How to Start a Cryptocurrency Exchange? — A complete Guide
The cryptocurrency market is eventually showing some financial and revenue growth due to the rise of various business ideas and opportunities. Among those options, the only one business idea that stands out in terms of ROI and innovation is ~ Cryptocurrency Exchange.
Crypto Exchange is nothing but a digital platform that enables the trading of cryptocurrencies seamlessly. As the growth of digital currencies is rising, it directly affects the user base of these trading platforms. Besides, crypto exchanges contribute more to the crypto ecosystem than other platforms. They are considered to be the potential future of the financial system with remarkable benefits. This is the reason why every budding startup or entrepreneur is curious to start a cryptocurrency exchange platform.
Start a Cryptocurrency Exchange
So, as a startup who is looking to start a cryptocurrency exchange, whether it may be Centralized, Decentralized or Hybrid exchange, then you should be aware of how to start one cost-effectively. As each type has its own benefits accordingly, it may lead to some confusion in the early stages of the development process.
To avoid those doubts on launching such a lucrative platform, this blog will guide you with basics of how to start one, and how you can be benefitted from this platform.
Let’s begin with the…
Incredible benefits of Starting a Cryptocurrency Exchange
Before starting this lucrative opportunity of creating a good business platform, you must be aware of the reasons for creating one. For that, knowing the benefits of this cryptocurrency exchange will be much helpful for your launch. On that note, get some insights on how this platform is beneficial for startups like you, so that you can create one to earn such beneficial profits and revenue.
Generates Lucrative Revenue
How do crypto exchanges make money?
This might be the question from the majority of crypto startups like you.
To be more frank, crypto exchanges are a trustworthy business idea to meet your expectations financially. They offer diverse trading options to users and collect relevant fees for trading. Precisely, modern-day crypto exchanges come with inbuilt wallet support, third-party plugins for payment, and more. So when you start a cryptocurrency exchange you earn from various service offering fees.
Futuristic Growth of Business
Cryptocurrencies are growing in the financial market with increasing usage and an active user base. The latest cryptocurrency market cap report from Statista also reveals the same. The reports highlight that the cryptocurrency revenue is expected to reach US$64.87 billion by 2027. Also, an individual user’s average revenue in the cryptocurrency market is estimated to be US$56.19 in 2023. Eventually, starting a cryptocurrency exchange platform will be a guaranteed future financially as well.
Innovation And Recognition
As stated earlier, Crypto Exchanges are always upgrading itself with the latest techs and innovations. As a result, it adopts user-demanding features and top-class security which makes them prevail in the crypto space. Further, starting a cryptocurrency exchange with the necessary technical updates, gives the users seamless trading. Such uniqueness keeps your business ahead of your counterparts. And, it prevails in the trust of millions of users through greater brand recognition.
Global Reach
The crypto marketplace is spread across the global nations with incredible accessibility. So when you start a cryptocurrency exchange, getting connected with global business partners becomes simple. The multi-language and currency support further strengthens the possibility of attracting global users. As a crypto exchange platform owner, you might get fond of the increased user base and new profitable opportunities.
Reaching Enterprise Goals
As mentioned above, starting a crypto exchange platform will be a better hope for huge ROI for startups. Not only that, keeping your users satisfied with seamless performance will maintain your startup business with long term trust of those users. Eventually, your platform scores well with popularity and branding ending up meeting the enterprise goals in the market.
Summing up all these benefits, you may be curious to start a cryptocurrency exchange platform. Right!! Without any delay, let me shed some light on…
How to Start a Cryptocurrency Exchange Platform?
This query is becoming popular among the business people, as this platform tends to offer various beneficial profits. Also, the answer to the question is already known to everyone in the market.
To be more exact, developing a cryptocurrency exchange platform can be achieved by different methods. And each of those methods has their own pros and cons which can affect the business growth. Let us see one by one. To start with the first one…
By Freelancing or Outsourcing
Freelancing is the way of hiring professionals for your crypto exchange project. The freelancer works independently and they don’t belong to any company. On the other hand, outsourcing is similar to freelancing, in which a contract is maintained between the contractor. In these two methods, the process of hiring professionals might be an easy task. And, you can significantly limit the development cost as well.
But before hiring them, you should be aware of their technical skills and access to using their technologies. Because these are some essentials to overcome the real-time challenges. In the meantime, you have to monitor the person and have to get regular updates on your project about the latest works. And, you have to rely on his/her work and performance until the project’s completion.
