How to start a Crypto Exchange platform? A Complete Guide to become Bitcoin Dealer

We would probably be aware of the Pizza story. It was the first purchase with Bitcoin on May 22, 2010. Hence the day is celebrated as “Bitcoin Pizza Day”. 

It was Laszlo Hanyecz who purchased the Pizza with 10,000 BTC which was worth $41. Moreover, Blockchain Industry is becoming an increasingly popular trend in recent days.

Thus, most of the users started entering the market to start Cryptocurrency Business. One such crypto business idea is to open their own Cryptocurrency Exchange and make money with it. 

This is a complete guide for investors, entrepreneurs, and business persons and can drive you in the appropriate destination to start with your own Bitcoin Trading platform! Come, let’s get started!

What is a Cryptocurrency Exchange?

Let us first explain to you the basics of Cryptocurrency Exchanges. A Crypto Exchange is a trading platform through which users buy and sell cryptocurrencies. In return, these people pay a charge of a fee in the name of the Trading fee. In this way, the owner of the exchange is benefited for every trading done on its platform.

 

Why you need a Crypto Exchange?

The very first step is to know the reason to build a cryptocurrency trading platform. Remember, creating a crypto exchange is equivalent to creating a corporation. The process can be complex which requires a lot of effort and resources. 

If you consider the success stories of popular Bitcoin exchanges such as Coinbase, Binance have gone through these days to remain successful.The most important advantage of owning a Cryptocurrency Exchange is the crypto market. 

As the prices of cryptocurrencies are already heading up, we can expect a good number of users to start trading in the exchange platforms.At the time of writing this blog, the current price of Bitcoin is $9859.26. 

With the higher volatility in the crypto markets, users will definitely reach the cryptocurrency trading platform to trade their virtual currencies. Therefore, it is always good to get started with creating a Bitcoin exchange platform.

Steps to Start a Crypto Exchange:

 
  • Figure out the different types of Bitcoin Exchanges & Choose the type you have decided to launch

To know how to start a crypto exchange, the initial step to launch your own cryptocurrency exchange is to know the type of trading platform you have planned to create. Moreover, popularity also plays a major role while choosing the type of exchange as the target audience will be more comfortable with certain exchanges. Here is the list of Bitcoin exchanges in the market:

1. Centralized Exchanges

Centralized Exchanges are the traditional forms of cryptocurrency exchanges. In this type of trading platform, a third-party or a middleman will be available to perform the transaction for the users. 

A Centralized crypto exchange consists of the following set of layers:

  • User interface
  • Admin Panel
  • Trading Engine
  • Matching Engine
  • Database
  • Liquidity
  • Cryptocurrency Wallets
  • Security

This kind of Bitcoin exchanges will charge around 0.1-1.5% of the trading fee from their exchanges. Moreover, users of Centralized Exchanges do not have access to the private keys of their exchange’s account wallet. Thus, this puts all user’s trust in the hands of centralized crypto exchanges with the central authority. These centralized exchanges offer higher liquidity while security is still a problem with them.

2. Decentralized Exchanges (DEX)

In the case of Decentralized Exchanges, there is no such middleman involved to regulate the transactions. Therefore, the exchanges don’t hold users funds, positions or other information and just serves as the matching engine for trade orders. 

These types of exchanges act as Peer to peer exchanges. Though they aren’t much prevalent in the market, we can consider them to be the future. Similar to Centralized Exchanges, these exchanges also consider the same set of components except the fact that they no longer have access to user’s crypto exchange wallets.

  • User interface
  • Admin Panel
  • Trading Engine
  • Matching Engine
  • Security

Since there is no popularity with DEX Exchange, these exchanges lack liquidity factor. But on the other hand, these crypto trading platforms are highly secured undoubtedly.

3. Hybrid Exchanges

As the name suggests, these exchanges are a combination of Centralized and Decentralized Exchanges. These trading platforms are built with the motto of solving the cons associated with both the exchanges and bringing in a reliable and trustworthy crypto trading platform. 

Thus, traders expect them to be the best exchange for cryptocurrency trading. In these exchanges, users can trade directly from their wallets to tokens deposited into a smart contract before trading initiates. 

It also ensures that no third-party holds and maintains custody for user’s funds and thus reducing potential risks. NEXT, CGCX, Beldex are a few popular Hybrid Crypto Exchanges in the market.

