Ever since the birth of Bitcoin and the concept of decentralized currency, cryptocurrency has always been a subject of hot debates. The subject of debate has been changing from time to time. Initially, it was about whether or not it will be a profitable venture to invest in cryptocurrency. After that, it became a question of legality – whether or not they will be accepted by the governments and jurisdiction around the world. Today, the hottest topic of discussion in the world of cryptocurrency on deciding the most profitable business open around crypto coins.
Taking a cue from the casino business, a few businesses have come to a conclusion, even with respect to the world of cryptocurrency, that the house always wins! Going by this aspect, it will be a profitable idea to start a cryptocurrency exchange.
Cryptocurrency exchanges present an alternate avenue for reaping profits in this arena – earlier, profit and cryptocurrency being mentioned in the same sentence would only conjure up thoughts of mining.
Let us take a look at what the landscape of cryptocurrency looks like today. People, fuelled by the fear of missing out (FOMO), have started to create their own cryptocurrency. There are more than 1500 different cryptocurrencies present in the market today. Some of these might turn out to be profitable in the long run, and some of these might fizzle out not being able to withstand competition. Making a profit by mining newly created cryptocurrencies might seem like a lucrative option. However, the profit depends entirely on how well the currency performs in the market.
People are often swayed by the success of the early Bitcoin miners. It is to be noted that even after these many cryptocurrencies being born, and even after more than a decade since its inception, Bitcoin stands strong in terms of both market value and market share. Not every cryptocurrency might be able to replicate the success of Bitcoin. Also, with every passing day, the process of mining becomes increasingly complex, power and time-consuming. Therefore, in the long run, it might not be a viable option to entirely depend on mining as an avenue for making a profit in the crypto.
The increase in the number of crypto coins, interestingly, opens another avenue for making a profit in the crypto world – the cryptocurrency exchange. Cryptocurrency exchanges can make profits from commissions, listing initial exchange offerings, stacking, and expert consultations. Even when the crypto market looks bearish, cryptocurrency exchanges still have the possibility to make huge profits. This goes in line with the casino philosophy that irrespective of gamblers winning and losing, the casino still makes money!
Creating a cryptocurrency exchange might seem quite a lucrative idea on paper, but it is a lot said easier than done. There are a lot of aspects, both technical and non-technical, that’s going to create a perfect cryptocurrency exchange. Let us look at the important pointers that need to be taken into consideration when developing a cryptocurrency exchange software.
The legal aspects
Even after a decade since its inception, cryptocurrency has always shared a love-hate relationship with legislations and jurisdictions. It is important to understand the laws of the country or the jurisdiction where your exchange will be incorporated. There are considerable chances that your exchange might be perceived as a money-laundering platform, and it is important for you to avoid those dubious instances of the limelight.
In the interest of credibility and security, it is important to collect the KYC/AML details of your customers.
Figuring out the architecture
A cryptocurrency exchange might look like a single unit from the outside, but under the hood, it is a confluence of multiple components working together. The components need to be seamlessly integrated with each other to flawlessly execute the process of exchanging multiple cryptocurrencies.
The trade engine can be considered the heart or the brain of the cryptocurrency exchange. It is responsible for executing transactions and calculating balances. Other than this mundane work, it also has the responsibility to match the buy and sell orders by referring to the order book. It is important, and rather crucial, that the trade engine should be in place before putting up all the other components of the cryptocurrency exchange.
The cryptocurrency wallet takes care to store the coins. The wallet should be a combination of both hot and cold storage options to reduce the risk of theft. The hot wallet can be used for transactions, and the cold wallet can be used for long-term storage, and there should be a facility to quickly move currency between these two wallets.
The administrative control panel functions like a control center where the operator can manage their cryptocurrency exchange. The orders, the management, and the alterations carried out from the control panel. In addition to that, the admin panel can also edit the spread and training fees, control customer support, and credit fiat deposits.
The trade engine and the control panel might stay under the hood, but what the user sees is the interface. It is the first impression that a user gets, and it is important that the user-friendliness is not compromised even to the slightest degree. The user interface should be interactive and intuitive and should be compatible with multiple devices like smartphones and tablets.