This kinda seems to be more of a troubling method for startups like you. So, the next one would be…
Creating a Crypto Exchange on your own
Creating a crypto exchange in your own effort must be a tedious process. It requires sound technical and programming knowledge. Also, you should have basic understanding about the tools required for developing this exchange platform. So before starting, make sure you are proficient in your programming skills and have sound knowledge in handling those tools. If not, you will end up with difficulty.
However, if you are unaware of trending market technologies, then the exchange platform will be outdated. Also, real-time maintenance and technical glitches would be difficult with this method.
I think the above two methods are somewhat not suitable for startups like you who wish to enter into the crypto world instantly. So, finally I suggest that,
Approaching a Crypto Exchange Development Company
To overcome such difficulties that you face in hiring a freelancer or outsourcing, seek professional guidance from a reputed cryptocurrency exchange development company. They would definitely guide you with the process of developing a crypto exchange platform for your business. Here they will provide you with a streamlined development process and stringent testing procedures to avoid any technical hassles.
Basically, when you approach the crypto exchange developers from a prominent development company, they would offer you different ways of creating a platform. They are,
Development from Scratch
Development from Scratch involves the process of creating a crypto exchange from the ground level. The process starts from the origin point. Each section of the process is carefully examined through multi-level testing. Hence it requires more time and cost than other development methods. But, you can review and incorporate your business ideas in this method. So there is enough time to evaluate innovations that work when you start a cryptocurrency exchange platform. As a result, your crypto exchange becomes robust and only requires minimal maintenance. But the time and cost consumed in this method will be larger compared to other methods.
Using a White Label Software
White label crypto exchange software is a prefabricated solution to start a cryptocurrency exchange platform. It has all the basic features and functionalities of a crypto exchange platform. You can customize the solution to get them to match your business services. Like, you can change the theme, logo, interface, and features with the brand name. The time taken to customize the platform is also minimal. As a result, the associated cost would be minimal in this method. This method can be a preferred one for startups like you for a cost-effective launch.
Also, the other method they would offer is by,
Using the Crypto Exchange Script
Crypto exchange scripts are readymade solutions representing the features of the existing exchange platform. For example, Binance is a top-notch crypto exchange that offers various trading options. The binance exchange clone script contains all the essential features and provisions of the Binance exchange. Making use of this clone script, you can launch a crypto exchange platform similar to Binance Exchange successfully. Also, you can customize the particular script features as per your business needs. Thus this method also limits the time and cost to start a cryptocurrency exchange business.
So, this method is a perfect choice when it comes to cost and time factors. Also, for a budding startup who wish to enter into the crypto space, using these crypto exchange scripts will definitely be a reliable one.
Now that you have a clear understanding about the methods of developing a crypto exchange platform. You might be still confused on which one to prefer or go to?? Right!
So to make it simple, have a look at the brief details of each method which will make you feel at ease to decide on.
Start a Cryptocurrency Exchange
Once you have selected the right method to start a cryptocurrency exchange platform for your startup business, it should be up-to-date with recent technologies and undergo real-time updates. For that, you should definitely seek assistance from the professionals of a reputed crypto exchange development company. Keep that in mind too.
Additionally, as a startup, you should be aware of how your crypto exchange platform will work and what are the features that should hold? To make it easy for you, I have sorted out the…
Must-Have Features to Start a Cryptocurrency Exchange
Features are kind of responsible for the seamless working of your crypto exchange platform. The more feature-rich platform, the more the users you tend to attract. Let me project the essential features as core and security features for better clarity.
Core Features
Admin Console: It is a control unit of the exchange platform giving authority to the platform owner or administrator to manage financial transactions, user information, and dispute clearance.
Interactive UI: The interface should be user-friendly and contain information about user data, trading charts, and fund-related options.
Liquidity API: This is the feature that manages the liquidity of the crypto exchange platform at a required level. The interface connects with multiple liquidity sources to maintain the required liquidity.
Wallet integration: Crypto wallets safeguard the crypto assets of users in a secure wallet environment. Multicurrency wallet integration would be an added advantage that can be used for multiple assets.
Order matching Engine: The order matching engine manages the orders between the buyer and seller. When a new order is placed, the order matching engine relates it to existing orders.
Payment gateway integration: The payment gateway is the interface that processes the payments in the exchange platform. Usually, they support multiple payment options like card payments, bank transactions, and more.
Affiliate or referral programs: Referral programs are a way to increase the user count through the existing user base. The user who refers to a new user will be rewarded through the referral program.