4. Admin User

This is one of the P2P Cryptocurrency Exchange which is made specifically for User & Admin. Popular Bitcoin exchanges such as Coinbase, Coinmama are Admin User Crypto Trading Platforms. 

 

5. Binary Trading Exchanges

With Binary Trading Exchanges, your users can easily fix and trade at a particular time. This is particularly helpful for beginners.

 

6. Order Books Exchange

This is one of the P2P Cryptocurrency Exchange which records all kinds of records and transactions happening in the marketplace of the exchange.

 

7. Ad Based Exchange

Your traders can now buy your digital assets by running the relevant ads on the Bitcoin Exchange Platform. Depending on your requirements, choose the right type of crypto trading platform and list out your ideas.

 

  • Do Extensive Market Research 

The next step in starting an exchange is to do complete research in the crypto market. In this case, you can refer to Crypto Calendars such as CoinDesk, CoinTelegraph, CoinIdol, etc. Additionally, you can also refer to Wiki and other Cryptocurrency Exchange Tutorials from the technical end. If you have the technical knowledge, compliments from my end.

  • Finding your Target Audience

Once you have your idea with your research, now it is time to find your Target Audience. To do so, you should know the country where you’re Bitcoin Exchanges are supported. If you are not sure of this, let us explain to you some of the best countries to launch crypto exchanges.

Here is the list of Bitcoin Friendly Countries where you can launch your cryptocurrency trading platform:

  • Malta
  • Switzerland
  • Gibraltar
  • The United States
  • The United Kingdom
  • Japan
  • Singapore
  • Luxembourg
  • Bermuda
  • Estonia

On the other hand Asia countries such as India, still haven’t regulated cryptocurrencies. But we can expect it to be soon around! While the United Arab Emirates is taking steps to make them legal in the near future.

So, perform complete research on it and select your country. Once you have decided on them, find your competitor’s exchanges in the country. 

List out the features they offer and functionalities they include. Remember, to stand out ahead of the competition you should have additional attributes and entities. Therefore, draft them separately. 

 

  • Know Jurisdictions and Regulations in the country

Now you have your idea, you know the country, you know your target audience and your competitor cryptocurrency trading platforms. As each country has its own jurisdictions and regulations with cryptocurrencies, it is important to know them.

As I have mentioned already, it is pretty good to get started in the above countries such that you can instantly launch a cryptocurrency exchange. This is the first step of success to develop a crypto exchange. 

If you build Bitcoin exchanges for countries that haven’t adopted Cryptocurrencies, you can sometimes be involved in risks. 

 

  • Hiring a Legal Team of Counselors

Once done, you can hire a legal team and check everything is on the right path. Proper licensing is much important here. To be on a safer side, it is crucial that your crypto trading platform consists of KYC. 

This entity asks for Identity requisition from your users to qualify them. This can reduce potential risks from your end. For instance, in the United States, KYC regulations are strictly followed right from 2002.

Along with KYC, Anti-Money Laundering is important as well. Both KYC & AML will require User Identification proofs such as International Passport, License, etc. The next thing is to register your company.

As you are qualified to launch a cryptocurrency trading platform, it is important to get registered.

 

  • Obtain the required funding for your project

Now the total budget and cost involved for your project. To setup own bitcoin exchange, you should hire cryptocurrency exchange development company to fulfill your needs and unique requirements.

The price usually includes the cost of technology, cost of solution provider, cost of government and its regulations, initial advertising, etc. Make sure you have the required funds to manage all these.  

Additionally, you should also have a future insight into your project as well. This is the major mistake some startups and companies encounter. Thus, ensure you have the required funds for your project.

 

  • Hire Cryptocurrency Developers to build cryptocurrency trading platform

Now it is time to hire a Cryptocurrency Exchange solution provider. It is impossible to create a quality product without hiring the right set of Crypto Exchange Developers. 

If you are well-versed in programming and have a good amount of technical skills, it is imperative that it will take time. Therefore, if you hire the right set of a competent team you will head towards the right destination. 

To begin with, your team should compose all sets of expertise people right from Managers to Financial Advisors. The C-Managers here include Chief Executive Officer, Chief Operating Officer, Chief Technology Officer, Chief Financial Officer. 

In the next hierarchy is the Bitcoin Exchange Developers. Next comes the cryptocurrency exchange marketing specialists. Finally, the Financial Advisors who act as mentors for your project.Therefore, while you start hiring the team, look for the above-mentioned prospects. 