The UI should enable quick registration and access to the account. The user should also be able to easily deposit and withdraw cryptocurrency without any hassle. Above everything, they should also be able to avail customer support at any point in time.
Building the blockchain exchange platform
All the vital components that make up the exchange architecture should be brought together in a complete and robust cryptocurrency exchange software or platform. There are different ways to make the platform function.
You can choose to build your software in house by hiring a team of cryptocurrency exchange software developers. They will also need to be well versed in all the aspects that are involved in making the cryptocurrency exchange, such as the legal aspects, the programming aspects, and the blockchain technology. It is usually considered cumbersome, expensive, and time-consuming. Also, there are considerable chances that there might be bugs and quite a lot of time is spent debugging those errors.
Alternatively, you can also use open-source exchange platforms. The code for these platforms is available on websites like Github. You will have to narrow down on your preferences based on the text Jack, the features, and the documentation. The extent of the use of a particular code should be an indicator of the magnitude of credibility. However, it is advised that you scan the code completely for malicious lines that might be intended to extract funds without anyone noticing.
The most viable and preferred option for most cryptocurrency exchanges is to make use of our white label crypto exchange software. It presents a perfect combination of the dependability of a product and the flexibility of service. The white-label exchange software can be customized according to your requirements in the lines of the design, brand placement, languages, crypto and fiat currency acceptances, and charting. You can get in touch with reputed companies that provide white label cryptocurrency exchange software solutions, and they will take care not only to set it up, but also to customize it according to your needs.
Using white label services also eliminates the need for you to have an in-house team to take care of the occasional technical fixes that might be needed from time to time.
Decide on the other cryptocurrencies
Today, and quite confidently, for a considerable time in the future, cryptocurrency will be synonymous with bitcoin. Most of the new cryptocurrencies have been futile attempts to break the supremacy of a bitcoin and to capitalize on the widespread fear of missing out. There is definitely a need for multiple currencies in any exchange to function. However, meticulous care has to be taken when it comes to listing the most trustworthy altcoins in the market.
Find the right investors
Even when choosing economically viable options like white label cryptocurrency exchanges, it might still be an expensive affair to completely set up and run the exchange to make it profitable. Not all funds might be acquired in the beginning, but there is surely an ongoing need for funds to keep the exchange up, running, and active. It is important to plan ahead for the future and ensure that sufficient funds are available to keep the exchange active. In fact, one of the reasons for crypto exchanges being perceived as a scam is because most of them ran out of money somewhere midway, and they get into a state from where they cannot be salvaged.
Find the right payment processor
Given the growing adoption of digital payments, finding a payment processor would have been a cakewalk if only cryptocurrency wasn’t involved! It is important to find a bank that supports your endeavors in the crypto space. Most of the banks are old school institutions and are not quite welcoming towards the idea of decentralized digital currency. Your bank should be able to facilitate high-speed transactions and settlement of funds. In all of this, the transaction fees should be kept as low as possible.
Ensure top-notch security
Attacks like Mt. Gox have rendered cryptocurrency synonymous with data breaches and hacking. Ensuring top-notch security for your trip to currency exchange should be of paramount importance. All the information pertaining to exchange, including but not limited to the funds, bitcoins private data, customer details, and the bank account should be kept secure. You can consider availing the services of third-party security service providers. A holistic crypto exchange marketing strategy goes a long way in ensuring the profitability of your crypto exchange business.
Marketing your exchange
All the time, effort, and money spent in creating your crypto exchangewould be a waste if you did not market if actively. The marketing effort involves money. It is quite common that people focus a lot on technology expenses related to marketing. Having a robust marketing and PR strategy in place ensures that your cryptocurrency exchange gets a jumpstart.
People often forget that marketing is relevant even after the customers have been acquired, and it falls into the territory of customer support. Your exchange should have an always-available customer support team to take care of all the queries related to KYC, deposit, withdrawal, and technical issues.
Crypto exchanges are here to stay and stay profitable. If you would like to ride on this nascent yet massive wave of profit, you can create your own crypto exchange. The first step in making this business profitable lies in choosing a perfect partner to create and customize your white label crypto exchange. All the other steps can take a backseat to start with, and slowly gain prominence as time progresses!