blockchain keeps a complete history of transactions in the network that allows enhanced transparency and data monitoring 

In this tutorial, I’m going to explain how you can make your own cryptocurrency using Python programming language.

Step 1: Python Setup

The first step in blockchain cryptocurrency development in python is to install python for Linux, Windows, or Mac. For this, visit www.python.org, go to downloads and install python’s latest version.

Once python is installed, follow the steps below,

1. Open the terminal
2. Enter the command python and run it

Step 2: Install IDE 

To work locally, we would need text files that make it easy for us to write code and understand it. For this, an Integrated Development Environment (IDE) will be required. IDE is a text editor with additional features, for example, the tool gives suggestions, identifies errors, and differentiates keywords with colors, and so on.

For this project, I’m going to use Visual Studio IDE. It is free and you can download it from visualstudio.microsoft.com.

Step 3: Getting Started with VS 

Before we start working on our project, it is important to install some extensions that can help up enable functionalities. 

1. Open visual studio and create a folder
2. Create a new file and name it blockchain.py

Step 4: Code

This python code includes all important libraries and functionalities that describe the architecture of your cryptocurrency. It creates the genesis block (first block) and enables proof of work consensus. Find the python codeand run it on your IDE.

While you are creating your own crypto coin, it is important to take into account all possible validations to avoid data manipulation. 

Now go to the integrated terminal in your VS and run the following command,

ipython
import blockchain
bc = blockchain.Blockchain()
bc.mine_block(“hello world”)

This will print some values that will show the working proof of work and that the mining function is working.

To see the entire blockchain, run command,

#bc.chain#

You will see the data of each block deployed on your blockchain network. Now the next step is to mine the blockchain. 

This piece of code validates the data on the blockchain. If some manipulation is done in the data, you will be able to know whether the blockchain is valid or not.

Now create a new file with the name main.py in which we’ll wrap this up using fastapi.

Now go to the browser and type localhost:8000/docs. Here you can see your entire blockchain and even mine a block. Try and test your blockchain code here to check its validity.

You can add a few more endpoints to your blockchain to return the previous block and see if the blockchain is valid.

Congratulations! You’ve created your own cryptocurrency in Python.

I hope this tutorial was a good starting point for you to create a blockchain. You can also refer to this clip for more clarity on how this code works. Remember this project can still be improved by adding more features, validations, and most importantly storage.

However, play with this code & be proud of yourself, crypto master!