One and a half trillion dollars. That is the staggering estimated value of the global crypto market (2023). Of course, with this soaring figure, also comes volatility.
The crypto world is no stranger to turbulent times, with the industry still finding its feet under the backdrop of colossal growth and constantly evolving regulations.
Increased scrutiny, high-profile media cases, and rife competition has seen the fall of big names, not to mention the rollercoaster for stigma and investor trust.
Despite this, cryptocurrencies have yet again bounced back. With grandmasters of the game like Bitcoin and Ethereum holding down the fort and maintaining a solid position, the industry has resumed its mantle as a desirable sector for digital asset investors.
For entrepreneurs, brokers, and forward-thinking finance heavyweights, this resilience has indicated it could be the perfect time to start a cryptocurrency exchange business.
But, how? Let us bring you up to speed with exactly what is involved, starting with the basics.
Software components
There are a number of vital software component pieces in the puzzle, that need to function together seamlessly to start a crypto exchange.
The admin panel is a dynamic command center where administrators can oversee transactions, manually adjust market settings, and safeguard user accounts.
Then we have the heart of the platform, the matching engine. It plays the crucial role of pairing buyers and sellers, ensuring efficient and fair transaction execution.
A high-performance matching engine is a major influencer of UX and trust with end-users.
It’s important not to confuse high performance with latency. End-users will typically be retail clients who don’t engage in high-frequency trading, and therefore seek throughput over latency.
Crypto traders are selective and will avoid platforms with poor UI. Interface functionality can’t be underestimated. This calls for a deep understanding of your target audience. Modern systems that can be tailored to your user’s needs are key. Mobile and web compatibility, for example, should be non-negotiable.
Platforms also need to be complemented by cryptocurrency wallets. Investors use wallets to deposit and withdraw crypto and fiat currencies.
Liquidity
A crypto exchange owner will need to gradually build up liquidity. Partnering with other providers is advantageous during low liquidity periods or when diverse assets are in demand.
Four primary sources of crypto liquidity include:
● Centralized exchanges (CEXs)
● Decentralized exchanges (DEXs)
● Market makers and institutional trading firms
● Over-the-counter (OTC) trading desks.
Protection and security
Significant volumes of cryptocurrency are stolen from both exchanges and individual wallets. Implementing adequate security measures, such as multi-factor authentication, is essential for safeguarding your business and establishing a platform investors will trust and feel confident using.
White labeling
A white-label crypto exchange is a ready-made solution that allows businesses to launch their own platform for crypto exchange without starting from scratch.
This is a wise strategic move, because licensing an existing solution is the most effective (both in terms of cost and speed) way for businesses to enter the cryptocurrency trading market with a quality product and service.
White-label exchanges are provided by a third-party, but are customized and branded as if the business itself developed it.
This approach includes software, and support services.
Timeframe: How Devexperts can help
Assuming operational and legal preparations are in order, DXtrade Crypto is a full package of software that can be white labeled to launch a crypto exchange within a month.
This encompasses several turnkey integrations with cryptocurrency wallets and crypto liquidity providers.
DXtrade Crypto exchange enables the trading of margin and spot cryptocurrencies as well as crypto CFDs, complemented by a risk management framework.
Establishing a cryptocurrency exchange has potential for yielding exceptional profit, however, the cryptocurrency landscape is a double-edged sword. There is ample opportunity, but success requires expertise and experience to avoid the common pitfalls.
If you're considering launching a cryptocurrency exchange, using a proven white-label solution from an experienced software provider, reach out to Devexperts for expert guidance.
