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In this article, we'll dive deep about building and launching own cryptocurrency exchange trading platform
. If you want to know more about P2P exchanges, or margin trading and how to make money through them - welcome. We'll explain everything in depth.
Types of Crypto Exchange and their cost
There are several main types of crypto exchange platforms. Let's consider each in more detail and describe the advantages and disadvantages, as well as indicate their cost.
Platforms for exchanging fiat and cryptocurrency between different users. As a rule, the platform acts as an escrow system. On the one hand, the user creates an order to sell or buy a cryptocurrency for a fial (dollar, euro, pound, etc.), and another user completes this order.
On the one hand, the platform may seem simple, but here it is worth considering several complex features:
1. The system must have a convenient chat between users, where the details of the deal will be discussed.
2. The platform must have an escrow system. A flexible tool to ensure the security of funds of one of the parties.
3. The platform must have a dispute system. Sometimes scammers can use the platform, so it is very important to analyze each case in detail and ensure the safety of user funds.
Income. The owner of the platform earns on the fee for the transaction. As a rule, this figure is about 1%. Thus, in order to have an income of about $1,000 per day, you need to have a daily turnover of $100,000. This is a fairly small amount, since this type of platform has a high percentage of user conversion per transaction.
How much does it cost to build a p2p crypto exchange platform? Prices start at $40,000 and go up to $80,000
is the most popular p2p crypto platform.
Trading crypto platform (spot, margin, derivatives)
A platform where users can trade cryptocurrencies among themselves. In such systems, you can add additional tools - margin trading, and derivatives (futures, options etc). This enables users to trade with leverage.
The high volatility of cryptocurrencies provides a good opportunity for users to significantly increase their income, but on the other hand, there are risks of completely liquidating your position or the entire budget. This is used by the owners of cryptocurrency platforms and usually add one or more tools. Statistics scream that at least 95% of users lose their funds when using leverage, 3% of users trade with zero income and only 2% of users actually have income from this type of trading.
Income. This type of platform combines several business models - earning on fee and liquidating user positions.
How much does it cost to start a trading crypto platform? The cost of simple spot trading will range from $30,000 to $30,000. Margin platform from $30,000 to $50,000. Futures trading from $60,000 to $150,000.
Decentralized crypto exchanges have become more popular lately. This is due to the collapse of one of the top exchanges - FTX. This story has changed the crypto platform market. So, the Binance crypto platform gained more users, at the same time, other platforms lost some of their users. But after half a year, the market starts to level off. But DEX platforms gained great popularity at that time. You can only trade through decentralized wallets, so your funds are always completely safe.
Income. DEX platforms earn on fee, but you can also sell token listing services. Many crypto project owners will be happy to pay $5,000 or more to list their token on your platform. One of the most popular projects: pancakeswap.finance
How much does it cost to build a DEX platform? The price can start from $40,000 to $80,000.
What you need to know about the start and cost development
As you can see, the price depends on the type of platform. If you want to create a very large project with a huge number of users, consider using the maximum number of trading and development tools based on a microservice architecture.
One of the most difficult points in the development and launch of a crypto exchange is the development of a trading module. The platform must withstand heavy loads, as the number of transactions per second can reach several thousand.
It is worth paying attention to providing liquidity and order books. At the first stages, users who will signup will see an empty order book and this significantly slows down the promotion of the project. Therefore, we recommend developing an additional market maker bot that can generate deals for trading.
How to Start a Crypto Exchange?
What target market are you aiming at? Depending on the country, states and their laws, your representative office must have certain permissions
. The easiest way is to work in those countries that officially allow bitcoin as a means of payment, probably, Estonia or even Malta (Binance moved and registered here). Belarus have already legalized cryptocurrency, only time will show us how it affects the industry. Australia provided an opportunity to pay bills (including utility) through bitcoin.
Iceland and France are well-known countries for the extremely low cost of electricity, therefore, makes the cost of mining incredibly low. Venezuela, and other countries in South America, as well as some states in the US, are also popular for crypto miners. So the very first thing is to choose cryptocurrency friendly jurisdiction
. Company registration is important for accepting fiat money.
