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Cryptocurrency App Development: Features and Costs

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Yuri Musienko
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Firstly, we should get an understanding of what is meant by «the cryptocurrency app». A list of their types is pretty extensive. For this reason, we need to state what app meets the requirements of not only developers and future controllers of cryptocurrency flows but also the audience. Cryptocurrency app is the app that allows its user to track and/or control local or global flows of cryptocurrency funds, exchange tokens for fiat funds, and vice versa. There are many such apps now, but all of them belong to one of two big groups: wallet, exchange, or a specific third group – so-called exchangers. Each of the specified groups has its drawbacks and advantages for people, who have decided to relate their well-being to the world of cryptographic currencies. In addition, each of them has its special characteristics, which can be both another step towards success and the push to fall. Let’s consider all of them in a bit more detail.

Cryptocurrency wallet

The first and relatively simple type is a cryptocurrency wallet. It has long been known that converting your own money savings into cryptocurrency or super-fast earning a big number of tokens are no simple tasks. The more difficult thing to do is deposit your crypto assets to a special account, where they would be perfectly safe. It’s appropriate to create your own cryptocurrency wallet, which would be in a form of a mobile app accessible for any popular operation systems: iOS, Android, Windows. The main task of this wallet is to work as a new payment instrument, which offers opportunities for various transactions with digital assets.

It’s important to realize what capabilities this app should have. As a rule, it’s created to avoid problems that are related to trading and storing funds on exchanges. On that basis, the main requirements for the app are the following:

  • implementation of various operations including direct sales and purchase of digital currency;
  • organization of trading (buying and selling) among the users;
  • sending coins to other wallets;
  • crypto coins conversion to bank cards;
  • paying for goods and services not only from fiat wallets but also from cryptocurrency ones;
  • connecting merchants to ensure payment acceptance;
  • possibility to keep accounts of various crypto coins.
Obviously, if you have the proper skills, you can develop a wallet on your own. However, if you don’t have such skills, it’s better, easier, and smarter for you to request the assistance of professionals, who will not only develop a cryptocurrency (bitcoin) wallet for you but also teach you how to use it as effectively as possible. There are standards in this field like in any other. A created app should have wide functionalities, a user-friendly interface, the possibility to connect to the exchange API (including FIX4) and banking API, reliable protection from hacker attacks of both local and global scales with the help of encryption, certificates, and passwords. A highly appropriate and welcome addition to this set is two-factor authentication (for example, a confirmation code that is sent via SMS). Sometimes, the developing company not only provides a service of creation and testing a new app but also helps in its further promotion. It’s entirely up to the client whether to refuse a similar offer or accept it, but you should ask yourself a quite obvious, but relevant question: why not? You can combine your capabilities with developers’ capabilities and get a double result, and consequently, a double profit.

Development and costs

Naturally, the total cost will depend on many factors. In pursuing such goals as a wide functionality and high level of security, we should remember that the amount of time and expenses is directly proportional to the required results.

So, let’s determine the main stages of the development of a classic crypto wallet.

First of all, as mentioned above, we should determine the main goal – investing or trading, long-term storing, transactions, etc.

Terms of reference should be determined then. The development of both simple and complex crypto wallets starts with an analysis of data available adjusted for user requests.

After that, you should pay attention to the choice of technology. The simplest and most rational option is the use of popular technology solutions for such systems as Android, iOS, and Windows. This option will make it possible to create a high-quality product that will contain as complete set of features as possible.

Then follows prototyping and a test run, which will allow controlling all aspects of the correctness of the app work and thereby detect and correct the malfunctions, if any.

The average price of development of a cryptocurrency wallet by an experienced and professional developer ranges from $900 to $1000. This price includes the following expenditure items:

  • creation of a reliable app that is protected against the most common types of hacker attacks;
  • a wide variety of tokens available for transactions. They can be both the most popular and little-known;
  • website search optimization for the system accessible and popular in the client’s country; as a rule, it’s Google;
  • possibility of long-term storage of both fiat and cryptographic funds;
  • convenient and functional cryptocurrency converter;
  •  full maintenance of the app in the future.

Exchange

Exchange isn’t just a more complex project than a cryptocurrency wallet. It’s a far more complex project that involves a lot more resources; not to mention, that unlike the wallet, the creation of a platform leads to certain risks. Nevertheless, modern times of active development of cryptocurrency offer prospects of enormous financial gain for those, who will follow the trends and take the flows of tokens under control.

