Modern cryptocurrency mining has become more difficult and, in some countries, illegal. That is why experts refer to alternative methods of profiting from the digital currency business. In this case, you can make a lot of money by creating a cryptocurrency exchange platform.
Such platforms are used for transactions by people all over the world. They usually prefer to keep their money in bitcoin or another virtual currency and wait for higher exchange rates. Last year, for example, the circulation rate of Bitcoin reached 16 million. However, there are still very few physical locations where it can be withdrawn. The situation is much better with digital ones.
So now is the time to create your Bitcoin exchange website. You can already begin providing profitable digital exchange to the eager crypto community. We will show you why to hire cryptocurrency exchange development services providers and how to start and run a successful business.
What exactly is a cryptocurrency exchange?
A cryptocurrency exchange is simply a marketplace where buyers and sellers can trade cryptocurrency. If you want to trade cryptocurrency, you must do so through a cryptocurrency exchange. A few traditional investment firms offer cryptocurrency.
There are three types of cryptocurrency exchanges: centralized, decentralized, and hybrid. However, there are other ways to buy and sell cryptocurrency, such as investing apps and P2P (peer-to-peer) platforms where you can buy and sell cryptocurrency 1:1.
Learn more about the various types of exchanges, how a crypto exchange interacts with your crypto wallet, and how to choose the best type of exchange for you.
How Does a Cryptocurrency Exchange Work?
When you open an account with a cryptocurrency exchange like Coinmarketcap Clone, you can buy and sell BTC, ETH, LTC, DOT, DOGE, and others. Depending on the exchange, you can buy crypto with fiat currency such as the US dollar or trade one cryptocurrency for another.
The larger and more established service, the more likely it is to provide a variety of cryptocurrencies. You should double-check that your desired cryptocurrency is available before opening an account.
On a crypto exchange, you can buy crypto with regular fiat currency, or you may be able to trade one crypto for another. You may be able to exchange your cryptocurrency for regular currency, keep it in your account for future trades, or withdraw it as cash. Depending on the exchange or app you use, the services available may differ. Some services, for example, do not allow you to transfer your cryptocurrency from the platform to your crypto wallet.
In contrast to traditional exchanges, which have set trading hours, cryptocurrency exchanges are open 24 hours a day, seven days a week.
How to Launch a Bitcoin Exchange in Easy Steps
- Seek legal counsel to ensure that all licensing requirements are met.
- Obtain venture funding.
- Connect your exchange to others to increase Liquidity.
- Collaborate with a payment processor.
- Put the best security practices into action.
- Go live through beta testing.
- Begin a marketing and public relations campaign.
- Provide customer service.
- Keep a legal team on hand to ensure ongoing compliance.
Start Your Crypto Exchange
Now that you’ve seen the steps required to start your crypto exchange let’s look at them.
1. Obtain Legal Counsel to Ensure Licensing Requirements Are Met.
Before you put your plan into action, you should seek legal advice to understand the regulatory requirements of your new venture. All jurisdictions in which the company intends to operate will require proper licensing. Many cryptocurrency exchanges operate without significant oversight because government regulations have yet to catch up with technology.
2. Obtain Venture Funding
Before you begin your project, you should know how much it will cost. A minimum of $135,000 is required to develop and launch a cryptocurrency exchange. This includes technology, hosting, initial legal counsel, government registration, and initial advertising. While not all funds are required upfront, the venture must have access to sufficient capital to allow for a proper runway.
3. Connect your Exchange to Others to Increase Liquidity
Liquidity is the foundation of any successful exchange. Potential customers will be skeptical of your new venture if it lacks an order book and trading activity. To avoid these issues and the need to stimulate activity through dummy accounts within the new exchange, we can connect your exchange to a network of existing exchanges, increasing its Liquidity.
4. Collaborate with a Payment Processor
Payment processors are not all created equal. Fee structures, among other things, will differ greatly between businesses. To compete with other exchanges, you must have the lowest transaction rate. Furthermore, some processors include hidden fees in their contracts, so make sure you understand what you’re signing.
5. Put Best Security Practises into Action
Whitelabel crypto exchanges like Binance Clone are among the most secure globally, thanks to offline cold storage wallets, two-factor authentication, and encrypted databases.
6. Go Live Through Beta Testing
You’ve created your exchange. You’ve signed a contract with a payment processing company. And you’ve gone to great lengths to ensure that your transaction adheres to all rules and regulations. You have ensured that your business is safe from cybercrime. It’s now time to launch your exchange and put its full range of capabilities to the test in beta.
7. Begin a Marketing and PR Campaign.
Once your exchange has gone live, it’s time to connect with crypto news outlets like Coindesk. It is critical to plan your marketing activities properly and their costs to ensure that your initial raise does not leave you scrambling for additional funding. Often, exchanges do not have a marketing budget instead of relying on free social media marketing to reach a critical mass of traders.
8. Take Care in Providing Customer Support
While customer service is the final step in creating a successful cryptocurrency exchange like Metamask Clone, your ability to shine in this area will determine your long-term success. Those who deal with customers must be attentive and satisfactorily resolve customer complaints and technical issues. Customers should be contacted as soon as possible, so consider implementing a ticketing system like ZenDesk and staffing it with knowledgeable and helpful representatives who are available 24 hours a day, seven days a week, because cryptocurrencies never stop trading.
9. Maintain a Legal Team for Ongoing Compliance
Cryptocurrency laws are rapidly evolving worldwide; it is critical to either hire a full-time in-house legal compliance team or outsource to reputable law firms to keep your exchange legal in all geographies where you will conduct business.
The Bottom Line
The most important thing to remember is that this industry — coins, platforms, blockchains, exchanges, and wallets — is largely unregulated. This means that the consistency you may be accustomed to in the traditional financial world, in terms of how investments are structured and how investment firms operate, is less common in cryptocurrency. As a result, it’s critical to spend some extra time learning the fundamentals — whether a particular exchange can do business in your state or country, what fees they charge, and so on — as well as more complex topics like selecting the right wallet.