As of right now, there are already a lot of places where you can exchange cryptocurrencies. More and more people are using virtual currency, and exchange platforms are becoming more and more in demand.
Not every well-known exchange is honest and trustworthy, so the market is still open to new and better companies.
What does Crypto Exchange Development really mean?
If you want to know how to make a crypto exchange, start at the beginning. A site where people can buy, sell, and trade cryptocurrency is called a Crypto exchange platform. A cryptocurrency exchange works like an online broker in that users can deposit fiat currency (like US dollars) and use that money to buy cryptocurrencies. Users can also trade one cryptocurrency for another, and some exchanges let users earn interest on the cryptocurrency they keep in their exchange accounts.
The three most popular Crypto Exchange Platform
Before you can make a crypto exchange platform, you need to know what kinds of platforms already exist. So, let’s look at the three main types of platforms for trading crypto:
Decentralized exchanges (DEX)
A decentralised crypto exchange is run by no one or group. Since there is no one in charge of the crypto exchanger, its work is not controlled from the centre. It’s a place where nobody is in charge.
All of the blockchain nodes that make up the exchange network are based on the idea of a smart contract. The main server has no control over how people buy, sell, or trade cryptocurrency on this site.
You can trade both fiat money and tokens with different designs, like bitcoin or the more complicated ether, on decentralised cryptocurrency exchanges.
To use a decentralised cryptocurrency exchange, you must first sign up on the exchanger and then verify your identity.
Also Check This: A COMPREHENSIVE GUIDE ON CRYPTOCURRENCY EXCHANGE DEVELOPMENT
Centralized exchanges (DEX)
Centralized cryptocurrency exchanges have online platforms where you can trade both cryptocurrencies and regular fiat currencies.
A centralised cryptocurrency exchange works in the same way as a public or private bank. When a client wants to do something, like trade ether or bitcoin, he gives his money to the website in exchange for that cryptocurrency.
Before using a centralised cryptocurrency exchange, each possible user must go through a complicated registration and verification process.
Hybrid cryptocurrency exchanges
The hybrid crypto exchange solves the scaling problems that come with decentralised exchanges by letting users store and use their private keys. People who made the hybrid crypto exchange were worried about the high costs of trading on decentralised exchanges. When you trade on a hybrid cryptocurrency exchange, neither the taker nor the gas has to pay anything.
Five Challenges with Building a cryptocurrency exchange
To make a cryptocurrency exchange that works, you should know about some of the problems you might face as you build it. Let’s look at each problem from the point of view of how to set up a cryptocurrency exchange.
Crypto Exchange Safety
When giving a licence to a crypto exchange, many places make sure that the personal information of your users is safe. By doing a cryptocurrency exchange, your business will not only deal with money, but also with a lot of people’s personal information. To make a safe and secure cryptocurrency exchange service, you should plan ahead.
When setting up your next cryptocurrency exchange, keep the following in mind:
** “Know Your Customer,” or KYC, is a process that cryptocurrency exchanges must use to find out who their counterparties are. It has procedures for picking clients (based on criteria for who can become a client) and identifying them (using data from passports and biometric data), as well as tracking and analysing transactions.
** Anti-Money Laundering, or AML, is the process of spotting schemes to launder money by looking at all the data. All of the available information is looked at to find transactions that don’t seem right.
** KYT (Know Your Transaction) will be able to block users whose bitcoins are thought to be used in illegal schemes in the future. In fact, KYT will help a crypto exchange figure out where a user got their coins from when they use them.
Architecture that can grow with a crypto exchange
You can’t make a cryptocurrency exchange without first thinking about how the platform works, of course. Because platform architecture is so technical, the average business owner might find it scary. At the same time, the topic isn’t as scary as, say, thinking about how your house was built if you don’t go into too much detail.
Whether you make your own cryptocurrency exchange as a CEX or a DEX, you should use a microservice architecture. Your cryptocurrency exchange has many parts and is a complicated product (even if it appears simple and easy to your clients).
