Important Things to Consider When Building a Cryptocurrency Exchange

The cryptocurrency market is a very lucrative and remarkable business proposition for global crypto users, traders, investors, and businesses. The fact is that the bitcoin network has surpassed 500 million transactions in just 10 years and simultaneously its value has risen over 100%.

When it comes to crypto exchange platforms, they are holding up to 80%-90% of the total business volume. The end of the year 2017 saw significant growth in the price of cryptocurrencies, experiencing a downfall at the beginning of the next year. Though the crypto market is volatile, it is gaining global adoption. Various countries have started realizing the potential of cryptocurrencies and are legalizing the trade using them. Korea has legalized crypto exchange platforms while France has recognized bitcoin as money. Similarly, Australia has allowed the payment of bills and even now India has legalized bitcoin.

All these instances show that building a crypto exchange is a great solution to create revenue streams and white label crypto exchange software development is a great option to build an exchange quickly and with less development cost.

Cryptocurrency Exchange- Introduction

A cryptocurrency exchange is an online platform that allows traders and investors to trade cryptocurrencies using fiat or other crypto assets at a predetermined price. It typically acts as a market maker and takes a commission on the bid-ask spread. Different types of crypto exchanges include centralized exchange, peer-to-peer exchange, decentralized exchange and crypto exchanges with the attribute of margin trade and leverage.

Thereby, if you are considering cryptocurrency exchange platform development, then you must take the following pointers into considerations and start with the development journey:

• Legal Jurisdiction

Although it is not mandatory to follow the legal guidelines and abide by the law, the exchanges that follow the laws surely get benefits over other exchange companies. Following the KYC (Know Your Customer) and AML (Anti-Money Laundering) norms is a good practice for any crypto exchange. Every country varies in legal guidelines and you need to choose the best country to set up your exchange according to your business model.

Following is the list of top 5 countries that you can consider for launching your crypto exchange:

1. Estonia
2. Malta
3. Switzerland
4. Singapore
5. Luxemburg

• Gather an efficient team of experts

Starting with a crypto exchange solution does not require a full army of employees. You just need to have a handful of skilled employees to begin with your crypto exchange. Let us explore what is the crucial manpower that you require for kicking off your exchange journey:

• Managing Director- This is the person who oversees all the work and makes sure that all the roles and responsibilities are being performed correctly and optimally.
• Marketing Manager- The person at this position is accountable for aligning all the marketing and PR activities in line. He has to ensure that all the activities are delivered smoothly.
• Director of Partnership- He/she focuses on bringing in the right party, partner or contractor in position.
• Support Manager- A support manager supports all the questions and maintains the ground functioning by being responsive to every customer.
• Technical Team- The last party that you require in your development journey is technical experts. You may hire an experienced and reliable cryptocurrency exchange platform development company to develop a feature-rich crypto exchange.

• Crypto exchange architecture

The architecture of crypto exchange enforces security and vigor in the system software. There are different architectures available such as monolithic, microservices and distributed architecture. It should be noted that it is the microservices architecture that runs on its service process and formulates its structure application on loosely captured independent services.

Functionally, make sure that your crypto exchange is scalable and can achieve the increasing server capacity, optimized scripts, and record modules.

• Intuitive user interface

It cannot be denied that it is the back-end of the cryptocurrency exchange that takes a lot of time and effort and needs to be built correctly. It is regarded as the core of the entire structure but everything takes a back seat when it has to be presented among the actual crypto traders. The end-user does not care about the complexities of the exchange platform and requires an easy-to-understand user interface. The user interface should be self-explanatory for both beginners and experienced cryptocurrency traders. It is always beneficial that your exchange is compatible with both desktop and mobile screens.

• Wallet Integration

Blockchain-based wallets integrated into the exchange enable both deposit and withdrawal functionalities of currencies. The wallet should be able to support both cryptocurrencies and fiat currencies. The hot wallet that is integrated should be feature-rich and secured with advanced security features. Nowadays, even direct bank transfer is valid through Visa and MasterCard which further simplifies the process.

• Liquidity

Liquidity is an important aspect for any crypto exchange and it signifies the degree to which a particular asset can be bought or sold without affecting the price stability. Traders and users would be attracted to that platform which functions quick processing of transactions. Thereby, you must work upon increasing the liquidity in your exchange. You can achieve this by choosing an appropriate liquidity provider or by combining with another exchange by using trading bots.

• Trading Engine

The trading engine should be robust which would be able to match buy and sell orders with minimum latency. It is like the heart of the exchange that executes buyers’ and sellers’ trade. The speed at which the transaction is performed and transacted is directly proportional to the power of the trading engine. It should have built-in order types such as market order, limit order, stop-loss order, and others to provide a convenient trading experience to traders.

Summing Up

The cryptocurrency exchange should be secured in all parameters. In the times of recent hacking and scamming, it is paramount to build a secure ecosystem. The features of KYC and AML should be well integrated into the exchange to validate the authenticity of users.

If you are also considering building a cryptocurrency exchange or white label crypto exchange software development, then you may leverage the expertise of our domain-specific and blockchain experts.

Schedule a call with our experts or schedule a free demo of our white label crypto exchange.