As of now, there are already a lot of services that offer exchange services for crypto. Virtual currency is becoming more and more popular, and exchange platforms are becoming more and more sought after.
Not every well-known exchange is honest and reliable, so the market is still open to new and better companies.
What exactly is a Crypto Exchange Platform?
Start at the beginning if you want to know how to make a crypto exchange. A Crypto exchange platform is a website where people can buy, sell, and trade cryptocurrency. A cryptocurrency exchange works like an online broker in that users can deposit fiat currency (like US dollars) and buy cryptocurrencies with that money. Users can also trade one cryptocurrency for another, and some exchanges let users earn interest on the cryptocurrency they keep in their exchange account.
Three Most Common Cryptocurrency Exchange Development Platforms
Before you can make a crypto exchange platform, you need to know what kinds of platforms are already out there. So, let’s look at the three main types of platforms for exchanging crypto:
Decentralized exchanges (DEX)
There is no one or group in charge of a decentralized crypto exchange. The fact that no one is in charge of the crypto exchanger shows that its work is not subject to any orders from the center. It is a platform with no one in charge.
On decentralized cryptocurrency exchanges, you can trade not only tokens with different designs, like bitcoin or the more complicated ether, but also fiat money.
To use the service of a decentralized cryptocurrency exchange, you must first sign up on the exchanger and then verify your identity.
Centralized exchanges (CEX)
Centralized cryptocurrency exchanges have online platforms where you can trade both cryptocurrency and regular fiat currencies.
Before working with a centralized cryptocurrency exchange, each potential user must go through a mandatory registration process and then a complicated verification process.
Hybrid cryptocurrency exchanges
The hybrid crypto exchange solves the scaling problems that come with decentralized exchanges by letting users store and use their private keys. The high costs of trading on decentralized exchanges were a big worry for the people who made the hybrid crypto exchange. When you trade on a hybrid crypto exchange, there are no costs for the taker or the gas.
Also Read This: How To Start Cryptocurrency Exchange Platform- A Brief Guide
Five Challenges with Building a Crypto Exchange
To make a cryptocurrency exchange that works, you should know about some of the problems you might run into as you build it. Let’s look at each problem from the point of view of how to make a cryptocurrency exchange.
Safety of Crypto Exchange
When issuing a license for a crypto exchange, many places pay special attention to making sure that your users’ personal information is safe. By making a cryptocurrency exchange, your business will not only deal with money, but also with a lot of people’s personal information. Because of this, you should plan ahead to make a safe and secure cryptocurrency exchange service.
Keep the following in mind when securing your future cryptocurrency exchange:
- KYC, or “Know Your Customer,” is a process that cryptocurrency exchanges must use to find out who their counterparties are. It includes procedures for picking clients (criteria for who can become a client) and identifying them (data from passports and biometric data), as well as tracking and analyzing transactions.
- Anti-Money Laundering, or AML, is the process of recognising money laundering schemes based on an analysis of all the data. All of the data that is available is looked at to find suspicious transactions.
- In the future, KYT (Know Your Transaction) will be able to block bitcoin users whose coins are thought to be used in illegal schemes. In fact, KYT will help figure out where a user’s coins came from when they use them on a crypto exchange.
Scalable Architecture for Crypto Exchange
You can’t make a cryptocurrency exchange, of course, without first thinking about how the platform is built. Because platform architecture is so technical, it might be scary to the average business owner. At the same time, if you don’t go into too much detail, the topic isn’t much scarier than, say, thinking about how your house was built.
Your crypto exchange’s developers will be in charge of designing the architecture, but you’ll see that they base their assumptions on things like:
- Do you want to make a crypto exchange that is centralized or one that is not?
- How many people do you plan to serve at the same time?
- How fast should they be able to do business?
- How long should it be?
- How much work will be done behind the scenes by the exchange host?
- What front ends do you envision (web/mobile/desktop/etc.)?
As you help answer these questions, the development team for the crypto exchange juggles the different parts of your product, putting them together to make a stable, powerful crypto exchange platform.
Interface that’s easy to use
We’ve already talked about how hard it is to make a cryptocurrency exchange. Don’t forget about the easy-to-use interface to make it easier for your clients to use the platform.
The main rule is not to put too many things on the interface. We suggest that you make the interface with the fewest necessary parts. Think about colors as well. They shouldn’t be too light or too dark. Customers who use your app don’t have to spend a lot of time looking for what they need or trying to figure out where everything is.
System to protect against cyberattacks
If you don’t want your business to be vulnerable to cyber attacks, think ahead about how to protect it. Keep all of your information and that of your business in a safe place. Don’t forget about this important part. After all, if you don’t take care of your business’s security, you’ll probably lose money, clients, and maybe even the whole business.
How to Make an Exchange for Cryptocurrency Without Making Mistakes?
