How To Start a Cryptocurrency Exchange Platform

How to Start a Cryptocurrency Exchange — Ultimate Guide For Startups

Explore the wide range of development methodologies to kickstart your crypto exchange business instantly!

The boom & prominence of cryptocurrency changed the financial lifestyle of many budding startups and entrepreneurs. Crypto opens the money-making opportunity door for all the people who come up with innovative business ideas and are willing to solve the existing issues that users face.

The Crypto market is filled with 50+ business ideas, but not everything will be convenient for you. Only a few business ideas will be worth starting in this modern era, and it would be life-changing if you have a brainstorming plan to execute them.

Speaking of the worthy crypto business, you can start a cryptocurrency exchange platform!! If you are a crypto enthusiast, then you might be aware of what an exchange is and how it works. If not, let me say it in simple words.

What is a Crypto Exchange?

The crypto exchange is an online medium or a platform where any individual can purchase, sell, or trade virtual crypto assets at any time they need. It is not like a stock exchange as it has some time restrictions. But in the crypto exchange, the user can securely buy/sell crypto at any time from anywhere without any intervention, as it runs over the blockchain.

However, before starting a crypto exchange, you need to be aware of the types of exchanges, development methods, functionalities, and the cost of building a crypto exchange platform.

Ok, let us see…

Types of Exchange you must know before starting a Crypto Exchange platform

Knowing the types of crypto exchanges in the market will help you get clarity before starting a crypto exchange business. If you want to make your own crypto exchange, then it’s mandatory to choose the right exchange type that fits your business plan. Presently, there are two major types of exchanges in the market. Such as

1. Centralized crypto exchange
2. Decentralized crypto exchange

These two exchange types have different workflows and functionalities. Wanna know them in detail??? Let us see…

Centralized Cryptocurrency Exchange

Centralized exchange, aka CEX, is a common type of trading platform. As the name itself suggests, it is owned by the individual or a group of people. Whenever a user trades crypto in the centralized exchange, there will be an admin to approve the transaction.

In the centralized exchange, the admin of the platform will be responsible for the user funds, security, maintenance, functionalities, and other aspects. Moreover, the centralized exchange is classified into order book exchange, ads-based p2p exchange, and user-to-admin/OTC exchange.

Binance, Coinbase, Localbitcoins, Paxful, Remitano, Huobi, and Bitmart are the best-centralized crypto exchanges in the market right now.

Decentralized Cryptocurrency Exchange

Decentralized exchange platforms are also known as DEX platforms in the global crypto market. This type of exchange is well-known for its high privacy, security, anonymity, and transparency.

Unlike CEX platforms, the Decentralized exchanges don’t have any third party to control the funds.

In the Decentralized exchange, swapping or trading will happen without any assistance from a third party, which leads to zero trading fees. However, the user must pay gas fees for every swap. Binance DEX and IDEX are popular DEX platforms.

DEX platforms are classified into decentralized p2p exchanges and DeFi(Decentralized Finance) exchanges. Pancakeswap, Uniswap, Sushiswap, and Bakeryswap are the top-notch DeFi exchanges in the market

I hope this basic knowledge about exchange types is enough to get started with the Crypto exchange business.

Now, a query might strike your mind…

Why should I start a Crypto exchange platform?

Over the past few years, cryptocurrencies like Bitcoin, Ethereum, Cardano, Matic, BNB, and Solana gained huge popularity worldwide. Even today, the craze and prominence of these cryptos are high in the market. So traders sought ways to trade these cryptos with the help of crypto exchanges.

In such a promising market and massive hype among crypto traders, what can be better than creating a crypto exchange platform for a startup??? That’s why there is always a demand for crypto exchange development in the industry

Undoubtedly, the demand and craze for crypto exchanges will continue to rise as the global usage and trading volume of crypto is surging daily. Considering this, it is the perfect time to start your own crypto exchang,e which is a far better option than crypto mining or other business ideas.

Apart from the hype and popularity, the major reason to create a crypto exchange platform is ROI. I’m saying this because most crypto startups will have a dream to start a crypto exchange platform and gain massive profits. On the flip side, some startups will have a mindset to build a strong crypto community under their brand name.

These two types of business people will have different perspectives and strategies when it comes to the crypto exchange business.

As a budding startup, you might think —

How can I make money by starting a cryptocurrency exchange?

From my point of view, any person who has a jaw-dropping business plan can generate a lucrative amount of money in this field.

As per the previous discussion, we know that centralized and decentralized exchanges are the two main types of crypto exchanges. Each exchange has distinct revenue methods. In case, you start a crypto exchange based on a centralized type, then you can generate revenue in multiple ways. Such as

1. Trading fees
2. Margin trading
3. Crypto withdrawal fees
4. Fiat deposit fees
5. Listing fees
6. IEO (for conducting token sales)
7. Staking and more

If you start a crypto exchange under the decentralized type, then you can earn money through staking, ads, IFO, swap fees, and other add-on modules that you enable in your DEX platform.

Now, you might have known the reasons startups are expressing their interest in creating a crypto exchange platform.

