In today’s world of business, you have to either be on the side of the product or the consumer. However, in the new world where the demand and supply are in excess, one of the most lucrative business ideas is to be the mediator between the demand and the supply.
Cryptocurrencies stand among the most innovative revolutions that have occurred in the field of finance and technology. There are different types of cryptocurrencies created day-in and day-out across multiple blockchains. These cryptocurrencies have a need to be traded to increase profits and to make the circulation and acceptance more dynamic.
To facilitate trade and transaction between cryptocurrencies, a robust cryptocurrency exchange is essential. You can create your own cryptocurrency platform using these steps!
What Is A Cryptocurrency Exchange Platform?
A cryptocurrency exchange platform is a digital marketplace where users can sell cryptocurrencies that they possess at established exchange rates. Cryptocurrency exchanges operate as an intermediary between buyers and sellers.
Before you go on to the actual process, the idea and the concept are of vital importance. Preparing and planning are quite crucial because all the specifications that you will need have to be specified even before the project starts. The exchange platform should have the following characteristics
- Flexibility to develop, customize, and scale
- Safety and security
- Complete control
- Instantaneous response to all actions
As a prescribed best practice, it is recommended that the entire ecosystem of the exchange is made of different modules. Each module should work independently. The interaction between the different modules should be managed by specific requests and should be hosted on different servers to balance the load. This will ensure that even if one of the modules is under attack, the others can function smoothly – taking care of just one server would be enough to get the exchange up and running again.
The Different Types of Cryptocurrency Exchanges
Given the fast-paced change in the world of cryptocurrencies, there are different types of exchanges. It is only upon your choice of the type of cryptocurrency exchange that the structure can be decided.
Direct trading platforms provide the tools for making immediate deals between the users. This type of exchange platform does not involve set market rate but depends on the rates set by the traders.
Brokerage platforms are the kind of sites that any person can use to buy currencies at the rate that is defined by an agent. The cryptocurrency agents are quite similar to foreign currency dealers in their functionality and profit-model.
Almost all cryptocurrency exchanges require the following steps:
Obtain The Legal Counsel To Ensure The Meeting Of Requirements
Any exchange is subject to the laws of the jurisdiction. Therefore, it is important to seek legal counsel and understand regulatory requirements. Proper licensing will need to be obtained in all the jurisdictions that your company plans to operate at. Some exchanges operate without significant oversight of recognition and legality. There have been instances where cryptocurrencies have not been recognized by the Government. Whatever be the geographical location of exchange and the intensity of the regulatory requirements, it is important to adhere to the KYC (Know Your Customer) and AML (Anti-Money Laundering) norms.
Estimate the cause and assure the funds
Before the start of the project, it is a good practice to estimate the approximate cost involved. It is known that a bare minimum of 12BTC will be needed to develop and launch a cryptocurrency exchange. The cost includes but is not limited to technology, hosting legal advice, government registration, and marketing. While the whole of the cost might not be required in the beginning, assuring the availability of funds ensures that the project will not succumb in the midway.
Finding a technology service provider
These Companies provide complete cryptocurrency exchange solutions charging a one-time fee without royalties or commissions. Buying a white label cryptocurrency exchange will also come in handy in the process of you launching the trading platform.
Ensure exchange liquidity
Liquidity is defined as the magnitude of the ease with which a currency or a cryptocurrency or an asset can be converted into tradable real-world cash. Liquidity for an exchange is the cornerstone to its success. If you don’t have a live order book with trading activity, there is a very good chance that potential customers think there is not enough demand on the exchange to sell their currency.
To circumvent this challenge, you can simulate activity on your exchange with dummy accounts within the new exchange. Another way to liquidity is to connect your exchange to an existing network of exchanges with a little cost. The magnitude of liquidity is directly proportional to the size of the network of exchanges.
Partner with the payment processor
You will have to consider a lot of factors like fee structure, lowest transaction rate, and processing fees before you choose your payment processor. There might also be differences when it comes to settlement time and compliances with the legal requirements. Be informed that your exchange is vulnerable to cybersecurity threats even through your payment processor!
Implement the security best practices
Security is of paramount importance for any place where the money is invested. The exchanges that are created by exchange development company ensure top-notch security, so it is immune to most cybersecurity threats. With the dubious record of security breaches like Mt. Gox, security is one aspect that users will meticulously consider before trading with any exchange.
Test your exchange
After the exchange has been built, and the contract with the payment processor has been set up, you have to ensure that the venture of the cryptocurrency exchange that you have created functions smoothly in its full range even at the beta level.
Marketing your exchange
While the technology and the functionality parts are important, it is equally important to ensure that your exchange is marketed in the right spaces. Making use of crypto news outlets and the classical elements like email marketing, search marketing, and social media could give your exchange the much-needed wings in marketing.
Provide ongoing customer support
This is one of the territories where most of the exchanges fail! A customer support desk that is diligent and attentive in satisfactorily resolving customer complaints should be in place to answer your customer queries 24/7. You can also consider implementing an existing helpdesk like Zen or Zoho.
What next? With a company, everything right from ideating your exchange to marketing your cryptocurrency exchange will be taken care of smoothly. Our white label cryptocurrency exchange scripts give you low-cost solutions for technology that is otherwise considered expensive. Just drop in your inquiries to us and we will take care to help you create and operate your own cryptocurrency exchange!