Cost to develop a Crypto Exchange (White Label vs Scratch)

Cost to develop a Crypto Exchange (White Label vs Scratch)

White-label vs scratch – which is best solution for crypto exchange development

From the title, it is easy to guess the subject matter. Let us not dawdle about and take a detailed look into the development life cycle of a crypto exchange business. 

The cryptocurrency market as a whole is a trillion-dollar industry. A crypto exchange is potentially a billion-dollar business opportunity. Bear market or not, the popularity of cryptocurrencies is growing as more and more users are entering the market every day. 

I bet you have heard the saying it is always better to be a bookie; than to be a gambler. If cryptocurrencies are the new gold rush, the businesses built around them to facilitate it are the best opportunities to make money. That is why it is always better; to run an exchange than to be a trader. 

But before you make money, you must invest money. Let us now look at the investment part of it. Here, investment means the cost it takes to develop a crypto exchange.

Steps to the Development Life Cycle of a Crypto Exchange 

  • License your business with the local and federal government 
  • Secure the funding needed to start your business venture
  • Determine the crypto exchange software for your platform
  • Connect your exchange with a blockchain
  • Beta test and stress test your platform
  • Market your platform online
  • Launch

All this, in its entirety, is considered the development lifecycle of a crypto exchange platform. And all these processes incur a cost; that is what we will discuss in this blog.

Start your Crypto Exchange Platform 

It’s time to take a closer look at all the steps mentioned above!

Business Licence

A crypto trading platform is the cryptocurrency equivalent to a digital asset brokerage. Like any brokerage selling securities, the US Securities and Exchange Commission (SEC) takes an interest in the inner workings and subjects the business to regulations. So, first, getting a license is the primary milestone, and it is not something you can circumvent. Unfortunately, this means the cost that it comes with is also unavoidable. In 2022, registering a crypto exchange license costs initially around $170K, with an added annual fee of $130K. (Licensing fees may vary depending on the laws of the country and region.)

Funding 

Funding is the second important marker. Either you have your own money saved up that you will be investing, or you have to find investors to fund your venture. This step won’t cost you anything, but to be honest, this step will be as complicated as getting a license, perhaps even more so. Most startups often secure a loan, which is the ideal route, but it is wise to secure a small loan during an intermediary stage of development rather than a large one at the start.

Building Software

This step is the most time-consuming and expensive part of the process. Developing a crypto exchange software from scratch requires hardware, specialized personnel, time, material, etc. And this is the part of development where startups often get stalled because the process typically takes 12 to 18 months. And it can cost somewhere from $100K to even $500K. Whether the cost is at the lower end or higher ultimately depends on the quality of the developers and the resources they have at hand. 

Blockchain Integration

Integrating a blockchain is easier; than people think they are. All the blockchains have their standard of instructions, and the source code is often public. But, keep in mind that you will need developers on your team who know the language to interpret the code. Different blockchains use different programming languages. For example, the Cardano blockchain uses the Haskell coding language; likewise, the Solana blockchain uses Rust, and not all blockchains rely on Solidity. The blockchain might also require you to pay them a fee or at least need that you stake an amount into the blockchain in their native coin as insurance, so this amount is variable.

Testnet

The next step is to stress-test the platform. After all, once the exchange gets launched, one cannot afford to lose functionality in any case. Exchange deals in the user’s funds, so businesses cannot afford to make a mistake. This step will not cost you anything, but it is critical because the bugs you clear during this stage will safeguard the platform from possible future hacks. So make sure to take your time with this step. 

Marketing

This step will cost a little, but it depends on how much you are willing to spend. It can be anything from a few hundred bucks to $10K. Like marketing a movie, one must list the exchange on sites like Coinmarketcap, Cointelegraph, or CoinGecko, conduct airdrops, and create ad campaigns to attract potential users to the business. The initial success you see from your campaign will determine the future of the exchange business. Many, many startups underestimate this step, and they pay their price for it.

Launch

The final step of the crypto exchange development life cycle may seem easy enough, but it is important not to rush into it. A launch has two steps; a soft release launch and an official launch. A soft opening is often done with limited functions to bring in hesitant users and to reel them in with the promise of the complete product. And this can even be a part of the social media marketing campaign. Once the platform gets launched, it is officially a full-fledged business. And this will not cost you anything.

So, adding up all the costs mentioned, we can estimate that developing a crypto exchange platform in the US in 2022 will, at best, cost up to $850K in initial investment.

How can we reduce this crypto exchange development cost?

Firstly, one must wonder if it is possible; to reduce costs during the development life cycle. Yes, it is possible.

As the title of this post suggests, white label crypto exchange software is the key to solving the problem. It will not end all solvency problems, but it will ease the stress immensely.

What is a white label crypto exchange software? 

  • Beta Tested (Bug-Free)
  • Readymade
  • Customizable
  • Secure Encryption
  • In-built Payment Gateway & Wallet

White label exchange software is a pre-tested, readymade crypto exchange software sold to entrepreneurs keen on starting an exchange of their own. White label software is a customizable product, flexible enough to be tailored to fit any design choice. The software can be custom encrypted for the buyer. Furthermore, these white label solutions come with their in-built payment gateway and wallet. Most notably, the cost of the white label software can range from $8K to $15K, which is comparatively better when considering the $100K – 500K development cost.

The reason to stress the importance of the white label software is that the costs from none of the other steps are compromisable. The cost of the business license from the SEC is mandatory. Although the marketing cost is variable, it is not wise to skimp on marketing, especially for a startup. The blockchain integration cost is non-negotiable because the underlying blockchain technology is necessary for the crypto business. That leaves the white label crypto digital cryptocurrency exchange software as the only avenue to save finances. 

Wrapping up

As we discussed, white label software is a much more cost-effective solution to starting a business than building one from scratch, not to mention its utility. 

However, it is crucial to approach the best white label cryptocurrency exchange software provider for developing your digital asset exchange platform. Professional software providers have the personnel and the resources to provide guidance, technical support, and assistance in the long run. Approach a professional software service provider now.

Talk to crypto exchange developers