Cryptocurrencies like Bitcoin are finally at the gates of the adoption phase. Those who invested in Bitcoin earlier are now sitting on small fortunes. Thus, many investors and individuals across the world are moving towards Bitcoin. Even the US SEC is coming around to crypto.
What is Bitcoin? It is the first cryptocurrency, a byproduct of revolutionary blockchain technology. Bitcoin is the first cryptocurrency that existed in the marketplace. All other digital currencies are called Altcoins.
The prominence of Bitcoin created the demand for crypto exchanges. For crypto trading, users need an exchange website or an app. Thus, many startups and entrepreneurs leaned toward building a crypto exchange. One of the best things about cryptocurrencies is that anyone can start an exchange platform with the help of a professional crypto exchange solution provider.
This blog is to illustrate the process for an entrepreneur looking to build a cryptocurrency exchange platform. This blog covers how to build a cryptocurrency exchange platform easily. It will also cover all the features and benefits of creating a crypto exchange.
What is a Crypto Exchange?
A crypto exchange is a trading platform where one can buy, sell, and trade any cryptocurrency. A crypto exchange platform has all the cryptocurrencies listed on it for trading. It simplifies the process of trading crypto with fiat, and some exchanges accept credit/debit cards.
Users can buy and sell crypto using credit/debit cards at the current market price. And there are many popular crypto exchange websites with millions of users.
There are many types of crypto exchange platforms in the market
- Centralized exchange
- Decentralized exchange
- Hybrid exchange
- Peer-to-Peer exchange
- Ads-based exchange
- User-to-admin exchange
A crypto exchange platform is a lucrative business through and through. Every crypto deposit, transaction, and withdrawal is taxed. Thus, by collecting fees for these actions, administrators generate ample revenue. And this might explain why entrepreneurs are interested in this field.
I hope you are intrigued by now. Let us now get to the core of the subject.
How to Build a Cryptocurrency Exchange Site?
If you are a visionary, envisioning the future as a decentralized digital utopia, then you are in the right place. Let me list the essential steps to follow so that you can launch a first-class crypto exchange platform without any obstacles.
Choose the Type of Crypto Exchange
The first step is to choose the type of crypto exchange you want to launch. Presently, there are three different types of platforms in the marketplace.
- Centralized Exchange (CEX)
- Decentralized Exchange (DEX)
- Peer-to-Peer Exchange (P2P)
A centralized exchange is a traditional crypto exchange. Here users can trade crypto, but the platform will act as the middleman for every transaction. Thus, the platform will collect fees for all the trading. Order book model, binary trading options, and a user-to-admin exchange are part of the centralized exchange.
A decentralized exchange is an open trading platform. This exchange works without the interference of an admin. Here, user privacy is highly protected. Also, they have complete control over their funds. So many crypto traders prefer a decentralized exchange. In a DEX, users have higher anonymity compared to centralized platforms.
Peer-to-peer is a trustless system of exchange. Users do not have to know who they are trading with, and they do not have to trust them. And the platform does not interfere with the transactions. All transactions are in the hands of the user and are secured via smart contracts, thus eliminating the chance of foul play.
Do Market Research
Research is necessary for any idea; the more market research you do, the better. In this case, the crypto market is what you should understand. Starting at the history of crypto is the first step. Then study how it functions and the types of trade in the blockchain and crypto exchange platform. Study the comparison of the crypto market trends with the stock market trends and the macroeconomic landscape at the broad level. The crypto market is volatile, and any event can affect the market, and fluctuations can be random and unpredictable. You must be adept with this market beforehand.
Review the Laws and Compliance Requirements
The idea of crypto still does not react well in many major countries. Depending on which country your exchange platform will operate, understand the regulations of those countries. The law differs in every country so check the laws of the country you are planning to set up an exchange business. In the USA, crypto business operators must get licenses for equity transfer businesses. They must follow SEC’s rules and regulations. Likewise, each country has its own set of laws and regulations. Thus, consult a legal expert before starting a crypto exchange business.