KYC/AML module: It is the module that manages the KYC details of the platform users. You can also implement automated KYC verification when you start a cryptocurrency exchange platform.
Margin trading: Margin trading has become the must have feature in a crypto exchange platform nowadays. In this method, the user can borrow funds for trading from the trading platform.
Multi-currency support: With this feature, the user can hold and trade with multiple currencies. Even some exchanges allow local fiat currencies. Hence global users can easily trade with their convenient currency.
IEO launchpad: The IEO launchpad option allows the users to list their own tokens in the exchange. With the increasing need for crypto token development, this feature becomes necessary in modern-day exchanges.
Staking module: This feature allows the user to earn passive income by staking their assets. As a result, the liquidity of this crypto exchange platform will increase resulting in better performance.
These are the must-have features, to start a cryptocurrency exchange platform with efficient working. Meanwhile, to ensure a secure trading experience, the exchange platform should be tailored with top-class security features. So let us just glance through…
Security Features of a Crypto Exchange
The following are the essential security features a crypto exchange platform should be furnished with.
2FA Authentication
Data Encryption
Anti-distributed Denial Of Service (DDoS)
Server-Side Request Forgery (SSRF) Protection
SSL Integration
Escrow Mechanism
With these astounding features, the crypto exchange platform is more appealing to users and platform owners. Giving your users the demanding features on your exchange platform increases the user contribution. This is the winning strategy behind many successful crypto exchanges ruling the crypto market.
However, the prime component behind every successful and popular cryptocurrency exchange is the ‘revenue’. So when you start a cryptocurrency exchange, you should know the revenue-generating opportunities. Get to know…
How can you make money by Starting a Cryptocurrency Exchange Platform?
As I have mentioned earlier, Crypto exchanges are the top lucrative business model in the crypto space. This is because of their services and revenue-making capacity. When you start a cryptocurrency exchange you can earn in the following ways. They are,
Revenue from fees
Fees are the primary source of earnings when you start a cryptocurrency exchange platform. They earn from a variety of fees through their service offerings. That includes
Trading Fee: This is the fee paid by the traders for each buying and selling transaction. The fee structure is not common across the exchanges. However, it varies based on the exchange’s trade volume and policies.
Listing Fees: The IEO launch pad feature allows the users to list their tokens in the exchanges. For each listing, the user has to pay the exchange. This listing fee varies from exchange to exchange depending on their reputation.
Withdrawal Fees: Some exchanges charge for withdrawing funds for particular cryptocurrencies. The fees are mandatory in some exchanges even if the funds are withdrawn from the native wallets.
Revenue from additional services
From Trading features
In Margin trading, the user borrows money from the platform for trading. The user has to pay the interest on borrowed funds while returning the principal funds. Further, the exchange can charge fees for derivatives trading, especially in future and options trading. The fees might include position funding and liquidation.
The staking services may take a certain percentage of interest given to users as fees. This is also applicable to lending and borrowing services offered by the exchange platform. So start a cryptocurrency exchange with more trading features to earn huge revenue.
From Promotions and Subscriptions
Crypto exchanges can make money from promotional activities, partnerships with brands, and event sponsorships. By displaying ads or any other format, they can make additional revenue. In addition to that, paid subscriptions, giving access to API, market-making, and liquidity provisions also generate passive income for exchanges.
So overall, when you start a cryptocurrency exchange, there is no shortage of revenue generation. Also, the demand for crypto exchanges across the globe is always higher. Their global fame also makes them a perfect business model for startups and entrepreneurs. Hence, owning a crypto exchange leaves your worries about future scope and business reputation.
Finally…
On the whole, crypto exchanges are considered to be a perfect business option in satisfying every traders’ demands. Also, the expansion of crypto exchanges with recent tech trends will uplift many exchange owners’ lives greatly. As starting a cryptocurrency exchange is an ultimate goal for many startups like you, It is highly advisable to reach out to the professionals in the market.
Speaking of them, I highly recommend that you connect with a prominent Crypto Exchange Development Company who might help you with that in your business path. With expert guidance and practical awareness, the professionals from the company will be your best companion. So that, it can keep the users satisfied and lead the competitive crypto market. Also, you can keep the business goals and reputation with a robust, secure, and feature-rich crypto exchange platform. So leave thinking away, and initiate your business endeavors to start a cryptocurrency exchange today!
How to Start a Cryptocurrency Exchange? — A complete Guide was originally published in CryptoStars on Medium, where people are continuing the conversation by highlighting and responding to this story.