- As of September 9, 2020, there are close to 5000 different crypto’s circulating in the market.
- The high number of coins only translates to more tradability.
- The space of crypto exchanges is being dominated by big names like Binance, Poloniex, BitTrex, and Kraken.
Cryptocurrency exchanges have been successful in bridging the gap between cutting edge technology and the common man’s utility. In addition to facilitating a humongous amount of profit for investors, crypto exchange software has also opened up exciting business opportunities for aspiring crypto entrepreneurs.
The lavish availability of cryptocurrency exchange development services has made the process of starting an exchange quite easy. In addition, the cryptocurrency exchange software provider also provides assistance in integrating essential features like KYC, AML, liquidity, and the likes.
For those who do not want to invest a lot of time and money on cryptocurrency exchange platform development, white label cryptocurrency exchange software comes in as a big bliss. There is also a growing acceptance for cryptocurrency, especially after passive endorsements from big corporate names like JP Morgan and IBM.
As of September 9, 2020, there are close to 5000 different crypto’s circulating in the market. Some authoritative sources like the CoinMarketCap list close to 7000 different crypto coins being active. The high number of coins only translates to more tradability.
With so many factors converging, and needless to say, the degree of volatility, right now is the perfect time for you to launch your cryptocurrency exchange business.
The landscape of competition
The space of crypto exchanges is being dominated by big names like Binance, Poloniex, BitTrex, and Kraken. On the surface, it might seem like an insurmountable task to beat this magnitude of competition.
On an encouraging note, it should be kept in mind that there is a slow but steady growth in the acceptance of crypto, and the intensity of growth is relatively higher when it comes to acceptance of cryptocurrency exchanges as a valid business model. Since there are possibilities of more and more countries opening up their legal regulations to accommodate this new business, it is quite possible that as a new player, you can still find success.
It should be remembered that Binance, the number one cryptocurrency exchange in terms of volume of transactions was late to the party when they started in 2017. By the time they entered, exchanges like Bitfinex, Poloniex, and Kraken had already established a market. Binance, however, kept constantly updating their services in terms of both spectrum of offerings and quality, and also expanded their operation into several countries. Today, Binance is to cryptocurrency exchanges as to what bitcoin is the cryptocurrency!
Given the profitably lopsided market and the example that Binance has shown, 2020 can be considered the perfect year to start your cryptocurrency exchange business. It also coincides with the time when the current financial landscape has been radically altered by the COVID-19 crisis, and people are quite likely to except decentralized finance and its manifestations.
The different possibilities of crypto exchange software
When we think about cryptocurrency exchanges, we often add a tone of monotony to it. There are different types of cryptocurrency exchange businesses you can create, viz., centralized cryptocurrency exchange, decentralized cryptocurrency exchange, and hybrid cryptocurrency exchange.
Based on your business model, the jurisdiction, the regulatory requirements, at your target customers, you can create a crypto exchange of your choice.
The key features of Crypto exchange Development
Every cryptocurrency exchange needs to be equipped with a matching engine. The matching engine is considered the epicenter of all activities on the crypto exchange. The order book collects the orders from the buyers and sellers, and the matching agent takes care to match them. Once the orders are matched, the trade is executed at the predetermined price dictated by market dynamics.
It is to be remembered that a cryptocurrency exchange will be used by common investors. Therefore, the user interface of the cryptocurrency exchange needs to be made as simple and intuitive as possible. The trade should be executed in simple and straightforward steps. The interface should also include graphs that show the fluctuation of crisis, the popular currency trading pairs, and other vital bits of information that are bound to influence the trade.
Liquidity is another quantity that determines the quality of your cryptocurrency exchange. It refers to the volume of transactions that happened on your exchange. Indirectly, it translates into measuring the probability of an investor trading their crypto asset on your exchange. A new cryptocurrency exchange can consider either having artificial accounts simulating trade or can alternatively consider using an API to connect an existing exchange to benefit from the liquidity of the other exchange.
Focus on security
One of the key areas that your cryptocurrency exchange software solution provider should focus on is security. Cryptocurrency is viewed as a manifestation of decentralization in finance. The crypto exchange, however, is a momentary antithesis for for what cryptocurrency stands for.
The centralization has given rise to a lot of security concerns, and it is quite understandable from the past instances of security breaches. The most infamous crypto security breach is the Mt. Gox Hank that resulted in the loss of about 7% of all the big coins in circulation.
It is true that cryptocurrency exchanges provide the avenue for common people to experience the monetary benefits of cryptocurrency. However, in this endeavor, these exchanges are also risking a lot. While it might not always be possible to completely eliminate the possibility of security breaches, steps taken to enhance or rather fortify your security.
A few simple steps and strategies can go a considerable distance in enhancing and ensuring the security of your cryptocurrency exchange in the interest of your investors.
Just like any other online entity, your cryptocurrency exchange should adopt cyber security features like SSL encryption, referral policy, transport security, cookies, firewalls, and a captcha. It is also essential that strong password policies are in force do with your users. Needless to say, KYC & AML processes Will ensure that the possibilities of social engineering are kept to a minimum.
The next step is the penetration check. The penetration check can be considered similar to the crash test performed on cars. It can help you find out the points of vulnerability on your cryptocurrency exchange, and these learning can be used to enhance your firewall.
The last step which could be considered quite exclusive to the crypto world is rewarding bounties for finding bugs. Bug bounty programs is almost like outsourcing security testing to your stakeholders. Crypto experts who find bugs on your exchange and fix them can be rewarded with tokens and coins.
If everything said above has to be encapsulated in a single line, it is essential for your exchange to be protected against the smartest hackers around!
The practicality and profitability of cryptocurrency exchanges have already been established and extra emphasis has been laid on security. While building your cryptocurrency exchange from scratch gives you a lot of control and flexibility, one of the key differentiators in facing a cutthroat competitive landscape is that the early bird gets the worm.
White label cryptocurrency exchange solutions can help minimize the delays and uncertainties associated with the classic process of cryptocurrency exchange development. The product is bound to be free from bugs that might interfere with the basic functionality. All you need to do is get in touch with the company that specializes in white label cryptocurrency exchange software solutions, and they will take care to understand your requirements, customize the exchange, and deliver it to you, so you start making a profit with every transaction on your exchange!