Based on our experience making cryptocurrency exchanges, we want to tell you how to make a cryptocurrency exchange without making any mistakes. So, let’s look at the most important things that will help you when you make your next product.
Determine MVP Features
With an MVP, you can start building a product. With MVP, you can test your idea and learn what your users want, what they need, and what they don’t need. When you’re making a cryptocurrency exchange, define the main features of your MVP. This will help you avoid making a lot of mistakes. First, build a base, test it, and then add features one by one.
Work only with a team that has done it before
To find the answer to your question about cryptocurrency exchange, you should only work with teams you can trust and that are made up of professionals. You could look for a good team on social networks or rating sites, for example.
If you need a great team of professionals for your project, the Suffescom Solutions team will be happy to talk with you about your ideas and help you find the best solution for your business.
Make a plan for marketing
A marketing strategy tells you what you need to do to move from the “we have a product and our first customers” stage to the “we want to grow” stage. The strategy gives answers to:
- WHY do we have to do this?
- WHO do we want to sell it to?
- WHAT do we sell?
- HOW do we sell?
- WHERE do we sell and how do we do it?
Don’t start unless you have a good idea.
You shouldn’t start making a product unless you know exactly what it is you want to make. If you and your team don’t have a good idea, it will be hard to figure out how to make a cryptocurrency exchange.
First, think about your product in detail, write down all of your ideas, and put them all together to form an idea. Then, start turning this idea into a real product that works.
What do you need to check before making a cryptocurrency exchange?
Now, let’s talk about the things you definitely need to do or check before you start building a crypto exchange, in terms of how to make a cryptocurrency exchange.
1. Monetization Strategy
If you want to make money with your business, which we’re sure you do, you need to come up with a plan for doing so. There are many possible choices. For instance, you could charge a certain percentage of the transactions that go through your exchanger. So, each time a user does something new, you will get paid.
Or, you can make different types of accounts that give you different rights. Users who want to switch from a basic account to a more advanced one, for example, will have to pay a certain amount per month.
2. Limits set by the law
When making a crypto exchange, here are some legal things to keep in mind:
- GDPR compliance. If you want to sell something in the EU, you should make sure your crypto exchange is GDPR-compliant. On May 25, 2018, GDPR, or the General Data Protection Regulation, went into effect. You can’t ignore or skip this step if you don’t want to get a fine.
- CCPA compliance. If you make things for people in California, you must follow the California Consumer Privacy Act (CCPA). The main goal of this law is to give people more power over their own personal information. If you want to sell to people in California, you must make sure that your cryptocurrency exchange platform is in line with the CCPA by January 1, 2020.
- Keep in mind that rules and regulations in different places may be different. Everything depends on where you want to set up your crypto exchange platform. So, whether your target markets are in Asia, the UK, Australia, or somewhere else, pay attention to the rules of each area.
3. Write standard contracts and rules
Prepare all agreements and policies you’ll need ahead of time. Without this, people won’t be able to use your platform at all. All of this should be done before designing and making the product, so that you don’t waste time on it later.
4. A look at your own market trends
Your own market analytics will be your biggest advantage, which you can show to people who use your platform. Of course, they can read about all the news and trends on the Internet, but it is almost impossible to find high-quality and personalized analytics.
5. Product for Multiple Platforms
Most people today choose products they can use on their phones, computers, and tablets. So, we suggest that you think about what kind of platform you want to make before you start. If you want people with different tastes to be able to buy your product, make an exchanger that works on all devices.
A Few Words on How a Crypto Exchange Development Works
What parts do you need to build your own cryptocurrency exchange?
It is where all the rules for trading are kept. Most of the time, this block would have an order-matching engine that compares buyers’ bids to sellers’ requests.
Create a wallet for more than one cryptocurrency
Keep in mind that each client is given a wallet. You’ll need a way to have it happen on its own. In reality, each client gets a number of wallets for different coins that work with your internal wallets to make sure that money transfers go as smoothly as possible.
Also Read Here: How To Create A Successful Decentralized Cryptocurrency Wallet?
An admin panel is a place where the people who run your platform can control it. It is usually based on roles and protected by hardware security keys.
Server for logging in
A server that checks and verifies the identities of your clients.
APIs are used to connect pieces of a building. They also help you connect your exchange to solutions from other companies. There are many things to connect to, such as liquidity providers, payment gateways, multiple blockchain explorers, trading bots, analytics, logs, and so on.
Create an Exchange Platform for Cryptocurrencies: Final Thoughts
There has never been a time when cryptocurrencies were more popular than they are right now. The market is still young, so there is still a lot of room for new ideas. Suffescom Solutions thinks that the market offers a lot of chances to be successful. Visit the cryptocurrency exchange development services page to find out how we can make your current product better or make you something completely new.
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