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Toquity

Create your own Equity Token

In 10 minutes and with no code

This piece walks you through the process of creating your very own equity token on the Ethereum blockchain. It will take you about 10 minutes and you will need a computer with Chrome, Firefox or Opera. The token will be ERC20 compliant, so you can use any wallet to hold them.

(If you’re familiar with Metamask, skip to Step 3 and head over to this webpage)

If you’d like to learn more about what tokens are, how they can be used to represent equity in a company and what that means for the future of equity, check out The Case for Equity Tokens.

“For the things we have to learn before we can do them, we learn by doing them.” — Aristotle

Step 1: Accessing the Ethereum blockchain

You will need an account to access the Ethereum blockchain. This entails having a public and a private key, analogous to a username and a password. Needless to say, keep your private key safe.

We will need Metamask, a popular browser extension that brings the power of Ethereum right to your browser and allows you to interact with blockchain applications. Go ahead, download it and follow through with their tutorial, which will include creating your Ethereum account.

Metamask extension once it has been setup

When you’re done, you should have something which looks like this.

The green box allows you to change the blockchain you are currently interacting with. For the purpose of this tutorial, select the Rospten Test Network, which is a copy of the Ethereum blockchain, but used purely for testing.

The orange box highlights your public key i.e. username on the blockchain.

The blue box highlights the balance of your account in Ether on the selected blockchain.

Step 2: Fuelling your interactions on the Ethereum blockchain

Since a blockchain is essentially a database of interlinked transactions, every interaction that you have with Ethereum also takes the form of a transaction. To process transactions and the information they convey, Ethereum demands some fuel, known as Ether (as a rough idea, a simple transaction such as a token transfer would cost you less than $0.10). Reading data from Ethereum is however, completely free and accessible to everyone.

Since we’re using the Ropsten test network for this tutorial, Ether on this network has no real-world value and is easy to acquire for free. You can procure some free test Ether here. Enter your public key and in a few seconds, your account will be credited with 1 ETH, which you can verify by clicking on the Metamask extension.

Step 3: Creating your token

We’ve created a tool you can use to create your token. Head over to this page, and if you’ve setup Metamask correctly, it will ask for permission to interact with the application like so:

Allow Metamask to interact with the application

You can learn more about Metamask here.

Click on Connect and the page should refresh (you may have to manually refresh the page, depending on your browser). Once loaded, the session details should auto-fill:

The session details should auto-populate if Metamask is connected

The user address that you see is your public key. You can click on it to see the address on the test network. Ensure that your balance is at least 0.2 ETH. If not, go back to Step 2 and request some test Ether.

You’re now ready to create your token! Put in a name, symbol and the initial supply (that represents how many tokens you want to begin with).

On clicking Create Token, Metamask will pop-up one more time, asking you to confirm a transaction that creates the token contract:

Metamask asks for confirmation to create your token

The transaction will take a minute or two to process, and once the contract is published, it will add to your dashboard so it looks like this:

Dashboard once your token has been created

If you’d rather import the contract that we’ve created, the contract address is 0x150EFa0F2A796149d241892c19742f621D6C2ECE. However, since you’re not the owner, you will not be able to perform any of the restricted actions.

And voila! You’ve created your very own token! The contract address is the address of the token contract. It’s the unique and permanent identification that references the code you’ve just published on the network. You can now interact with the contract by clicking on the Actions button.

Some of the actions that you can take are:

  1. Pause: Pause all token transfers, possibly for maintenance reasons
  2. Mint: As the owner of the contract, you can increase the total token supply by minting tokens
  3. Whitelist: Add an address (another public key) that is allowed to receive tokens
  4. Transfer: Transfer tokens to a previously whitelisted address

Pause, Mint and Whitelist are actions that only the contract owner can perform. Transfer can be performed by anyone who owns tokens.

Adding your token to your Metamask wallet

The equity token you’ve just created is ERC-20 compliant. These tokens can now be owned, tracked, managed and sold. However, it does not truly represent a real-world asset: neither has an official authority validated the token’s authenticity nor is it legally linked to your company’s equity.

You could also add these tokens to your Metamask wallet: Open the extension, click on the hamburger menu on the top left and at the bottom you should see an option to Add Token.

Select custom token and paste the contract address of the token you’ve just created and click Next. You should now see your newly minted tokens in your wallet.

What’s next?

It’s clear that the technology needed for creating and issuing secure equity tokens on a blockchain is relatively simple. The real challenge is doing so legally, while ensuring compliance with regulations. This is where France has recently passed legislation that allows one to store share registries and transactions on a blockchain.

However, the token offering model is fundamentally flawed and the constant management of tokens, token-holders and securities regulations surrounding the business environment is just as important as financing. Check out our piece on The Case for Equity Tokens to learn more about the practical limitations and the hurdles that equity tokens need to overcome to become mainstream.

On the Toquity platform, you can issue different forms of legally compliant equity tokens (common stock, preferred stock, convertible notes, warrants, stock options and more). You can also manage your captable, stock options and change resolutions. We are a company based in Paris and part of the Family group of companies and also the INSEAD Launchpad at Station F. If you enjoyed reading this, watch out for more of our content. We also love talking about technology, finance and philosophy and would love to hear from you on Twitter or Facebook or email us on contact@toquity.io

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