How to Start a Cryptocurrency Exchange Platform? A Complete Guide for Crypto Beginners
A History of Bitcoin Exchange Platform
Bitcoin is the world’s first cryptocurrency which was developed in the year 2008; it was given as a reward to the process involved in Mining. Apart from mining, the ways people tried to get Bitcoin in the earlier days was through trading on forums and Internet Relay Chat. This kind of exchanges completely depended on each party fulfilling their side of the deal. Then the development of an exchange platform sprung up and the first cryptocurrency exchange platform came live in March 2010. The first launched platform was Bitcoinmarket.com which is now defunct.
As years passed by the Bitcoin became quite popular, and the mining process became more difficult. The process of mining at least one bitcoin has become more complex. Some countries started to give attention to it positively and but few other countries started banning it stating it as an illegal business/tax evasion. The success of Bitcoin gave a reason for the launch of other Cryptocurrencies such as Ethereum, Ripple, Altcoins, etc.
This is the short history of bitcoin exchange platform development. Furthermore, in this article, you will get a complete idea about how you can develop a Cryptocurrency exchange platform and all the basic details you need to know about Crypto exchange development. Crypto exchange platform is gaining momentum in its growth as well as the number of users count these days. So, it will always be fruitful to launch an Exchange platform.
Cryptocurrency Exchange Platform
A crypto exchange platform is a market with the provision of services such as enabling users to buy and sell the Cryptocurrencies based on their requirements but charges a commission for successful transactions. The commission received becomes the main source of income for the owner of the platform.
The Income of a Platform Owner
One best way to earn Cryptocurrency is through the development of a Cryptocurrency Exchange trading platform. The platform owner doesn’t have to risk anything and based on the volume of trades, the commission for the platform owner gets added up.
The platform owner will not only benefit from the trading fee but also other sources of income such as from listing fees and Dark pool trading. The listing fees include the fees as a reimbursement for the addition of currencies which is have not been listed earlier and Dark pool trading involves the private trading which does not provide transparency, here huge investors and venture capitals make use of this platform to exchange assets at a reasonable price and the exchange platform will collect fees for these trades separately.
Other reasons to develop a Cryptocurrency exchange platform
Launching and running a Crypto exchange platform will be similar to starting a corporate from scratch. Even though it is little complex there valid reasons to start an exchange platform.
- The increase in the value of cryptocurrencies
- Increase in the number of users across the world
- Higher volatility in the crypto markets
You may have doubts whether the higher volatility in the crypto market may affect your business. There is no business without riskier terms. If there is volatility in Bitcoin then the market of other coins will also change. Will it be good for you? It completely depends on you. The market volatility provides opportunities for the traders and stabilizes the daily volume of the Cryptocurrency exchange platform. Only those holding a long term investment will lose. But as the owner of the platform regardless of the volatility of the crypto market, you’ll be able to earn from transactions carried out by the users.
Steps to Start a Cryptocurrency Exchange Platform
The exchange platforms allow transaction or trades to take place in these forms:
- Local fiat to Cryptocurrency
- Cryptocurrency to Cryptocurrency
Types of exchange platform which is currently present
Centralized exchange platform
Its a traditional form of exchange where a middleman will facilitate the transactions between the users and in this kind of exchange platform the trading fee will be near to 0.1-0.5%. The centralized exchanges offer higher liquidity even though security still is a problem in it since the user’s private key for their exchange account wallet cannot be easily accessed and will be controlled by the centralized authority.
- Will have high trade volumes compared to DEX
- Enables Fiat to crypto trades
- Has high functionality
Decentralized exchange platform
Decentralized exchange platform which is also called as DEX does not involve any middle man and the platform does not hold the funds of the user and serves only as matching engines for traders. DEX offers high security from hacks owing to distributed nodes. Examples of DEX includes Bitshares, Cryptobridge, Bisq, etc.
The hybrid exchanges involve combinations of both centralized and Decentralized exchange platform. This type of exchange is built to overcome the limitations in both the centralized and decentralized exchange platform. This helps to ensure that no third party holds and maintains custody for user’s funds.