Cryptocurrencies to List
The obvious but yet significant point. The more currencies you provide to users, the more audience coverage and more interest to the cryptocurrency exchange platform. Contrary to the erroneous view, cryptocurrencies are not much more difficult to maintain than 3
. But at first, we need to integrate them, and this process takes some time. Once you have dealt with the previous two points of preparation, here is your next one.
But you should keep in mind, that every cryptocurrency such as Ripple, Litecoin, Ethereum, Dash, Dogecoin and other need to be integrated manually. Or you can create your own cryptocurrency and launch ICO
. Companies like Binance, Exmo, and many other exchanges chose this proven way. They provide discount by using their coin as an internal volume. This is a safe strategy. Users get discount and exchange increases volume of coins.
Security and Protection
First, let’s find out what common issues, holes, and problems you might be faced with in the security of the system
1. Unauthorized access to the administrator account (hacking)
2. Access violation to the server
3. The rogue process due to privileges
4. Security issues in external platforms
. Personal data security is in the first place, moreover, access to the system must be strictly regulated. Popular tools to protect this layer are:
1. Using secure and protected libraries and frameworks.
2. Two-factor authentication using Google passcode.
3. Request documents from users (KYC and AML). This item mostly related to exchanges with cryptocurrency to FIAT pairs and vice versa. It doesn’t necessary right now to upload documents for cryptocurrency to cryptocurrency pairs. In most cases you need only international passport, driver license or ID; also bank statement or utility bills for level 2 verification.
4. Manual confirmation from the administrator of high volume transactions and/or their large amounts. A cold wallet is optional and highly recommended to be used.
, whether the cryptocurrency exchange built with blockchain technology, which is among other things in mobile apps development
trends. Any trading platform requires admins
. To secure yourself and the system check the following list:
1. Distinguish responsibilities and privileges of administrators; create additional groups, and roles. Every person manages only his small part and does not have access to more.
2. Team solution. Administrators from different groups must confirm especially important features.
3. Development and production are at least two separate areas. Limited access to each group. Manual database transfer, which is controlled by executives, CTO for example.
. Caused by malicious software either due to an intruder.
1. DDoS attacks. Requests must pass through certain servers and be cleaned for the end project.
2. Firewall vulnerability. They are solved quite easy – by professional system administrator, or an awesome hosting. AWS is probably the best solution at least if your Government allows hosting platform in the cloud. Otherwise, you have to take a closer look at the dedicated servers with load-balancing.
3. Authorized and protected access. 2FA is mandatory, whatever you choose Google Authenticator or SMS or even both options. If you decide to build decentralized cryptocurrency exchange
you can forgot about this item.
4. Notification of administrators about suspicious activity. Well, you and your team have to be informed and up-to-date with current stage.
. Sometimes things break down. Software issues or damaged hardware. Everything should be monitored and have Plan B, as well as a backup in a safe place.
1. Changes, exchange, and trading transactions are calculated, and if something is wrong – there is a return of operations.
2. Validation of sum.
3. Regular backups.
4. Available user log files.
5. Administrative notifications in case of inadequate activity.
Most importantly, in the event of a malfunction respond as quickly as possible; and be generally notified about it. Therefore, the cost of supporting of such projects monthly ranges from $200 to $2000
, subject to working with East European Company. We recommend that you pay attention to security when building a crypto exchange
and still use the cold wallet feature.
How long will cryptocurrency exchange development take?
So, if you decide to start a crypto exchange and decided on a cost, the platform development can take from 2 months to 6 months. It all depends on the type of platform and the number of tools.
As a rule, the following team participates in the development process:
1. Business analyst. Offers ideas to improve your idea.
2. Project manager. Gathers requirements and supervises the development process.
3. Design team. Designing according to your requirements.
4. Team of developers.
5. Team of testers.
6. DevOps team to install your project on the server.
Development of a cryptocurrency platform requires knowledge and skills such as blockchain development. First of all, it is necessary to take into account the high load
and the high level of safety
. Our company, Merehead, has experience in development of similar projects and if you need advice feel free to contact us
. We will give personal advice that will help you to develop a cryptocurrency platform.