An easy-to-use interface
We’ve already talked about how hard it is to set up an exchange for cryptocurrency. Don’t forget that your clients will find it easier to use the platform if it has a simple interface.
The most important thing to remember is not to put too much on the interface. We think you should make the interface with as few parts as possible. Also think about the colours. Don’t make them too light or too dark. Customers who use your app don’t have to spend much time looking for what they need or trying to figure out where everything is.
System to protect against cyberattacks
Think ahead about how to protect your business from cyber attacks if you don’t want it to be a target. Keep all of your personal and business information in a safe place. Don’t forget this essential part. After all, if you don’t take care of your business’s security, you might lose money, clients, or even the whole business.
How to Trade Cryptocurrencies Without Making Mistakes?
Based on what we’ve learned from doing cryptocurrency exchanges, we’d like to tell you how to do one without making any mistakes. So, let’s look at the most important things that will help you make your next product.
Determine MVP Features
You can start making a product once you have an MVP. With MVP, you can test your idea and find out what your users want, what they need, and what they don’t need. Set up the main parts of your MVP when you’re making a cryptocurrency exchange. You won’t make as many mistakes if you do this.
These are the parts of your product that users can’t use if they don’t have them. Don’t add things to the platform that aren’t needed. First, make a base, test it, and then add features one by one.
Work with an experienced team
To find the answer to your question about cryptocurrency exchange, you should only work with professional teams you can trust. You could find a good team, for example, on social networks or rating sites. It should also be good at all stages of product development and know everything there is to know about them.
If you need a great group of professionals for your project, the Suffescom Solutions, a top leading cryptocurrency exchange development company 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 get from the “we have a product and our first customers” stage to the “we want to grow” stage.
If you don’t have a marketing plan, you might as well be marketing in the dark. You test a lot of hypotheses, and most of your marketing budget goes toward doing so.
What do you need to make sure of before exchanging cryptocurrency?
Now, let’s talk about the things you must do or check before you start building a cryptocurrency exchange.
If you want to make money with your business, which we’re sure you do, you need a plan. There are many things to choose from. For example, you could charge a certain percentage of the transactions that go through your exchanger. So, you will get paid every time a user does something new.
Or, you can make different kinds of accounts that give you different rights. Users who want to move from a basic account to a more advanced one, for example, will have to pay a certain amount per month.
Laws that set rules
Here are some legal things to keep in mind when making an exchange:
GDPR compliance. If you want to sell something in the EU, you should make sure your cryptocurrency exchange is GDPR-compliant. GDPR, which stands for the General Data Protection Regulation, became law on May 25, 2018. If you don’t want to get a fine, you can’t ignore or skip this step.
CCPA compliance. You must follow the California Consumer Privacy Act if you make things for people in California (CCPA). The main goal of this law is to give people more control over their own personal information. If you want to sell to people in California, your cryptocurrency exchange platform must be in line with the CCPA by January 1, 2020, if you want to sell to people in California.
Keep in mind that rules and laws may be different in different places. Everything depends on where you want your cryptocurrency exchange platform to be set up. So, whether your target markets are in Asia, the UK, Australia, or somewhere else, you should pay attention to the rules of each area.
Write up standard rules and contracts
Get ready ahead of time with all the agreements and policies you’ll need. People won’t be able to use your platform at all if you don’t have this. All of this should be done before designing and making the product, so you don’t waste time on it later.
Take a look at the trends in your own market
Your own market analytics, which you can show to people who use your platform, will be your biggest advantage. They can read about all the news and trends on the Internet, but it is almost impossible to find high-quality and personalised analytics.
Product for use on more than one platform
Most people today choose products that they can use on their phones, computers, and tablets. So, before you start, you should think about what kind of platform you want to make. Make an exchanger that works on all devices if you want people with different tastes to be able to buy your product.
Make a crypto exchange development platform: Final Thoughts
Cryptocurrencies have never been more popular than they are right now. Since the market is still young, there is still a lot of room for new ideas. Suffescom Solutions thinks that there are many ways to be successful in the market. Visit cryptocurrency exchange development services page page to learn how we can improve your current product or make you something completely new.