Creating a Crypto Exchange Platform: Tips and Strategies

A cryptocurrency called Bitcoin was introduced in 2009 by an unknown individual who went by the pseudonym Satoshi Nakamoto. It has since become an industry leader due to its longevity in comparison to other coins. More than any other digital asset, Bitcoin boasts the largest market capitalization with a robust technology ecosystem that regularly upgrades its codebase. In addition, metrics suggest that more people use Bitcoin than any other currency for digital trading purposes.

The second coin that is also good to bet on for investors is Ethereum. Ethereum improved Bitcoin by introducing smart contracts, which allow for more complex operations and tokens. Despite significant scalability issues since its launch at the end of July 2015, Ethereum today is the most actively used blockchain.

The market for crypto coins and tokens is constantly growing, and today there are more than 22 000 digital assets available. With them, there are tons of opportunities to profit — whether you are an individual trader or a business owner looking for a place in this new emerging economy.

Ready-Made Solution or Starting from Scratch?

If you ever considered offering other people an opportunity to trade and invest in these currencies, you probably contemplated building your own exchange. There are many ways to do this — start from scratch or use white-label cryptocurrency exchange offerings from third-party providers.

Before starting a crypto exchange setup, you need to do a lot of research, which requires considerable time. You or your team must have abundant technical knowledge, resources, and expertise to turn a concept into a fully functioning platform.

However, as was mentioned, you can also use ready-made solutions from third-party providers. Every solution provider has services that give users an edge in the industry. Their solutions include everything a good exchange needs: trading platform, integrated wallets, market data APIs, liquidity implementation and transaction processing.

Making the right decision between building a crypto exchange from scratch or choosing ready-made solutions depends on what you are actually looking for. White label solutions can be an efficient way to enter the market quickly with minimal cost and effort. Alternatively, building a crypto exchange from the ground up will provide you with more freedom in terms of designing and individualizing your platform.

What are the Steps to Build an Exchange?

Here are some key steps that are required to start building your own crypto exchange: 

• Performing complete market research
• Identifying which country where you would like to locate your business
• Making sure that your exchange adheres to all legal regulations
• Hiring experienced developers who have built crypto exchanges before
• Developing/Looking for robust technology solutions
• Ensuring that your venture outfitted with solid security features
• Focusing on your target audience
• Providing customer support 24/7
• Marketing an exchange through social networks or by making useful content for your users

If you want to start a crypto exchange business from scratch, it’s important to understand it takes a large amount of time and money. 

Make Security Your Top Priority

As we know, security in the crypto market is one of the most important concerns and issues. With the rise of digital currencies, cybercriminals are also becoming more and more active. Among the targets of their attacks are investors, exchanges, and wallets.

Also, in a decentralized crypto market, there is no regulating authority that guarantees the safety of users’ funds and private keys. That’s why it is essential that you hire qualified developers and security experts who will help you build a secure and reliable system.

• Use Cold Storage of User Funds

You should make sure that you are properly storing your users’ funds. This is most often done with cold wallets — a form of offline storage where the actual private keys never leave a paper wallet or hardware device.

Cold wallets are much more secure than online storage solutions. A cold wallet ensures that even if your exchange’s servers get hacked, user funds cannot be compromised because they are stored separately from the network and not connected to it at any point.

• 2FA feature

Also, a great security measure to implement is two-factor authentication (2FA) for your app and PC platform, which adds another security layer to users’ login process. A majority of providers out there offer crypto exchange solution software with 2FA by default. User accounts can be protected by SMS or a one-time password generated within a specific authentication app, such as Google Authenticator.

• KYC

In addition, there should be a customer authentication process in place to ensure that users are using real identity information when signing up. This will protect your platform from money laundering and will help to adhere to all regulations.

What Coins to Include on Your Platform?

With the crypto industry’s growth, investing has become more accessible and more secure. This is an existing space that shapes innovation and offers access to new technology. As digital currencies continue to take the attention of the broader public, more and more options for them appear on the market. Today, the digital market has over 22 000 cryptocurrencies.

Most of the owners of cryptocurrencies treat them as long-term investments, but they can also be used to make some purchases. However, the volatility of the market makes investing in cryptocurrency risky, and It’s important to know what you’re getting into before you buy in.

As a general rule, the more — the better. Ultimately, you want to list assets with high liquidity and big transaction volumes/activity. That way, you will alleviate the liquidity risks and ensure that trading on your platform will be smooth at all times.

For example, these coins (among others) are ideal in terms of liquidity: Bitcoin, Ethereum, Binance Coin (BNB coin), Cardano, and XRP. 

Conclusion

You must understand that investing or doing business in the crypto industry is still a risky endeavor. However, it is worth the effort if you are persistent and professional. 

The exchange market is one of the most profitable businesses in the cryptocurrency sphere, and starting your own crypto exchange is a great way for you to become a part of this growing and exciting industry.