Building a cryptocurrency exchange is one of the most profitable businesses in the crypto industry in today’s world. It is expected that by the year 2025, the market size will experience a substantial growth to US$39.7 billion with a CARG OF 67.3%. There is a large increase in simplifying business processes for seamless transactions with valuable assets across the world. So, the integration of blockchain technology is the moving force of the cryptocurrency market. If anyone wants to create a cryptocurrency exchange platform for investors and companies, they can build one without any obstacles! This is made possible because there is no central authority controlling the cryptocurrency market and its procedures. The cost of launching a cryptocurrency exchange platform is US$135,000 at a minimum.

How to start cryptocurrency exchange?

Here are some things to keep in mind when starting a Crypto Exchange:

  • Decide where you want to establish your business
  • Research and learn about the relevant regulations in the area you have decided upon
  • Form a partnership with a bank or payment processor
  • Make a transaction history and the liquidity on the exchange
  • Ensure the best safety practices
  • Be available for customer support

Let’s discuss this in further detail:

  • Establish the operational scope of your exchange

It is up to you to decide, whether you want to operate on a global level or keep to your specific region. For any of these options, you need proper and necessary licensing and approvals before opening any company for a bitcoin exchange. Consult with a legal expert and make sure your work stays in the legal zone.

  • Partner with a Bank or Payment Processor

Before you start your crypto exchange, you need to partner with a payment processor. Banks and payment processors have a PCI-compliant to defend against cyberattacks. They also help to process payments through fiat currency. Under-developed and developing economies that do not have the facility to initiate instant bank transactions online require this even more. Transactions can take almost two days to settle. Partnering with a bank that has fast clearance and settlements of funds will add convenience to your customer. Adding and withdrawing fiat funds can be done through a payment gateway or by manual remittance.

  • Create Liquidity on Your Exchange

All exchanges need liquidity to be successful. Your customers will hesitate to place an order if there is no order book and trading activity. Starting a new crypto exchange, you are more than likely to go through liquidity issues. But you can kick-start your liquidity in the following way:

  • By buying and selling between two artificial accounts within your own exchange, you can simulate trading activity within your exchange.
  • The implementation of an API interface that connects your bitcoin exchange to another existing exchange can also be done.
  • You can join a whole network of cryptocurrency exchanges like Trust-Deposit that ties together the liquidity of all exchanges within its network. The bigger your network gets, the better the liquidity becomes.

 

  • Add a High-Grade Security for Transactions and Customer Data

All crypto exchanges need a good security system. The security system must ensure that the operator and trader’s funds remain safe. You must ensure the privacy of your customer’s data as well. there have been many incidents of a security breach at various exchanges like the Mt. Gox breach where the security breach went unnoticed for years. That incident leads to almost 1% of total bitcoins in circulation at the time, to be stolen. According to a Reuters report, a third of all bitcoin exchanges operational from 2009 till 2015 was hacked. So, it is up to you to keep security as the top priority within your crypto exchange.

  • Organize better customer support

Another crucial step in building your crypto exchange is to establish customer support. Have a few dedicated employees that take care of the customers, give guidance and help when needed. The staff is also needed to approve the KYC requests, answer customer queries, and deposit/withdraw fiat currency. This will increase customer engagement and start trading, and generate revenues for your crypto exchange.

The Best Way to Launch a Crypto Exchange Platform:

A turnkey solution to make your way into the world of crypto is to turn towards B2Broker. B2Broker is a cryptocurrency exchange-building company that guides in creating your cryptocurrency exchange. B2Broker has professionals to help you establish a platform and generate revenue.

Basic Components of Crypto Exchange:

Following are the basic functional components of crypto exchange:

  • The trade engine is the basis of every crypto exchange

Trade engines are the core mechanics of the crypto exchange. These engines match ask and bid orders, record all the open orders, generate new trades, etc. Select a trade engine that requests matching speed, trade processing, and has technical support conditions.

  • The Exchange’s front end (UI)

Your interface must be convenient and straightforward for end-users. There should be accessible features at the fingertips of the traders. The design should be simple and user-friendly. Identification and verification processes are very important.

  • Leverage secured wallets that hold and trade assets.

A system called hot/cold wallets is another thing required for your crypto exchange. Hot wallets are a gateway that provides users with an option to exchange or withdraw their crypto funds. Trading platforms keep a small part of funds on hot wallets. Business owners analyze daily trading volumes to observe how many digital assets should be stored in the hot wallets.

The remaining crypto capital is placed in cold wallets which are highly protected, to make breaches impossible.

  • The admin panel is another important component

The trading platform must be convenient, for both the traders and the exchange operator. A well-equipped admin panel enables operators to:

  • introduce liquidity changes;
  • increase or decrease spread and trading commissions
  • verify traders’ accounts, and follow the KYC policy
  • manage digital assets and listed trading pairs, staying up-to-date on the statistics
  • Fulfill the requests for deposit and withdrawal by traders
  • send problems and queried made by clients to customer support agents