So, based on your requirements choose the right type of exchange platform you want to develop.
Market research is one of the important strategies to make a business successful. The current market analysis helps to gain more insight about the limitations in the existing platform and helps to add more features on technical ground basis. Obtaining the big picture of the trending market helps to analyze who you will be competing against locally and globally. You can analyze these using Crypto calendars such as Coin desk, CoinTelegraph, Coin Idol, etc.
Target Audience analysis
In any business finding the suitable target audience is important as it will help to take the business to the next level. In the crypto world, it would be easy to work on those countries which have officially accepted Cryptocurrency for payment options. It would make all the process easier if jurisdiction is selected before company registration as it is important for accepting fiat money. Many countries such as the list given, will be a good target for your Exchange platform development. The countries including Switzerland, Gibraltar, USA, UK, Japan, Singapore, Luxemburg, Bermuda, Estonia, Belarus, Venezuela, Malta, France, Iceland, Australia, Brazil, Liechtenstein, Barbados, Solvenia, Hong Kong, Dubai, Georgia, Germany, Few countries in South America are top priority countries.
Once you have set the jurisdiction to find the competitor’s exchange in that particular Jurisdiction. Analyze the different attributes they offer in order to top the competition. Always remember competitor analysis is crucial.
Regulations in the chosen jurisdiction
Assess the regulation of the countries selected in order to avoid any lawful issues. Launching your platform in the cryptocurrency-friendly countries will help to dynamically expand the users in the countries.
Hiring a legal Team to Counsel
Once the target is been analyzed and the Regulations are being assessed you can select a committee to ensure the exchange Platform development is on the constructive path. To make sure the safety, you can introduce KYC in your exchange platform to while you qualify the users in your platform. This will help to reduce the risk on your end to minimal. Also consider Anti-money Laundering before registering your company.
Gather the funding for your Project
Analyze the complete budget to bring your project to live. In order to set up your own cryptocurrency exchange approach an experienced Cryptocurrency exchange development company. Your budget should be based on the cost of technology, Cost of solution provider, Cost of Government and its regulations, Initial advertising, etc. Make sure the funds also cover the futuristic attributes of your projects in the long term.
Building a Cryptocurrency Exchange platform
There are three ways by which you can develop an exchange platform.
- White label solutions- Many cryptocurrency exchange platform development companies provide white label solutions where you can buy the White label software and customize the platform based on your needs.
- Open source solutions- Open source software or platform development can be shared freely, used transparently, and is developed for the communities good rather than owning a platform like a Business or a company.
- Custom software development- In this way, you will be building a platform from scratch but it needs more work compared to the former ones.
In order to develop a platform, you will need the right set of Crypto Exchange developers to develop a standard platform. Even if you are so good at programming it will take time.
But you can instantly launch an exchange platform by getting a ready-made script from a Bitcoin and Cryptocurrency exchange script providing company. This will save the amount of time and money spent on developing the platform on the whole.
Pulsehyip is a robust Cryptocurrency exchange platform development company which allows you to develop your platform at an affordable cost. Once you have decided on things about the above features move on to the technical part of the Exchange platform development.
