How to start a cryptocurrency exchange business?
Cryptocurrency exchange platforms are the modern equivalent of financial service companies in the crypto space. Specifically, they function similar to financial brokerages that deal in cryptocurrency and cater to the crypto market instead of dealing with fiat money and the stock market.
A cryptocurrency exchange offers its services to its users as intermediaries so that the users can exchange fiat money for cryptocurrency and vice versa. Similarly, the users can exchange one cryptocurrency for another using the appropriate trading pairs. And in return for their services, the exchange gains a transaction fee as payment.
With the increased accessibility to smart-contract technologies, Dapps, and increased awareness for cryptocurrencies, more and more people are venturing into the crypto space, looking for exciting opportunities. And this is where keen business enthusiasts can seize the chance of the emerging market by starting their cryptocurrency exchange. The best way to get started is by using crypto exchange software.
How to start a cryptocurrency exchange business?
A cryptocurrency exchange business is predominantly done online due to the nature of the business itself being the exchange of digital assets. Like any online platform, the software used is the indicator of its potential. The more flexible, secure, and customizable the software is, the easier it will be for you to run your business.
Developing any software is not easy, and a cryptocurrency exchange software is no different. Furthermore, unlike most software products out there, software products that use cryptocurrency and blockchain technology are new, and there are not many references available for you to refer them. On top of that, the public blockchain technology itself is a new field which is only a decade old. In comparison, we have had the internet for nearly forty years now.
Before we venture into the creation aspect, let us look at the two major software development types.
- Creating a Cryptocurrency Exchange from scratch
- Using a White label Crypto Exchange software
In the first scenario, the creative process of a brand new cryptocurrency exchange is a resource-intensive pursuit. It requires a large sum of money, time, equipment, and energy to develop a platform from scratch. Not to mention the sheer level of technical knowledge necessary to pull this off would be too much for one person or even for a small institution. Even hiring the experts for the job would be a task in itself.
On the other hand, a white label crypto exchange software is a ready-made and fully customizable software that can be purchased and installed. This software automatically comes with all the necessary basic trading and security features that are needed to run a cryptocurrency exchange. In addition to that, you can also further tailor it and add the unique customizations that you think would best suit your business needs.
Why is White label Crypto Exchange Software the better choice?
Entrepreneurs interested in starting a new business, any new business for that matter, would want to do it on the merit of their idea and their skillset. A crypto exchange business requires a specific set of skills, expertise, and a vision. And this is where the following aspects play a role in assuring you why White label crypto exchange software are the ideal choice.
Analysis — Developing a crypto exchange platform from the ground up is no easy task. Market analysis is an absolute necessity. You will have to conduct extensive research on what kind of platform you are trying to build. An Order Book model, an AMM model, P2P model, OTC, an Aggregator model, etc. You need to know the intricate difference between them and how to code the functions. But when it comes to cryptocurrency exchange scripts, you can choose the type of platform you want and purchase that exact product. Every single feature and function that you wish for in the crypto exchange platform will be installed automatically by the developer.
Technical Expertise — The quality of any crypto exchange platform ultimately depends on the technical experts that helped design it. Blockchain technology, Layer 1 blockchain, Layer 2 blockchain, interoperability, decentralized apps, smart contract development, and security subsystems. All of these require specialized experts working around the clock to develop every single software module separately, before they are carefully stitched together to make it work seamlessly. The technical expertise needed to build a crypto exchange platform from the ground up is a nightmare. However, on the other hand, a white label cryptocurrency exchange software is a pre-tested, ready-made software product.
Security — Developing security systems for an online platform is an art form, a difficult task because it concerns both the user and the admin. HTTPS authentication, Jail login, two-factor authentication, ADoS, ADDoS, data encryption, and more… A platform requires all these features and developing each of these as separate modules and then integrating them will take months of work and stress-testing them is a task in itself. Whereas, with a white label cryptocurrency exchange software, all these necessary security features come built into them as part of the product.
Customizations — Every software has to be tailored a little before using it for business. When you are building a crypto exchange platform from scratch, customization can be a hassle. While not a difficult task, it is a time-consuming process nonetheless. In a white label crypto exchange software, you will be buying it from a developer who has all the tools and expertise needed for the process. So you can have it customized for you exactly as you want it before you buy it from them. It’s an effective way to save yourself some time.
Add-ons — Add-on features are another major hindrance to developers. Once the software is launched, adding new features requires massive work and have to be done during each upgrade phase. It has to be developed first, and then the software has to be stopped to the public for some time and then added during that time. But when it comes to white label crypto exchange software, adding new features is a relatively easy task. Since the add-on module is pre-made and tested, an upgrade can be easily scheduled in mere hours.
Testing — Stress-testing and troubleshooting are not often talked about. They are a necessary part of the process when building a new crypto exchange platform. Because a single error can cause problems later on. A smart contract may have an error that can cause both parties to lose the money and the cryptocurrency which you will become liable for. If not stress-tested, a hacker can backdoor into the platform itself and siphon out funds without you knowing it. And testing often has to be done repeatedly over time for it to bear fruit. All of this can be prevented with a white-label crypto exchange because it will be extensively tested before the product is even launched for sale. It’s simply a more reliable option.
Duration — Time is a valuable resource. Most crypto projects have a roadmap that estimates up to 18 months. That’s 18 months to develop a platform and to get it running properly. And not all projects survive the process, most of them fail either due to a lack of funding or the necessary expertise. Most of them end up extending the time on the roadmap to six more months or another year because they cannot deliver the project on time. With a white label crypto exchange script, you don’t have to deal with any of these problems, you can have the platform up and running in 7 days. That’s how easy and useful it is.
Cost — This is another extensively talked about subject because it’s true. Cost is a problem. Imagine developing a crypto exchange business from scratch, you have to recruit qualified members, provide salary and allowance for the staff, money for the equipment needed, and space for them to work. Monthly expenses on the space. That doesn’t even include the whitepaper, auditing, crowdfunding, and development. It can range from $150K to over a million dollars, depending on the quality of the platform that you’re building. On the other hand, a white label crypto exchange software is much cheaper, it can be purchased and hosted with a mere $8K to $14K, at best.
Deployment — Deployment is one of those minor problems. You have to be very careful and very confident before deploying the platform because a single point error at the beginning can ruin the reputation of the platform itself. First impressions are very important in the business market. So after extensive testing, you have to commit to a soft release with limited functions and then proceed to an official launch with all the features for the users later on. It’s not a debilitating problem, but still a risky phase. You’ll have no problem when deploying a white label crypto exchange platform. All the features are extensively tested long before you even buy them. It’s far less risky.
User-friendly — As a developer, it can be hard to visualize a user-friendly platform when you’re building it. Online platforms are never user-friendly when they are launched, they become easier to use as more users use them and review them. That’s a part of the process during the initial launch. However, this is not an issue for white label products, which are often modeled after existing online platforms, hence they are often user-friendly from the beginning.
Final Words
Business is the goal of any entrepreneur. With cryptocurrency being the best performing asset of the last decade, it’s only logical that entrepreneurs want to invest their ideas, their time, and their resources into the crypto market. But investing is not the same as developing a cryptocurrency exchange, a white label crypto exchange script is by far the best way to get started at the earliest possible avenue. And it is imperative that you find and reach one of the Best White Label Crypto Exchange Software Provider, not just as a seller, but also as a technical support firm to help your business grow as you go forward.
