In the recent two to three years, Blockchain and Cryptocurrencies have impacted several households worldwide since their inception in 2008. A lot of tech giants and emerging startups are working towards the goal of incorporating Blockchain technologies and cryptocurrencies. One of the booming business models in the web3 space is the cryptocurrency exchange.
A cryptocurrency exchange can help people to generate a lucrative amount of money through various streams of transaction fees.
Statistics related to Cryptocurrency exchanges.
In the last decade, the price of bitcoin has increased by approximately 540k %, and nearly 300 million people use or hold crypto tokens. According to the tech jury, more than 300 cryptocurrency exchanges offer trading services to their customers. Binance is one of the largest cryptocurrency exchanges, with a 24-hour volume of USD 29. Following Binance, HBTC has USD 14 Billion volume and Hydax finance a USD 12.19 Billion volume. This shows how demanding cryptocurrency exchanges are.
This blog will discuss all the necessary steps to build a cryptocurrency exchange from scratch.
How to build a cryptocurrency Exchange Business in 10 easy steps?
- Learn about the competitors and do market research.
- Choose a region or country where you would like to provide services.
- Select the type of Cryptocurrency exchange, such as decentralized or centralized.
- Design an architecture.
- Hire a legal team to guide you with the KYC and AML process.
- Find a good team of developers or a Blockchain development agency.
- Build some unique features and enhance security.
- Partner with the payment processors like Paypal or UPI.
- Do the beta testing with Initial customers.
- Offer good customer support to the Users.
# Step 1: Learn about the competitors and do market research.
It is essential for a beginner to identify competitors and research them. This would help you to know the features you need to build and some enhancements you can make to the existing ones to attract more crypto users.
Cryptocurrency markets are quite volatile. Hence you need to do in-depth market research and know if it is the right time and opportunity to launch the cryptocurrency exchange.
# Step 2: Choose a region or country where you would like to provide services.
Determine the right location or country to begin a successful cryptocurrency exchange product business. Few the countries like Nepal, Ecuador, Bolivia, China, and Russia are not in favor of cryptocurrencies.
To begin with, you should choose some countries that support blockchain and cryptocurrencies. Some countries where you can launch your exchanges are Australia, Malta, European countries, Singapore, America, and many more.
# Step 3: Select the type of Cryptocurrency exchange, such as decentralized or centralized.
It is important to decide the type of cryptocurrency exchange you would like to develop. Therefore you should learn about some major types of cryptocurrency exchanges that already exist in the market.
Some common types of Cryptocurrency trading exchanges are hybrid exchange, Crypto derivatives, p2p Crypto Exchange, Decentralized Crypto Exchange, and Centralized Cryptocurrency exchange.
# Step 4: Design an architecture.
Based on the type of cryptocurrency exchange you choose in the previous step, start working on the trading platform’s basic wireframe design and architecture. While working on the exchange, you should take care of some important components:
- A user-friendly interface
- Admin control panel
- Multi cryptocurrency wallet
- A high-performing trade Engine
# Step 5: Hire a legal team to guide you with the KYC and AML process.
While you build a cryptocurrency exchange, you must ensure that no illegal activities are happening through your exchange, such as money laundering. Therefore, hire a dedicated legal team to work on customer onboarding and verification.
They would also work with the regulations related to the cryptocurrencies where you want to launch them. Make sure that your cryptocurrency exchange is regulatory compliant with the rules.
# Step 6: Find a good team of developers or a Blockchain development agency.
This is the fundamental step out of 10 steps here, and you will need to begin the development of the crypto exchange. As an entrepreneur, you have few options, like hiring an in-house development team or outsourcing your work to the best blockchain development company.
Many blockchain development companies offer cryptocurrency exchange scripts and complete end-to-end development, but choosing the correct one is quite essential.
# Step 7: Build some unique features and enhance security.
Recently, there have been quite a few instances where millions of funds have been compromised. Due to many security loopholes and improper security measures, many cryptocurrency exchanges lose money. Hence while you develop, ensure you integrate some security measures like Registry lock, two-factor authentication, SQL Injection, Jail Login, and much more.
# Step 8: Partner with the payment processors.
You should partner with a payment processing company to process the payments in fiat currency by the users. A payment processing company would settle the payments faster and offer your customers a convenient and best user experience.
# Step 9: Partner with the payment processors like Paypal or UPI.
Beta testing would help you understand the mistakes or the bugs in the cryptocurrency exchange that you can rectify. Once the testing process is completed, you can deploy the final product on the server and launch it publicly.
# Step 10: Offer good customer support to the Users.
Once you have launched a cryptocurrency exchange, deploy some mediums so your customers can instantly interact with you. It is essential to offer good customer support to the initial customers as this will help you make a good foundation and attract more customers.
With the increasing demand for cryptocurrencies and governments working on the regulations, it is proven that cryptocurrencies are here to stay. Businesses or companies looking to build a cryptocurrency exchange with the most demanding features are more likely to stay ahead of their competitors.
If you are looking to build out a cryptocurrency exchange, such as a centralized exchange, NFT exchange, or any other exchange, we can help you. Our blockchain development experts offer some great development services and have experience building an advanced trading platform.