Modern cryptocurrency mining has become more difficult and even illegal in some countries. That is why experts refer to other ways to make money in the digital currency business. In this matter, you can develop a cryptocurrency exchange platform quite profitably.
People all over the world use such platforms to make transactions. They usually prefer to keep their money in bitcoin or another virtual currency, hoping it will fetch higher exchange rates. For example, the circulation rate of Bitcoin reached 16 million last year. However, there are still very few physical locations to pick it up. The situation with digital is much better.
So it’s time to create your own Bitcoin exchange website. You can now start offering a profitable digital exchange among the eager crypto community. We will tell you how to start a cryptocurrency exchange business and make it successful.
What is a cryptocurrency exchange?
A cryptocurrency exchange is a process of exchanging virtual currency for other assets, as different digital currency tokens or Fiat money. It is extremely popular today and numerous companies/entrepreneurs trade cryptocurrency. Not even the threat of a ban by the European Union can shake Bitcoin or cryptocurrency positions that much.
On the Bitcoin exchange website, a registered user can buy and sell digital money, track their exchange rates (as they vary differently from time to time) and store some of their own crypto assets. Such sites usually pay most of the attention to their level of security and payment facilities. However, an experienced user should be aware of the type of change you are proposing.
Learn more in the following infographic:
What is What difference does the exchange make from the market?
Cryptocurrency markets are intended for people with cryptocurrencies in hand to interact with other enthusiastic cryptocurrency traders and trade them directly on the platform. That is a major difference from a cryptocurrency exchange where you simply have the ability to exchange your particular type of cryptocurrency for another type of currency, directly interacting with a single service provider (not other merchants).
From a user perspective, exchanges are much more reliable in terms of exchange rate stability due to their centralized service nature. This aspect has both its pros (exchanges are free of scams) and cons (exchange owners are the only ones who decide what fees to assign and can make them unreasonable).
On the other hand , prices on exchanges are generally , based on the situation in common, the most popular markets. However, in the exchange, you cannot choose the most suitable price option, you can only adhere to the set single fee.
Types of exchanges
We can define two main types of exchanges Cryptocurrency:
- Offline. These provide an efficient way to withdraw your cryptocurrencies in the equivalent of real money (dollars or euros, for example). For that, a user is sent to the exchange website. Later, they can withdraw their cash at the physical point of sale of the service or bank. Such exchanges are few at the moment, as they are not very popular among users;
- Online. Exchanges that operate online are complete digital trading platforms that allow you to buy or sell crypto for particular rates on the web. These are basically the most typical exchanges where, in addition to fiat currency, you can trade Bitcoin, Ethereum, and other altcoins.
How to build your own cryptocurrency exchange website
Cryptocurrency exchange website development can become challenging. However, you wouldn’t need a fortune and brilliant technical knowledge to do that. We’ve put together some basic tips for you on how to run this process smoothly and make a profit.
Define your target audience
Consider how broad your TA’s reach should be; it may be restricted. by your country and jurisdiction, but it’s a completely different case when you plan to go global from the start. In the latter situation, you will need to take care of all the necessary international licenses and permits depending on the locations where you plan to present your exchange business. Either way, you will need the assistance of an attorney experienced in dealing with international exchange laws.
Establish a partnership with a reputable bank
To trade fiat money, you will inevitably deal with with a bank or payment provider. Therefore, it is very important to choose a reliable bank with a sufficient number of online services, friendly conditions for partners and more or less substantial exchange rates.It is better to establish your connections in countries where cryptocurrency is adopted as a common means of payment, such as the US or Scandinavian countries.
Pay attention to software
Current technology The market is fully ripe for adventurous entrepreneurs who aspire to launch their own digital currency exchange startups. That’s why it can offer you a starter software package. Websites like BTCTrader or Alphapoint can offer you an out-of-the-box trading solution.
