Let’s begin by clarifying a couple of points before we get started on how to start a crypto exchange. Firstly, this blog is not for beginners and secondly, it will only focus on describing the crypto exchange platform rather than its business aspects.
A Crypto exchange is a platform where individuals can buy new cryptocurrencies and traders use sophisticated features to trade cryptos and make profits. Along with features, the platform offers security measures, payment options, and wallets for its users.
As the owner of such a crypto exchange platform, you can earn revenue through multiple streams, including trading fees, withdrawal fees, offering premium features, and more. This allows both users and platform owners to gain advantages from the exchange.
According to Statista, the growing popularity of cryptocurrencies is evident from the growing number of users, which has reached 420M worldwide. In a way, the demand for crypto exchange platforms is also increasing aside.
Considering these positive indicators, it seems promising to start a cryptocurrency trading platform in the future, right? To assist you get started, here is a guide on how to start a crypto exchange.
Let’s get started,
Step 1: Select the Type of Your Crypto Exchange Platform
You may be aware of what crypto exchange is, right? Do you know how many types of crypto exchanges there are? There are 5 types of exchanges
- Centralized Exchange (CEX)
- Decentralized Exchange (DEX)
- Hybrid Exchange (HEX)
- Peer to Peer Exchange (P2P)
- Over-the-counter (OTC)
Centralized and over-the-counter exchanges operate only on the basis of a central authority. On the other hand, hybrid and peer-to-peer exchanges are somewhat administratively controlled. While decentralized exchanges do not rely on a single entity and are run by a group of members.
Ultimately, the choice of platform depends on your discretion. When designing the perfect platform, carefully considering your target audience is a wise business move.
Step 2: Outline the Key Features You Desire to Include
Before diving into Step 6, it is important to outline the key components and features you want for your crypto exchange. So, make a detailed list to ensure you cover all the essential features.
Some features you should include like
- Powerful Trading Engine
- Order Book system
- Crypto Wallet & Splitups
- Effective Admin Portal
- Trading Chart
- Multiple Currency Pairing
- Crypto & Fiat Transaction
- Multi-lingual support
- Customer Support & more
Some of the Add-ons you can include are
- Crypto Staking
- Launchpad Voting
- Token Sale
- Forex and Commodity Trading
- Referral & MLM Programs
- Wallet Splitup
Also, to launch a crypto trading platform with strong security, it is necessary to integrate various security components as needed. Below are several security features that can be added during the development or customization of software:
- Crypto Private Key Encryption
- Email Authentication & Verification
- Crypto Withdraw Confirmation
- Login Activity & Device Management
- Secure Third-party Access
- Separate User Panel & Admin Panel
- DB Network Access
- Two-factor Authentication
- New Device Management
- Anti-Phishing Code
- Anti Denial of Service (DoS)
- CSRF & SSRF Protection and more
Apart from this, you should have features and security measures that should be implemented after collecting user feedback or researching the best crypto exchanges like Binance and others.
Related Article: Security Features of Binance Clone
Step 3: List the Integration You want to have
This phase encompasses various aspects such as Data Management, API integrations, Wallet Integration, and Payment Gateway Integration. Let’s see some of the popular options to provide you with a clearer understanding.
Data Management: For admin-based platforms, MongoDB databases are often used to ensure quick access to data. Adminless platforms have the option to use blockchain technology for data management, giving you more control over the process.
API Integrations: Secure interaction is possible through integration with popular services such as Binance TradingView Chart, reCAPTCHA, CryptoCompare, and more APIs if necessary for your platform.
Wallet Integration: At your discretion, there are multiple functional wallets such as TrustWallet, MetaMask, Conibase Wallet, Binance Pay, and more. Additionally, users who are verified on the platform get a built-in wallet for seamless transactions.
Payment Gateway: You have the flexibility to integrate various payment methods of your choice, including PayPal, cards, wallets, and bank transfers, ensuring a wide range of possibilities for your users.
Step 4: Decide on the Appropriate Technology Stack
Selecting the appropriate technology stack is crucial for any successful cryptocurrency exchange development. Consider factors such as scalability, security, speed, and compatibility, and choose the tech stack that syncs with your project needs.
