A cryptocurrency exchange platform is a digital market where users are able to buy and sell virtual currencies at market-established exchange rates. Cryptocurrency exchange like Binance is an online site that operates as an intermediary between customers and digital currencies traders.
How To Develop Cryptocurrency Exchange Platform: First Steps
Preparing and planning are the most important web development stages before launching an online project. It means that you should think through all the details. The first step, to begin with, is the specifications and the type of the platform you want to create.
An online exchange platform should have such characteristics as:
flexibility in development, customization, and scaling;
instant response to all actions.
Any webpage is made of separate layers or modules. Each module works independently and is based on the trade interface and data received from the server. The interaction of various layers is managed by specific requests. Usually, each module has its own server. On the cryptocurrencies exchange market, the platform itself matters, so you can make a client for it. Nevertheless, it is up to you whether to choose a site or a mobile platform.
How To Build Bitcoin Exchange Website: Types Of Cryptocurrency Exchanges
Nowadays, plenty of miscellaneous types of cryptocurrencies exchanges can be named. The type that you choose will determine the structure of the website.
Direct trade platforms provide tools for making immediate deals between users. This type of exchange platforms does not involve a market-established price on the market; instead, traders set their own exchange rate.
Brokerage platforms are sites that any person can use to buy currencies at a rate that was set by an agent. Cryptocurrency agents are similar to foreign currency dealers.
Cryptocurrency funds are investment pools with professional management, where you can buy and hold digital currency assets.
How To Get Started With Building The Cryptocurrency Exchange Platform
For the successful launch and performance of an online currency exchange platform, the following tools are needed:
charts that reflect digital currencies volatility indexes. They can be used to compare different trading pairs before making transactions.
orders - a table with the transactions made by market players.
the detailed history of the most profitable transactions for a qualitative analysis. It is useful for determining bidders’ demands, as well as for more accurate forecasting, which is the basis of any trade.
First, you need to determine the time and budget restraints. The complexity of the exchange software leads to the fact that its development and debugging can take a whole year or even more. Keep in mind that the professionalism of your developer team heavily influences the amount of required time.
Remember that while developing software, employees must receive wages that depend heavily on the complexity of tasks. The cost of development can amount up to €400,000, but this is only an approximate cost that may vary depending on numerous factors.
To create such a program, you will need a team of experienced developers as a single IT specialist will not be enough for such a task. It is clear that a qualified team requires investing a lot of resources. Therefore, be patient, because when it comes to cryptocurrencies, you need a trading platform developed meticulously in the perfect details.
First of all, you need to create a user account system. In a user profile, the customer has to be identified, and there should also be an option for depositing and withdrawing currency included. With the platform’s help, investors and traders will be able to manipulate their market positions. In the process of modular development for the trading platform, you need to take into account even the tiniest details.
You will also need an aggregator. With its help, users will have the opportunity to create their own coins or tokens and put it on the list of assets immediately. It is important to understand that the aggregator will process a large amount of information every second. That’s why its cost is also pretty considerable.
But we are far from being done. The currency exchange will not work if the platform does not have a trading kernel, which purpose is to form the order book, carry out the transaction and calculate the balance. Without the established work of the core, the platform will simply be an empty shell.
The currency exchange platform must have a user-friendly intuitive interface. This design should facilitate using the site well and, therefore, attract more customers. In addition, the interface should be adapted for smartphones, tablets and other devices. Custom mobile applications will make your exchange even more attractive and practical.
A perfect interface should provide the user with the following features:
access to trading accounts;
depositing and withdrawal of cryptocurrencies and fiat currencies;
review of the order book history and past transactions;
changes in balance and statistics monitoring;
analytical infographics and charts;
24/7 customer support.
One of the most important tasks on the list is creating a wallet. The client will use it to store the cryptocurrency. It is crucial to ensure complete security of the users’ wallets. To minimize all risks, wallets should be divided into two groups – “hot” and “cold”.