In addition to a web trading solution, make sure you don’t forget about additional mobile app development as it can significantly increase your revenue. However, it may be a good idea to use your preferred custom software package to create completely new and convenient exchange facilities.
Create the best exchange architecture
An architecture solution The basic framework for the cryptocurrency exchange website will include the four necessary steps:
- Trading engine. Without this central part, the whole mechanism cannot work. A trading engine should have unimpeded access to the order book, match all buy and sell orders, process transactions, and calculate balances.
- Frontend. Your user interface should be fully configured for fast and smooth business and transaction processes. Try to make it intuitive and easy to use for your customers to find their accounts, see all significant exchange rate changes as soon as possible, deposit crypto or fiat money, and place orders.
- The wallet. The electronic wallets for the digital currencies that you provide on your website should allow a very quick and easy launch, but secure, to withdraw your virtual money and convert it to fiat currency.
- Admin Dashboard. This powerful dashboard should help the admin to execute business operations as well as check processes, create liquidity and provide helpful and professional customer support.
Ensure the appropriate level of security
Digital money is about being safe duly protected and safe. We recommend that you commit to that principle, as it is estimated that nearly half of all cryptocurrency exchange businesses have gone out of business due to being hacked.
Make sure your website is absolutely foundational. Secure for all transactions. , ICO and withdrawals that you will have. The same should apply to your customers’ sensitive personal information, as it needs to be protected much more these days than it used to be.
Take care of transparency and security
Virtually everyone services that deal with currencies must adhere to Know Your Customer (KYC) policies, which involve checking the passport or other identifying data to confirm the identity of the client. The main purpose of following such policies is to exclude the possibilities of scam on the exchange network.
Think about the choice of cryptocurrencies
Any exchange website should support as many crypto currencies and important fiduciaries as possible. In this way, developers ensure a wider customer audience and rapid international expansion.
However, a necessary manual integration of each coin it supports can become a challenge, so it would be impossible to launch an exchange. service with numerous digital currencies. Therefore, you will need to do some in-depth research to analyze your target market and see which coins would be the best fit for your startup. In addition to the popular Bitcoin and Ethereum, you should also consider Litecoin, Ripple, and a few others.
Provide liquidity
When launching your exchange business, you should artificially model demand for your service. You can do it in two ways:
- establish activity buying and selling cryptocurrencies using profiles that you also create manually;
- connect to the network of other exchanges to acquire liquidity from all services who are already connected to it.
Organize good customer support
After the launch of the platform, you should hire at least a couple of employees who would take care of support. It is crucial to provide full accessibility to support services, that is, support employees must react quickly and help with the required competence.
How does the launch of the cryptocurrency exchange happen from a business perspective?
In the context of running a crypto exchange to be established as a future business owner, you must formally complete the following three global stages.
Calculating the budget
To begin with, you need to consider how much your entire project will cost. Therefore, the most expensive aspects include engineering, setup and support of an exchange website. As an option, you can use a ready-made template, adapting it to your own needs. This will cost you between $500 and $1,000. For sure, the custom resource will cost more. Plus , don’t forget about SEO and promotion expenses which can run up to a couple thousand dollars.
Finally, you will need to buy a certain amount of crypto and fiat money to have what to trade in the first place. As a rule, a minimum initial cash volume should start at USD 20,000.
Document preparation
In certain countries, online exchange activity is not regulated by law at all, so they can work without documentation and without infringing any na law. If you are fully legal from the start, you will minimize future risks associated with registering your company in ‘not so business-friendly’ locations.
You can provide services in accordance with perpetual agreements based on lending with clients, registering a private establishment with a physical entity as the head, or purchasing a Japanese license.
Launching an online platform
The final stage before launching your business will be to the technical launch of its online platform. First of all, you need to choose a hosting service. You need to accommodate a larger scale, so don’t try to save on your future provider choice. As for the platform itself, you can buy a ready-made template or request a custom solution from a specialized developer.