Identify the Location to Build a Crypto Exchange
Determine the location where you are planning to create a crypto exchange website because licensing and regulations on crypto-based businesses depend on the county. Since financial institutions are against speculative assets like Bitcoin, some countries have high taxes on crypto businesses. For example, Portugal is one of the most crypto-friendly countries to start a business (although that might change).
Here is a list of crypto-friendly countries with a progressive attitude toward crypto-based startups.
- The United States of America
- Switzerland
- Slovenia
- Germany
- Singapore
- Malta
- The Netherlands
- Portugal
So you need to plan and analyze which would be the perfect location for starting the Bitcoin exchange business.
Funding the Venture
You must have enough funds to start, promote, and maintain the exchange. At the initial stage, secure enough capital and allocate it toward different aspects. Like other businesses, a crypto exchange business will flourish well if properly managed. Also, be aware of the fees charged by cryptocurrency exchange solution providers for licensing. They often fail to mention the legal requirements for setting up and maintaining the crypto exchange.
Project Feasibility
Project feasibility depends on the cost, time, and resources available to start an exchange and the regulations of the business. Other deeper analyses will be done by crypto exchange solution providers as mentioned below.
- Technical Viability
- Schedule
- Economic Feasibility
- Legal Feasibility
- Operational Feasibility
Find the Best Crypto Exchange Solution Provider
This is the vital part of creating a crypto exchange website. Because, at the moment, there are several crypto exchange solution providers in the marketplace. There are two ways that you can follow to build a crypto exchange. Either from scratch or by using premium crypto exchange software. But many startups prefer a ready-made crypto exchange script to create an exchange site. An exchange software is cheap, fast, and secure with all the customization and features.
Integrate Latest Features
Features play a significant role in all crypto exchanges. So features must be more effective for the users. Features attract many users from various countries and help to increase the user base. Here are some features that you must integrate into your platform.
- Limit order
- Market order
- Stop order
- Margin trading
- Bitcoin wallet integration
- IEO module
- Liquidity API
- Referral program
- Admin dashboard
- User dashboard
- Multi-lingual
- Bitcoin Payment gateway integration
- Site API
- Trade engine
- Automatic KYC/AML verifications
By conjoining these features, your users can get a better trading experience.
Implement High-level Security Features
Crypto exchanges have always been a target of cyber-attackers. Also, many crypto exchanges have lost their funds due to improper security systems and monitoring. So, here we list some high-end protective systems that you must integrate into your exchange website.
- HTTP authentication
- Biometric authentication
- Jail login
- Data encryption
- Two-factor authentication
- SQL injection prevention
- Anti-Denial of Service (ADoS)
- Cross-Site Request Forgery (CSRF) protection
- Server-Side Request Forgery (SSRF) protection
- Anti-Distributed Denial of Service
Integrating these security mechanisms will help you avoid cyber attacks and other fraudulent activities.
Deployment
Deployment is the final stage. You will get your fully furnished, ready-to-go live crypto exchange website. Once your exchange gets deployed with the help of a professional solutions provider, you need to market your platform in the space.
If you wish to start a unique crypto exchange business, consider these factors, and build your exchange website without problems.
The only thing you have to do is a unique business requirement and reach out to the finest exchange solution provider in the industry. One such finest provider in the industry is Coinsclone.
Why choose Coinsclone for building a Crypto Exchange Business?
Coinsclone is a leading cryptocurrency exchange development company in the industry. We excel in offering premium white label and exchange clone script solutions.
Coinsclone provides tailored crypto exchange software with all the trading features with integrated advanced security features that will avoid threats and other cyber attacks. We employ a team of developers, software experts, blockchain engineers, and UI designers to build you the best-customized software. We serve the crypto industry by providing the best quality and legit crypto exchange software.
Get an instant free live demo of our crypto exchange script now!