At Zab Technologies, we have all set of desired experts who have rich experience in Bitcoin Exchange Development. 

  • Technical Aspects

So, you have a great set of the team with you. Now you can list your technical aspects to your team. To start a cryptocurrency exchange platform, it is important that you should know the basic knowledge of programming and the languages your team is going to use.

Let us explain to you some of the features that have to be embedded into the cryptocurrency trading platform.

 

1. Initial Exchange Offering Module

IEO is the popular crowdfunding strategy that most startups and enterprises are making use of. You can integrate this Initial Exchange Offering Module into your Bitcoin exchange. 

 

2. Security Token Exchange

Similar to Utility tokens, by adding this feature you can support security tokens like real asset tokens to get listed. As most of the firms have started to move with Security tokens, there are higher chances that they can be listed on your crypto exchange.

 

3. Trading Bot

This feature can be integrated when your users want to trade 24*7. This chatbot assists your users to perform trading anytime by placing buy and sell orders in your cryptocurrency trading platform. 

 

4. Investor Dashboard

As a Crypto Exchange Owner, you can design your own customized Admin Panel from your end. By integrating advanced Content Management Systems, you can manage the exchange platform of your choice.

 

5. Issuer Dashboard

Similar to your Admin Dashboard, you should give equal importance to your trader’s dashboard. To build a top-notch cryptocurrency exchange you can make use of Crypto Exchange Script which is written in PHP that leverage easy navigation for your users.

 

6. Leverage Trading

With the Leverage Trading feature, your traders can borrow a certain amount of money to invest in any cryptocurrency. Most of the popular cryptocurrency trading platforms like Kraken, BitMex support these features. You can integrate this feature into your exchange.

 

7. Referral Program

To introduce your cryptocurrency trading platform to a great number of users, you can integrate the Referral program feature in your exchange. This affiliate program is intended to gain a good number of users by referral.

 

8. Multi-Language Support

As Cryptocurrency Exchanges are prevalent in most of the countries, you can integrate Multi-Lingual support in your trading platform. This attribute automatically translates the exchange website into the required language.

 

9. Mobile Application for Android, iOS devices

Around 70% of your traders would definitely like to trade on mobile applications. Hence, you can create a Bitcoin exchange application that supports Android and iOS devices instantly.

 

Zab Technologies majorly make crypto exchange mobile app which is built with SDK & Java for Android and Xcode & Swift for iOS.

 

10. Multi-Currency Wallet

It is important that you integrate Cryptocurrency Wallets. Additionally, it will be beneficial if your crypto wallets support multiple currencies such as Bitcoin, Ethereum, Litecoins, etc. This can, in turn, drive more traders to your crypto platform.

 

11. Matching Engine

Regardless of the type of crypto exchange, a trading engine plays a greater role in the exchanges. A Matching Engine is responsible for matching the buy and sell orders of the traders. 

 

We at Zab Technologies, support all these features and make Bitcoin exchange based on the client’s unique requirements. If you need a White-label Cryptocurrency Exchange Development or Ready-made Cryptocurrency Exchange with our Script or Software, our experts do it for you!

 

Make sure your solution provider render these features into your cryptocurrency trading platform. Additionally, if you have any unique set of characteristics for your exchange, you can integrate them as well. 

 

  • How to enhance Liquidity factors in Bitcoin Exchange?

As a lack of cash creates an imbalanced environment, similarly liquidity is a crucial factor in cryptocurrency trading platforms. With higher liquidity, your traders can instantly buy and sell cryptocurrencies. 

If you look at current cryptocurrency exchanges, they have higher chances of problems with liquidity. As each exchange platform is supporting different trading currency pairs and hence will be the trading volume. 

As there are around 1600+ cryptocurrencies in the market, not all the exchanges support them. Traders prefer platforms that render multi-currency pairing. So, how to improve liquidity in your crypto trading platform? 

To get higher liquidity you can connect with external providers through API. Added, as your exchanges become popular across the globe, you can expect an ample amount of users to trade on your platform. 

Thus, this can also enhance your Liquidity. To bring in higher liquidity, our development specialists make use of API correlation with other exchange providers. 

  • Partnering with Payment Processors

Remember not all payment processors are equal. They vary with the characteristics of fee structures, and other entities. 

As there are more cryptocurrency exchanges in existence, to stay ahead of the competition you should have the lowest transaction fee. 

