How to Start a Crypto Exchange: Tips and Pitfalls
Let’s start with the statistics. 300+ million Earth inhabitants hold digital currencies, and 60% of crypto holders prefer to use wallets inbuilt into crypto trading platforms. This is why it is no surprise that crowds of business owners wish to start a crypto exchange.
The industry is fiercely competitive, and even top-rated crypto trading platforms are always in search of updates and improvements to meet the demands of their clients. What are the key basics to achieving success?
Licensed = trustworthy
Crypto exchanges are roughly divided into two categories: centralized and decentralized. The crypto market is moving out of the shadow, and newer crypto holders rely more on centralized licensed platforms that act in entire compliance with legal standards.
This said a license is the core stage of cryptocurrency exchange development. Compare different jurisdictions (Estonia, Malta, Singapore, etc.) to understand which conditions match your demands the best.
Integrate high-level software
When your trading platform is licensed and corresponds with legal norms, think about traders. Signed-up clients expect to get the next-level functionality; otherwise, they may easily focus on one of your competitors (over 400 exchanges have already been launched).
An order matching engine is the core cryptocurrency exchange software, as the system is responsible for collecting bid and ask orders and matching requests, where bid and ask prices correspond to each other.
While looking for a provider of such a system, compare the technical specifications of each component. For instance, B2Trader is an engine developed by B2Broker, is among the best solutions, processing 10 000 requests per second, while an order processing time starts from 0.05 msec.
The more trading pairs – the better?
When your cryptocurrency exchange is ready to process requests, the most important part commences. List digital currencies to enable registered traders to buy and sell them. Sometimes, newcomers are convinced they should provide a client with the highest number of digital assets listed on a trading platform. This approach is entirely wrong.
First and foremost, listed assets should be liquid; otherwise, your traders will face high spreads and price slippage – they don’t like it. Make a brief analysis of an asset before adding it to your platform – never list scam projects.
Furthermore, the overall liquidity of an exchange does matter as well. Traders prefer to create an account on platforms with high trading volumes. Apply to a reliable liquidity provider to connect your platform with the deepest liquidity pool. Your exchange’s order book will be linked with crypto exchanges, crypto brokers, dark pools, and other market players.
What is the best way to start a cryptocurrency business?
Business owners who are ready to make their feet wet in the crypto industry may select the best solution among three possible options:
- Run a trading platform on your own. This solution forces a business owner to hire a staff of lawyers, IT and blockchain specialists, etc.
- Use ready-made scripts placed in open-source. You need to face expenses, having no guarantee that scripts are out of bugs and errors.
- Order a turnkey solution and get a company ready to welcome traders. This solution is a bit costly, but business owners get a trading platform that 100% works.
B2Broker offers a White Label trading platform that consists of the most technological and effective components, letting business owners conquer the market.