Every crypto enthusiast has the dream of building their own crypto trading platform. Because cryptocurrency exchange is one of the excellent online businesses for budding startups. Already many business class people started to build a cryptocurrency exchange with the assistance of crypto exchange development companies. Currently, many Startups are emerging towards the crypto trading business. Their main motto is to gain more profits and succeed in this crypto industry.
Every person can not shine in the cryptocurrency exchange business in the industry. One with an excellent strategy and innovative ideas in designing your crypto exchange can make you succeed. Presently, most of the people speak about digital currencies. Also, there is vast user traffic in most of the crypto exchange platforms. So there is a lot of chance for startups to make ample amounts of profits by launching a cryptocurrency exchange. In this blog, let us see what is a crypto exchange and the types of crypto exchange that you can launch for your business.
What is a Cryptocurrency Exchange?
A crypto exchange is a trading platform where users can purchase, sell, or trade a wide range of virtual digital currencies. Also, you can exchange other digital assets. Here you can trade all the prominent crypto coins. Such as bitcoin, ethereum, bitcoin cash, ripple, dash, litecoin, and other reliable cryptos. It is more similar to stock exchanges. But the main difference is it fully focuses on only cryptocurrencies.
As I already mentioned in this blog, it is the best online business for startups and entrepreneurs. If you are a crypto exchange owner, you can charge fees for every successful transaction. Basically, crypto exchanges allow the user to trade in two ways. Such as fiat currency to cryptocurrency trading and crypto to crypto trading. There are some popular crypto exchanges in the industry. Such as binance, LocalBitcoins, paxful, coinbase, and more.
Now, let us figure out the types of crypto exchanges in the marketplace.
Types of Cryptocurrency Exchanges
As for now, there are three different types of crypto exchanges available in the marketplace. Such as
- Centralized cryptocurrency exchange
- Decentralized cryptocurrency exchange
- Hybrid cryptocurrency exchange
Centralized Cryptocurrency Exchange
Centralized exchanges are traditional crypto exchanges. This kind of crypto exchange is completely governed by the company of central organizations. It provides crypto to crypto trading or fiat to crypto trading. We can also say that it is a user to the admin crypto exchange. In this exchange, there will be an intermediary for buying and selling the digital currencies. Here the exchange owner or admin will control all the securities and functionalities of the crypto exchange. Also, the admin will control the user’s crypto wallet. Current, centralized crypto exchanges are more in the marketplace compared to other types of exchange platforms.
Pros of centralized crypto exchange
- You can get a high trading volume compared to a decentralized exchange
- High functionalities
- Offers high liquidity
- Allows fiat to cryptocurrency trading
- Allows cryptocurrency to cryptocurrency trading
Cons of centralized crypto exchange
- It is more vulnerable to attacks compared to other crypto exchange types
- Users can not have control over their funds
- Centrally governed by third parties
- Under government regulations. So it can be shut down at anytime
Decentralized Cryptocurrency Exchange
The decentralized crypto exchange is shortly considered as a DEX. DEX acts as an alternative to a centralized exchange. This type of exchange does not depend on any centralized services or companies to control the funds. We can also say that DEX is a peer to peer exchange platform. Here will be no middleman to monitor your crypto transaction. So the crypto transactions are completely controlled by the automated process without the presence of a central authority.
A decentralized crypto exchange is built using advanced blockchain technology. So users can transact their cryptos in a secure manner. In DEX, the purchaser and seller can directly connect and make a deal. Most of the DEX operates using the ethereum blockchain. So it can provide services through smart contracts. If you are building the decentralized exchange platform. Then you can enhance the top-level security entities. Also, you can change the settings for your users.
Pros of Decentralized crypto exchange
- Hacking and fraudulent activities are less in DEX than traditional crypto exchanges
- Avoids the intermediates and other third parties
- The government can not shut down the exchange
- No central company
- Users can have control over their funds
Cons of Decentralized crypto exchange
- Low trading volume compared to traditional crypto exchanges
- Low liquidity
- Limited functionalities
Hybrid Cryptocurrency Exchange
The hybrid crypto exchange is a mixture of both the centralized crypto exchange and decentralized exchange. This exchange eliminates the disadvantages of both types of crypto exchanges. It also brings up an effective and secured crypto trading platform for all the crypto users. Here also, users can trade all major crypto coins in a hassle-free manner. If you are launching the hybrid crypto exchange, then your users can have the option to choose the best type of exchange for trading.
Pros of Hybrid crypto exchange
- Crypto transactions are faster and transparent.
- Funds are completely stored in cold storage. So the user’s funds will be safer and secure.
- Two-factor authentication will be available for all the users in this type of exchange
- It overcomes the cons of traditional crypto exchange and DEX.
- The architecture used in this exchange is highly scalable.
- Users can have control over their funds.
Why Choose Zab Technologies For Cryptocurrency Exchange Development?
Zab technologies are the outstanding cryptocurrency exchange development company with years of experience in the blockchain industry. We so far successfully delivered 60+ crypto-based products to our international clientele. We excel at offering reliable blockchain services with an effective outcome. Our team of experts is here to assist you with 24/7 technical and customer support through the internet.
If you are looking to start an ideal crypto exchange. Then use our premier cryptocurrency exchange software which helps you to launch a secured crypto trading platform within a few days. You can also customize designs and desired features according to your taste. Else, we also help you to build a crypto exchange from scratch as per your business requirements at an affordable cost.
Start your blockchain business journey with Zab Technologies…!