Hot wallets allow users to export currency to an external wallet. The money withdrawal does not require the approval of the exchange administrator. Cold wallets contain the remaining coins or tokens. No one can access a cold wallet if a hot wallet was hacked, as the cold one is disconnected from the network. Therefore, it is preferable for users to keep the main part of their assets in the cold wallet.
Dividing wallets into two groups is what it takes to achieve a good balance between high security and comfortable use.
Read also: How to Develop a Bitcoin Wallet App
How To Get The Software For The Exchange
There are three options for acquisition and maintenance of Bitcoin exchange software:
your own software;
free or open source scripts;
special ready-made software.
If you choose the first option, it is necessary to build a team of specialists that will create, launch and support all the software. It should be mentioned that each team member must have a clear understanding of the principles of such exchange platforms functioning. Moreover, they should be familiar with encryption systems. And, of course, they should be able to implement the required components.
If you are facing the issue of choosing the programming language, it depends heavily on the cryptocurrency you are going to use for your exchange platform. The other significant thing to consider is that your software should work properly with a great variety of payment systems and banks to guarantee the safety of all transactions within the platform.
It is crucial to consider the time and money that are required to make your project come true. Such aspects as development, maintenance and constant updating will have a significant impact on your company and its budget. Due to the inherently complex nature of the whole process, it will surely be rather expensive and may take up to 1-2 years. Depending on the salary and the developers’ competences, and features that you want to implement, the whole process cost may range from €300,000 to €400,000. Yet, it is obvious that the cost will vary in different countries.
If you visit various websites and forums for IT specialists, you may find a great number of files with codes for open source platforms for your startup. The main advantage of such files, obviously, is that this code is absolutely free of charge. However, there is also a number of risks that need to be considered:
there is still a need to hire at least one specialist who will be able to understand the code and to implement it successfully to make everything work;
even the ready-made code should be improved, fixed and modified according to your platform’s needs;
such code provides almost no guarantee that everything will be reliable and secure.
Using an open source model, you should clearly understand that the support is in your hands. Mainly, it is your team of developers that should work on improving the code. They must find all bugs and errors and fix them themselves. In the worst case, if the project is abandoned, there is no support at all.
In case you give preference to proprietary software, you will be able to modify and customize the programs according to your needs. The advantage of this model is that everything was checked and tested in advance. That’s why it seems to be a quite good acceptable alternative for building your own software.
The most pleasant aspect of using such software is that you can get rid of all the rush related to implementation and constant need of maintenance, as well as technical requirements. As all components have already been made and checked, the only thing that should be done on your behalf is some rather simple settings. It is a great opportunity to save your time, because the setup time is rather short, as well as to save a significant amount of money because you pay significantly less for a software license compared to its development from a scratch.
Cybersecurity: What You Should Consider Before You Start Bitcoin Exchange Website
Exchange platforms owners must guarantee the safety of their users' funds. Any cryptocurrency exchange website can be under hacker attack: Bitcoin can be stolen easier than dollars or euros, as the latter ones can be traced back to return them. Cryptocurrency is easier to "merge" and maintain a certain level of anonymity.
How Are Exchanges Hacked?
The weak point in any system is a person. Even if the exchange is protected from the technical point of view, it can be hacked by exploiting the human error. Having compromised the owner's computer, hackers may take a fairly huge amount of money. No one is protected from social engineering. There are no such things as completely secure systems, there are always some risks that remain.
How Can The Exchange Platform Be Protected?
There is no one-size-fits-all solution for protection against hackers. The first step you can take is to configure the security architecture so that it is difficult for the hacker to get to the assets. The security of the platform itself is ensured by the quality of the code. If it is written by people who have little idea how cryptocurrency can be stolen, then it is very likely that one day there may be nothing on the account of the exchange platform.
Read also: 10 Best Blockchain API Providers
We hope that this guide on how to start Bitcoin exchange business has provided you with all the answers you needed. Now, you know what you should pay attention to and how hard it is to create and launch a successful cryptocurrency exchange platform.
If you still have any unanswered questions, don’t hesitate to contact our specialists who will be glad to provide you with all the necessary support.