After knowing the worth and potential of crypto exchange, you will be curious to know how to start a crypto exchange for business. To show a successful path in your exchange business journey, let me reveal the…

Best Development Methods to Start a Crypto Exchange

In recent times, the most asked query from emerging crypto startups/entrepreneurs on the internet is how to make a crypto exchange. You will get various blogs & answers from many crypto experts and some random cyber-citizens when you Google it.

I too read them, but no one…I mean, not even a single person mentioned the crypto exchange development methods in their article, and their importance in starting the exchange business.

So, here I am…allow me to explain the two great ways to start your own crypto exchange.

1. Development from scratch
2. White-label crypto exchange software

These two approaches are the most preferred methods by aspiring startups to create a crypto exchange platform. Ok! Let us see about them and finally, you decide which solution will be suitable for your project.

Development From Scratch

It is a traditional development process which means that you need to build a crypto exchange from the ground up. You need to implement each function to your exchange from the base. If you are a tech expert, you might not face any technical difficulties. If not, then going with this method is like walking on a flimsy road that looks like a sturdy one!!

If you select this method for your crypto exchange development, you must have a well–experienced team. but, keep in mind that this process might take around 10–12 months to complete the entire project and also will require bulk investments. So, it’s a major drawback of choosing this development method.

White-label Crypto Exchange Software

Presently, the demand for the white-label crypto exchange solution is high due to the astounding business perks it holds. By making use of this ready-made crypto exchange software, you can create a crypto exchange platform within 7 days based on your business plan.

The white label exchange software is completely developed, designed, multi-tested, and ready for deployment. So you can save more time when you have this software in your hand. Besides, it will be more cost-effective than starting your own crypto exchange from scratch.

One of the major benefits of using this solution is software optimization. You can customize the entire software right from the UI/UX to the backend core functionality, in a comfortable and relaxed way.

Comparing these factors with the development from scratch, the white-label crypto exchange software will be the optimal solution to make your own crypto exchange platform.

(Note — It’s totally my point of view, and most shining startups also used this solution to gain hefty returns. However, the choice is yours, my fellas!!! Keep reading)

Must-have Trading Features to Start a Crypto Exchange

Enabling the attention-seeking features will help you grab uncountable crypto users to your trading website and app. So here is the list of desirable features that you need to equip in your crypto exchange.

1. User login
2. Order book system
3. Crypto wallet integration
4. Admin Control Panel
5. User authentication
6. KYC/AML
7. Margin trading
8. Staking
9. IEO launchpad
10. Crypto Portfolio analytics
11. Fund deposit/withdrawal
12. Advance trading charts
13. Two-factor authentication
14. Crypto payment gateway integration
15. High-end security functions and more

Look out for these features when you get a white-label crypto exchange solution from the development company.

Security Modules Required To Start A Crypto Exchange Platform

You must employ first-rate security features if you want to build a robust trading platform for virtual assets. By turning on these features in your exchange, you can effectively protect it from numerous security risks and aggressive cyberattacks.

Let me list the best security functionalities that you can incorporate in your crypto exchange and mobile app.

1. HTTPs authentication
2. Jail login
3. End-to-end encryption
4. Data encryption
5. Two-factor authentication
6. SQL injection prevention
7. Cross-Site Request Forgery (CSRF) Protection
8. Server-Side Request Forgery (SSRF) Protection
9. Anti-Denial Of Service (DoS)
10. Anti-Distributed Denial Of Service(DDoS)

I’ve mentioned only a few security measures that most exchange owners utilize on their platforms. If you need more than these mechanisms, you can also enable them promptly because you are going to get a premium white-label crypto exchange solution from the development firm.

Next, let us see…

Cost to Start a Crypto Exchange Platform

The crypto exchange development cost is mainly based on the method you choose. The cost of building a crypto exchange using a wonderful cost-effective solution — the white-label crypto exchange software would be around $7000 — $14000. Therefore, it is an affordable solution for all startups and entrepreneurs who plan to enter the crypto space by launching a crypto exchange.

The cost which I’ve declared above is not a fixed one as it differs based on some vital factors. Such as

1. Unique business needs
2. Crypto exchange type
3. Technology stack
4. Technical features you enable
5. License for your exchange
6. UI/UX design
7. API integration

These are the major factors that shape the cryptocurrency exchange development cost.

In any case, if you are willing to develop a crypto trading website or mobile app from the ground up, then the development cost will be more expensive. This means that the development cost would be around $80,000 — $150,000. Yes, it was expensive!!!

Final thoughts

Undoubtedly, the reputation that cryptocurrency holds among people and investors will skyrocket in the upcoming years. So this is the right time to enter the trillion-dollar market and create a crypto exchange platform with the premium white-label crypto exchange software.

To get this out-of-the-box solution, choose a genuine White-label crypto exchange software development company in the blockchain space. Also, ensure that the software you get does not have any technical issues and meets all your business demands. By seeking assistance from professionals and getting this software from a reliable development company, you can create your own crypto exchange without any stress.

How To Start a Cryptocurrency Exchange Platform was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.