Blockchain technology is the talk of the town nowadays. A digital currency like Bitcoin has become very popular due to its innovative features like decentralization, open-source code, etc. Crypto exchanges are platforms through which you can buy or sell cryptocurrencies like Bitcoin, Ethereum, or any other digital currency of your choice. Crypto exchanges provide a transparent and fair method to trade in cryptocurrency for everyone who wishes to own it to use it for their day-to-day dealings.
The exchanges charge a fee of 0.1% to 1% of the transaction amount for their services provided.
There are many types of exchanges available today, but the most popular ones are:
Brokers – They act as an escrow between you and the person selling/buying cryptocurrencies at some value. You can buy or sell your coins directly to them without worrying about finding a buyer/seller on your own.
Trading Platforms – This platform acts as a medium that allows users to trade their crypto coins with other users on the exchange itself after giving out appropriate bids. A fee is charged for each transaction, depending on whether the transaction was done through the 'maker' or 'taker' system.
Peer to Peer Exchanges – These types of exchanges allow users to interact with each other directly for buying or selling cryptocurrencies without any mediation, i.e., they help you find a counterparty who is willing to sell/buy the crypto coins at your desired price. They connect both buyers and sellers to work their trades accordingly.
How does one create cryptocurrency exchange? One of the most important aspects of a cryptocurrency exchange is the platform. If you want to start your own crypto exchange, step one must be to create a cryptocurrency exchange platform that has all the necessary features mentioned below:
You will need to provide round-the-clock support via emails or phone calls in case there are any problems faced by your customers while using your platform. This also includes responding to queries about registration, login problems, technical issues with trading platforms, wallets, etc., solving withdrawal/deposit-related issues, etc. On top of this, you must encourage them to share their reviews about your services on public forums like Facebook, Twitter, etc. You can also ask for feedback about how your business is run and how you can improve their experience.
A trading engine is the backbone of any cryptocurrency exchange, and it processes all the transactions between users who are trading with each other. If you are starting crypto exchange, you need to ensure that your platform's trading engine can process an immense number of transactions per second without any glitches or network disruptions.
Security has become a significant concern for people when it comes to using cryptocurrency exchanges as they handle a lot of valuable information regularly from their customers. So you must ensure that your platform is safe and secure from all types of cyberattacks.
When you create your crypto exchange, your customers must deposit their digital currencies in these wallets before trading with them on your platform. So, it's your responsibility to keep the funds stored in these wallets safe and secure. You need to make sure that you follow standard industry practices while holding crypto assets. These include cold storage (i.e., offline) for most digital currency holdings, encrypted passwords, 2-factor authentication for login details, and others. You will need to provide access to all major digital currencies like Bitcoin, Ethereum, Litecoin, etc., so your platform must have multi-currency wallet support enabled by default without any additional charges. Also, making cryptocurrencies more accessible will help you gain more customers.
An escrow system is an essential tool that you can use to deal with fraudulent users in a decentralized manner. You need to ensure that your platform has an effective and reliable escrow system for recovering or refunding money to the buyer or seller if any disputes arise between them, e.g., an item was not delivered/received even after payment was made.
Customers will need reports about their financial activities on your platform, e.g., their profits & losses, trading history having all the details about trade pairs used, etc., so you must have this feature available for use by them.
People want to know about what's happening on a public blockchain where their transactions occur every time they perform any operation on your platform. This feature will help them keep track of all the digital currency movements that are happening on your platform, i.e., deposits, withdrawals, buy/sell orders placed or executed, etc. You need to provide complete transparency to gain more trust from your customers, as it is one of the most critical aspects of the crypto-trading industry.
An exchange platform needs to have some or all of these features to ensure that people can trade digital currencies conveniently on it. So you should make sure that your new crypto-exchange has at least a few essential features mentioned above so that it becomes more reliable and trustworthy in the eyes of your customers.
