If you want to know about a crypto exchange or a startup that wants to gain insights – welcome. Here, we will discuss one of the questions of how to build your Bitcoin exchange platform in this blog.
Before beginning, let’s be clear with the agenda that we going to discuss in this blog.
- What is it?
- Requirements for starting your platform
- How to build your Bitcoin Exchange?
Hope you are super clear about the agenda, right? Well, let’s start with a very basic thing just to refresh your mind.
What is Bitcoin Exchange?
Bitcoin Exchange is the platform where users can trade Bitcoins with others and buy\sell digital assets with the platform. This platform facilitates the exchange of cryptocurrencies directly between users via P2P. Moreover, it provides tools and strategies such as margin trading, spot trading, and derivatives trading (futures, options, etc.) that allow users to trade with leverage.
Generally, a crypto exchange platform has various revenue streams to charge fees and commissions to generate revenue. To begin the process of creating and launching a crypto exchange, it is important to understand the requirements. In the following section, we will discuss the prerequisites for starting the Bitcoin exchange development.
What are the Requirements to Start a Bitcoin Exchange?
Not a Bitcoin exchange, any online platform needs some requirements to kickstart. In crypto exchange, there are some prerequisites that startups need to get prepared before starting. Here are some for your consideration.
#1. Choosing the Bitcoin Exchange Types
When it comes to Bitcoin exchange platforms, there are many types in the market. Each of them has its advantages and disadvantages with different costs.
Centralized – Admin-based platform for exchanging fiat and bitcoins between users. Eg. Binance
P2P – Escrow-based platforms for exchanging fiat and Bitcoin between users. Eg. LocalBitcoins
DEX – Trade through a crypto wallet in a decentralized manner. Eg. Pancakeswap
#2. Legal Requirements
It is crucial to understand the regulations surrounding cryptocurrency in countries such as the USA and EU. Recently, Abu Dhabi welcomed its new cryptocurrency exchange, M2, after obtaining a license. Estonia and Malta, where Binance has relocated and registered, have also joined the list of cryptocurrency-friendly countries.
Belarus has already legalized cryptocurrency, and only time will reveal its impact on the industry. Australia now allows the payment of bills, including utilities, via Bitcoin. Iceland and France are renowned for their low electricity costs, making mining cryptocurrency very cost-effective.
Countries like Venezuela, as well as some US states, are also popular among crypto miners. Choosing a cryptocurrency-friendly jurisdiction is the first step, followed by company registration to accept fiat money.
#3. Security
Several exchanges have risen and fallen due to inadequate security measures. Mt. Gox, Nerae, and Altsbit have all experienced significant losses as a result of hacking and data breaches.
Consequently, security is a critical aspect in this field. To establish a highly secure Bitcoin exchange, it is important to understand the challenges and solutions that can be implemented to mitigate them.
Challenge Faced
1. Platform access without authorization
2. Server access breach
3. Unauthorized process with elevated privileges
4. Security concerns with external platforms
Solution to Mitigate
1. Employing secure and safeguarded libraries and frameworks for enhanced security.
2. Using two-factor authentication and keeping the separate source for user panels and admin panel
3. Requiring users to submit necessary documents for KYC and AML compliance.
4. Subjecting high-volume transactions, withdrawals, and/or those with significant amounts to manual confirmation by the admin.
5. Consideration of using a cold wallet is highly recommended.
To ensure the safety and continuity of operations, it’s crucial to have security measures in place for malicious processes such as DDoS attacks, firewall vulnerabilities, and phishing-related activities.
Additionally, technical issues like shutdowns, software glitches, or damaged hardware can also disrupt operations. Hence, it’s essential to have a monitoring system in place that can detect and address such issues promptly. Having a backup system in place can also mitigate the risk of data loss and downtime.
Related Article: Binance Clone Security Features
#4. Partnering With Payment Processor
To ensure that your Bitcoin exchange platform users have a seamless experience while making transactions and depositing/withdrawing digital funds, it is important to carefully evaluate the integrated payment processor that you choose. You should conduct a thorough investigation into what each provider offers, including their performance, transaction speed, security, and availability.
Additionally, it is important to analyze how many businesses are currently utilizing the payment system you are considering. This will give you an idea of its reliability and popularity within the market. It is also essential to thoroughly research the market prices, conditions, and feedback before making a final decision on which payment processor to choose.
#5. Organizing Funds for Bitcoin Exchange Development
Developing a Bitcoin exchange from scratch is a complex process that requires a team of qualified professionals including developers, testers, marketers, content creators, associates, and other specialists. This means that you will need to raise funds to cover the costs of hiring these professionals to ensure that your exchange is developed to the highest standards.
The initial cost of Bitcoin exchange development typically starts from $15,000 and can vary based on the specific features, integrations, and plug-ins that your business requires. It’s important to plan and estimate your budget carefully to ensure that you have enough funds to cover all the costs associated with setting up and running the trading platform.
With the right cryptocurrency exchange development company and budget in place, you can create a secure and reliable Bitcoin exchange that meets the needs of your users.
These are some of the requirements you need to consider when preparing for your Bitcoin Exchange development. Now, let’s move on to our third agenda of how to build your Bitcoin exchange platform.
How to Build Your Bitcoin Exchange?
You have a decision between two alternatives: either start your own Bitcoin exchange software development from the ground up or opt for the pre-designed Bitcoin exchange script. To facilitate your decision-making process, we will elaborate on both methods below.
Method #1: Bitcoin Exchange Software Development
If you are considering building a Bitcoin exchange platform, it is important to be aware of all the necessary preparations and steps involved in the process. Building a cryptocurrency exchange platform from scratch is a complex and time-consuming process that requires significant financial investment and technical expertise.
Before starting this process, it is crucial to ensure that your development team has the necessary skills and experience to create a secure and reliable platform. It is also important to remember that building a Bitcoin exchange platform can take several months to a year, depending on the complexity of the platform and the level of customization required.
In addition, your Bitcoin trading platform will require a comprehensive audit to ensure that it complies with all relevant safety and legal regulations. If you lack experience in this area, it is highly recommended to work with developers from a reputable cryptocurrency exchange development company who can assist you in creating a trading platform that meets your needs.
One of the key benefits of building a Bitcoin exchange platform from scratch is that it allows you to implement your unique ideas and features into the platform. This can help make your Bitcoin exchange platform stand out from your competitors and attract more users.
Method #2: Bitcoin Exchange Script
By choosing method 2, you can avoid technical and business headaches, as the Bitcoin exchange script contains all the necessary features, from basic to more intricate, to quickly launch your site. Additionally, the solution provides numerous customization options, allowing you to tailor the software to meet the unique needs of your company.
When you work with a cryptocurrency exchange development company, you can obtain a highly functional exchange solution that is connected to your desired database or blockchain. Technical features, such as a trading engine, effective admin panel, user dashboard, and more, are included to ensure that your exchange operates smoothly.
With this method, you can quickly launch your Bitcoin exchange before your rivals by customizing the cryptocurrency exchange script according to your taste. This approach offers a cost-effective and efficient way to enter the Bitcoin trading market while ensuring that you have a fully functional exchange site that meets your requirements.
That’s it! However, if you’re still feeling uncertain about which direction to take, no worries! Zodeak experts are here to provide you with a free consultation, guiding you through the process and helping you make an informed decision. So feel free to reach out to them and get assistance for building your Bitcoin exchange.