Some popular choices are
Frontend Development: AngularJS & Node JS, Bootstrap, jQuery
Backend Development: NodeJS, PHP, Python
iOS App: Flutter, Swift, iOS Fabric, Objective-C
Android App: Flutter, Java, C, C++
Cloud: Google Cloud Platform, AWS, Microsoft Azure
Step 5: Design an Architecture for Your Crypto Exchange
Considering steps 1, 2, 3, and 4 design an architecture for your crypto exchange platform to visually represent the user interface and flow. Focusing on overall user experience, simplifying navigation, and implementing unique design is essential.
To get a perfect design, collaborate with a cryptocurrency exchange development company to prepare a wireframe that will allow you to easily and effectively communicate your vision to stakeholders and the development team.
Step 6: Select a Development Methodology
Step 6 alone can answer your question about how to start a crypto exchange as it is a crucial one. Here you have two (solution) methods:
The first method is Building a Cryptocurrency Exchange Development and the second method is Buying a Cryptocurrency Exchange Script. To assist you in choosing wisely, we’ll explain the options below.
Method 1: Cryptocurrency Exchange Development
If you choose this method, it’s important to ensure that your team is well-versed in software development and well-prepared for the process ahead. Keep in mind that this effort can take several months to a year and will require a substantial financial investment.
Additionally, your project should be audited for security and legal compliance. If you do not have experience in this area, it is better to collaborate with a specialized cryptocurrency exchange development company. They can guide you in creating a platform that meets all your needs.
Note: This method sets your crypto exchange apart from rivals since it is uniquely built from the ground up, giving you the opportunity to implement your own ideas.
Method 2: Cryptocurrency Exchange Script
Choosing this method allows you to save time, effort, and money, helping you start your business much earlier than method 1. Also, if you want to avoid technical and business complications, method 2 is the most suitable choice to start your venture.
Cryptocurrency Exchange Script is a pre-built software package that has all the features you need from basic to complex to get your platform up and running quickly. The solution offers a variety of customization options, allowing you to customize the software to the unique needs of your business.
By partnering with the right solution provider, you can get a high-performance exchange solution integrated with the database/blockchain of your choice. Moreover, features like a powerful trading engine, useful admin console, user dashboard and more are included.
Note: This method enables you to quickly launch your cryptocurrency exchange ahead of your rivals with little customization according to your business needs.
Step 7: Establish Connections with a Liquidity Provider
The success of any cryptocurrency trading platform depends on liquidity. Integrate with liquidity providers to ensure your trading platform has sufficient functionality. Collaborating with liquidity providers can help users find suitable buyers or sellers and improve the overall trading experience on your exchange.
Step 8: Integrate a Payment Processor
Incorporate a reputable and secure payment processor into your cryptocurrency exchange platform. This enables users to deposit fiat and purchase cryptocurrencies in an easy method. Integrating a payment processor correctly promotes smooth transactions and improves the overall customer experience.
Step 9: Testing the cryptocurrency exchange
Test your crypto exchange platform thoroughly before launching it to the public. Perform functional testing to ensure all the features function as intended and security testing to discover and fix potential vulnerabilities. Also, perform performance and load testing to ensure the platform is able to handle high user activity and trading volumes.
Step 10: Ready? Set! Go
Lastly, once you have successfully tested your software, you are ready to launch your crypto exchange platform to the public. This includes finalizing legal and compliance requirements, marketing your platform, and building anticipation among potential users. Detailed white paper, setting up customer segments and channels, and ensuring security measures are most important before going live.
Hope you understand and get a basic idea of starting your own platform. Therefore building a cryptocurrency exchange platform is a time-consuming process that involves research, planning, development, testing, pre-launch, and launch. By following the steps mentioned above you will know how to start a crypto exchange platform.
Moreover, by partnering with the right cryptocurrency exchange development company, you can get assistance for each and every step mentioned above. If you are still confused about how to start a crypto exchange, you can contact Zodeak anytime, anywhere. Our dedicated support team is always ready to assist you. See you in the next blog!