Important Features to be embedded in an Exchange platform
|Initial Exchange Offering Module||Its just like ICO’s but will have Crypto exchange platform as the middleman. Its a crowdfunding strategy used by most of the startups and enterprises. Unlike ICO, in IEO the exchange platform will provide the tokens to the investors on behalf of the startups looking to raise funds.|
|Security token Exchange||Security token exchange is a platform that facilitates buying and selling of security tokens for the investors. Getting the security tokens listed in the exchange platform features will you help to attract a large number of investors. As an increasing number of firms have started to adopt Security tokens, it will be profitable on your side. The major features of STOs such as Major boost of global investor pool and high security and transparency of their investment records will help to boost the user mass of your platform.|
|Trading Bot||Trading bots makes the trading on the exchange platform more simple without the need for the user’s “continuous watch” to trade because of the works of Trading bot on behalf of the user’s cryptocurrency exchange . This will positively impact your platform.|
|Investor dashboard||Investor dashboard will give a clear idea about investments made by the investors. The complete record of all the investment activities done by the investors will help the users to analyse their investment portfolio.|
|Issuer Dashboard||You can develop your own Admin panel with advanced Platform management systems to manage your platform.|
|Leverage Trading||Here, the traders on a platform can borrow certain amount of money from the exchange that controls the investor’s trading account. This will help the investor to profit from both price fluctuations and difference in the exchange rates.|
|Referral Program||To increase the number of users of your platform you can include referral program such as an affiliate program carried out by popular exchange platforms like Binance, Coin base, BitMEX etc.|
|Multi language support||Including this feature on your platform will help you to attract more native people from different countries|
|Mobile applications||Developing mobile applications for your exchange platform will help to increase your market among mobile users because of the increased user count of android and iOS.|
|Multicurrency wallet||The multicurrency wallet development such as Bitcoin, Ethereum, Litecoins etc will help in the to drive more traders to your platform.|
|Matching engine||The matching Engine facilitates matching a buy and sell orders of trader.|
|Improved Security features||Include two factor Authentication using Google passcode, Multiple ID for KYC/AML attributes, Manual processing of large amount of transactions from the Admin side, Build a firewall for in order to detect a malicious activity, Provide authorized and protected access to the users, Notifications about any suspicious activity to the Admin and Always backup your data now and then. Other technical features include Administrative notifications if there is any inadequate activity, Availability of User log file and, Regular calculations on transactions.|
Pulsehyip is a major cryptocurrency application development company which builds applications with enhanced attributes for Android and iOS.
For the conversion of fiat currency to cryptocurrency, you will need a payment processor such as a bank. With the help of a payment processing partner and payment gate-away API, the users will able able to add or withdraw funds as they want. You can impose a reduced transaction fee in order to top the competition.
Liquidity is a significant factor for the success of an Exchange platform. Higher trading volume, Greater acceptance of the currency, the number of Crypto exchange platform drives the liquidity factors. In order to manage the liquidity of your exchange platform, you will have to integrate other existing platforms to your cryptocurrency exchange’s liquidity position. This can be carried out through modern API interface that helps to share liquidity and trade volume data between two exchanges. Being in a crypto exchange network will also help to increase liquidity.
Provide 24X7 Customer support
This features will ensure that you have happy users and will also help to support the budding traders of a platform. In case of any discrepancies for the users, the customer support option will play a vital role.
Arrange a team to handle legal compliance
If you are about to launch your platform in various countries then this process is important, the legal team will help to analyze and sort out all the legal issues you may face and will help with the laws of various jurisdictions. They will also help you to handle the emerging laws in a country.
Publicizing your Platform
You can start marketing your exchange platform by using Crypto calendar like Coin Desk, Coin Telegraph or you can go for advertising in social media, forums, and through Google. Discussing in well-know Communities such as Bitcointalk, Crypto talk will help you you gain popularity along with the introduction of your platform to various messenger like a telegram, Reddit, Slack, etc., The major impact of your business will be from social media, so never forget to include it in the list. Also, email marketing will allow you to increase the user number of your platform.
How Much will it Cost to Start a Crypto Exchange Platform?
In order to develop a crypto exchange platform, one needs to know all the information regarding the development of a platform from the scratch. Not only that the platform owner should have an extensive knowledge about platform he is about to develop but also should be ready with the needed features in his platform based on his/her current trend analysis.
To develop a platform you can hire a developing team but the ultimate cost of this process will be overbearing. Instead, you can choose to acquire a Cryptocurrency exchange website script from a Cryptocurrency exchange platform development company which would cost you -4x of the cost of developing an exchange platform from the developers.
Pulsehyip is a cardinal Cryptocurrency exchange development company which will help you to develop your exchange platform at a reasonable cost. The ready made script allows you to launch your platform dynamically with revolutionary features.
Get free demo for cryptocurrency exchange platform development!