While some cryptocurrency trading platforms build hidden fees into their contracts, therefore, so be sure you understand the contract before you signing. In addition to fee structures, additional differences are major with security practices. 

  • How to implement the best security factors?

So, you have your cryptocurrency exchange will all sort of functionalities. Now it is time to check for security. Here we have explained to you the set of features you should integrate into your cryptocurrency trading platform to make it highly secured.

Before that, know the common security issues that most of the cryptocurrency exchanges are experiencing. 

  1. Hacking of Admin & User Panel
  2. Malicious Processes
  3. Technical Issues

These are the most prevalent issues with the platforms. Let us also explain the way you can get rid of these. Our team of experts at Zab Technologies, follow the below-mentioned steps to resolve them:

1. Hacking of Admin & User Panel: Solution

Having access to other’s personal data and information is the major thing which has to be strictly restricted. These tools have to be used to protect the user’s layer of security. In this case, you can implement the following set of security factors:

  • Two-Factor Authentication
  • Request ID for KYC/AML attributes
  • Manual confirmation from the Admin end for a large amount of transaction

While speaking from the Admin panel, it is the most crucial thing to become Bitcoin Dealer you must concentrate on. Here are the things you can ask your team to implement for an added layer of security:

  • Share the responsibilities and privileges to avoid the factor of difficulty in recovery
  • However, decide on privileges by separating the areas. For instance, the top-level manual database can be controlled by senior officers like CEO, CTO, etc.

 

2. Malicious Processes: Solution

Major malicious attacks may sometimes be caused either by the software used by the intruder. One such popular attacks id DDoS attack. You can prevent them in a manner through which requests pass through certain servers and be cleaned for the end project.

Additionally, administrators have to be notified of any suspicious activities that are encountered. A firewall is yet another security option to resolve security issues.

 

  • Technical Issues: Solution

Sometimes, problems can arise from our end through our Software or other hardware. Everything should be monitored routinely and backup should be done for a safer side.

  • Perform Beta Testing

So now you have your Cryptocurrency Trading platform with a complete set of security features in it. You have done everything from your end. It is time to test your exchange platform and move it to live.

You can now perform Beta Testing to ensure the crypto exchange website works well with no issues. If found any, try to resolve it as soon as possible and bring your exchange to live. 

 

  • Start introducing your Cryptocurrency Exchange Platform to your audience by Cryptocurrency Marketing

 

Now it is time to start marketing campaigns. For instance, you can connect with popular Crypto Calendar like CoinDesk, CoinTelegraph, to introduce your cryptocurrency trading platform to your target audience.

While coming to the Blockchain Marketing phase, you can make use of both Organic and Paid Ads to the fullest. Ads here refers to Google Ads, Forum Ads, Social Media Ads, etc. So, frame a Cryptocurrency Marketing Plan and work accordingly. 

You can start discussions in popular Cryptocurrency Communities like Bitcointalk, Crypto talk, etc. Additionally, you can make use of messengers like Slack, Telegram, Reddit to introduce your product.

Undeniably, Social media channels like Facebook, LinkedIn, Instagram can also be a perfect way to bring in a huge set of audiences and trade in your cryptocurrency exchange!

You can schedule the time and also focus on Email Marketing strategy as well. As most of the traders are ready to look at your features. Mark all these Cryptocurrency Marketing in your check list and perform accordingly. 

Finally, you can start publicizing with Press Releases which has the news of your cryptocurrency exchange development. 

 

  • Render 24*7 Customer Support

This step is equivalent to the development strategy. It is important to lend your hands to your customers in case of any issues or errors. This step will pave the way to make successful Bitcoin exchanges in the industry. Therefore, have a team that can support the customers anytime and resolves their issues as soon as possible.

  • Maintain a team for ongoing legal compliance

In addition to the technical team, it is relatively important to maintain an in-house legal compliance team who can help you with jurisdictions and laws of the country. This is more crucial if your cryptocurrency trading platform is supported by many popular countries. On the other laws, sometimes new laws and jurisdictions may emerge and thus having a legal compliance team will help you be worry-free.

How much does it cost to start a Crypto Exchange Platform?

Remember, to create cryptocurrency exchange it requires too much expertise as well as efforts excluding the cost. Apart from this, the Bitcoin exchange development companies usually charge either in terms of hours or monthly payments. To put it in simple words, the total cost of the project depends on the features you have embedded into the cryptocurrency trading platform. Additionally, it is also the time frame which plays an important role in them.