In either case, you’ll need someone to write a basic script for your software. However, you can also save on that by browsing GitHub or other similar forums where many open source ready-made scripts are available.
Read also: How to Create a new cryptocurrency
Launching a cryptocurrency exchange: where to see examples?
In general, a crypto asset trading and exchange business is practically guaranteed to succeed if its owner has enough patience along with sufficient budget. However, if you have both, we recommend that you pay attention to the success of such niche leaders, such as Binance.com or Poloniex.
Thus, Binance is among Relatively young platforms focused on cryptocurrency trading, which was introduced to the market in 2017. The exchange is owned by Binance Limited, a China-registered company operating under local jurisdiction. To date, it is considered one of the leading players in the field by average daily trading volume.
It also offers fairly low commissions, high performance, the ability to use professional trading tools for technical information enlarged. market analysis and withdraw up to 100 BTC per day.
As for Poloniex, it has been operating since 2014 and is owned by Poloniex, Inc. registered in the US. The company occupies the leading position by the volume of Ethereum sales, attracting a colossal audience of users to the resource. Almost 30,000 users are constantly online. The platform provides support for numerous types of cryptocurrencies, more than 60 in total.
Looking at these two powerhouses, we can see that if you want to be equally successful in the field, flawless UX, broad crypto support and user security guarantees are necessary factors.
How much does it cost to create your exchange website?
Regarding the various challenges you have to overcome when building your own exchange facilities of cryptocurrencies, it cannot but be an expensive process. However, with a smart attitude and plenty of entrepreneurial spirit, you’ll be able to launch your startup with very reasonable pricing.
Regardless of your choice of software, your perfect team should include a project manager (unless who doesn’t want to take this position on his own), platform developer, QA engineer, experienced web designer, and user interface developer. The cost of their services will vary significantly depending on several factors. The most important thing here is probably the country where your team is located.
Unless you’re ready to spend a small fortune on your new project, you’ll need to find the perfect balance between price and experience. Anyway, the starting price for a simple cryptocurrency exchange website from scratch would not be less than $25,000, if you mean the Eastern European specialists.If you decide to build your site with experts from the US or Western Europe, be prepared to pay a lot more – up to $400,000.
Top 3 Crypto Development FAQs
Will the created solution be secure enough?
Your future solution will ultimately be secure if:
- it uses users’ biometric data for authentication ;
- employ artificial intelligence to detect suspicious activity during transactions;
- choose a blockchain-based platform.
Blockchain involvement itself alone will guarantee an advanced level of data protection due to its basic distributed ledger technology.
Will the created solution work fast enough?
In the case of bitcoin, the ability to transfer is 7 transactions per second, and it is 20 transactions per second for ether. If the number of operations is exceeded, the queue is formed. This, in turn, leads to higher fees per transaction. The higher the priority of the queue, the higher the sum of the fee. Fortunately, you can solve this problem in several ways:
- regulate the size of a block according to the load of the exchange;
- employ the PoS protocol;
- choose centralized over decentralized blockchain.
Will my exchange be legal enough in the US territory?
In the US, any activity related to cryptocurrency employment is considered legal (if we take the ICO out of context). That is why your business, being registered in the US, will be subject to tax according to the following regulations:
- if it is stored for up to one year and its price increases gradually , the cryptocurrency will have a 10% tax. -37%;
- being stored for more than a year and progressively increasing in price, it will be taxed at 24%.
Conclusions
In this article, we share with you our take on how to start a cryptocurrency exchange. We hope you will be inspired by our tips and launch your own website with the perfect conditions for traders. If you want more help from the professionals, our experienced and friendly team is always ready to fulfill your wishes.
In particular, we specialize in developing everything related to cryptography, so you can be sure that the The solution will be created according to the most advanced current methods and trends in the field.
We also provide consulting services in creating your own business in the field of cryptocurrencies. Contact our business experts for the cooperative development of a truly efficient business plan if you want to succeed.
.