A cryptocurrency exchange is inherently a kind of a classic online platform of a type «marketplace», which serves as an intermediary between the sellers and the buyers in trade transactions, which are mostly limited to a pretty short list:

  • buying;
  • selling;
  • exchange between fiat and virtual money.
Quite logically, given the speed, at which the technologies related to the cryptocurrency develop, a specific classification has emerged in the field of exchanges. All similar platforms are divided into three types:
  • created to exchange digital money for real money or other means of payment;
  • platforms – exchangers, where crypto money are exchanged: ethers for bitcoins, litecoins and vice versa (their accordance with this classification is obvious at first view, but looking more closely, it’s quite debatable because even at this similarity of these platforms and exchanges, they still have fundamental differences, so they will be considered in a separate fragment of this article);
  • platforms, where capabilities of tokens are implemented only in their various branches.
Having chosen the type of exchange, all you have to do is find competent specialists to create the exchange. You shouldn’t rely solely on your own efforts in this case because the risks are extremely high. Without the active help and consulting of the professional team, chances of success seem negligible if not slim. Actually, this is the truth since even the high-level professional isn’t able to bear in mind everything singlehandedly.

Before you start, you need to define all stages of developing your own app so that you don’t forget anything. The set of actions, or more specifically – the goals of the client and future mega trader – is the following:

You should start with the purchase of software or its building from scratch.

The second option is more appropriate in this regard despite its higher price as it helps the client to understand the crypto market better and control each stage of development – from concept design to final release. As a rule, in a basic version, a crypto exchange consists of a quite limited number of fragments: trading engine, admin panel, database, user interface, account management center, wallets, and analytics. It’s this approach that has such advantages as enhanced security, obtainment of an absolutely exclusive product, and the possibility of constant adjustment and improvement of the exchange. Disadvantages of development from scratch are that it may take longer to start a new exchange than buy an out-of-the-box platform. The second disadvantage is a financial one: the turnkey exchange turns out to be costlier than the purchase of a ready solution.

Tailoring a ready-made product to your own brand can be a nice temporary solution for those, who work in another field, which is similar to the cryptocurrency field by theme, and the necessity to create a platform for buying and selling cryptocurrency is driven by demand and trend. It’s closer to an additional service than to a stand-alone project. This solution is better than turnkey platforms in respect of quick setup and start and friendly start-up costs, but it’s inferior to them in the aspects of security (no access to the source code), expensive alignment to requirements (on average, it turns out to be costlier than the engine itself), and dependence on a third party.

Anyway, a new project needs to include the following components:

  • identified personal account with a possibility to manage it;
  • separate gateways to connect the users to the marketplace;
  • high-capacity aggregator, which creates its own cryptocurrency;
  • central trading core that contains the main features of the exchange.
The geographical scope and trade boundaries are defined next. This is a fundamental issue since the complexity of development and control, and consequently, the prospects of earnings and the audience growth are increasing or decreasing depending on the coverage of the territory whether it be a separate region, state, or the whole world.

After that, you should open a personal account in an accredited bank with an online platform, which will make it possible to withdraw the real funds because, fortunately, or unfortunately, none of the cryptocurrencies can exist without the backup by real (fiat) money. As of today, this is one of the most complex problems faced by any crypto services because banks consider cryptocurrency activity extremely risky so with almost a 100% chance they will deny your application on opening an account in European countries. This decision will remain even in case of the obtainment of licenses and compliance with AML regulations.

The only way to open a current account is to set up an account in an Electronic Money Institution (EMI). Basically, when you transfer money to an EMI, your funds are automatically converted into electronic assets. When you withdraw funds from your account, those electronic units are «canceled.» Looks quite confusing but it is usable. Be advised that opening an account in EMIs doesn’t exempt an account holder from the fulfillment of strict legal requirements.

The table shows the most popular payment systems that are setting up IBAN accounts to cryptocurrency services at the moment:

Then you need to develop a productive strategy of increasing the liquidity of an exchange, attracting investors and traders, promoting a trading activity by any legal means. Either you may do it personally or with the participation of external specialists (the choice is always dependent on purely individual factors, above all, the human factor, which determines the level of trust between the owner of the future platform and hired managers).

Later on, you should provide the security of all IT levels from both hacker attacks – common ones and the most non-standard ones. An integral analysis of the most productive hacker attack – successful and failed ones – is needed.

The last thing to do is gathering a competent team of a customer support service.

Legal and financial matters

The complexity of reaching technological objectives related to the creation of a cryptocurrency exchange is unquestionable because only competent specialists can do that. Nevertheless, in reality, solving financial and legal matters captures over 50% of the time and it is the most complex and thorny issue.

First of all, you need to deal with legal entity registration. The first to do is choosing a jurisdiction the most loyal to crypto services. It hasn’t recently become a lot easier than last year or the year before that because cryptocurrencies have not yet been recognized by the masses. The implementation of tokens is most welcomed in Malta, Netherlands, USA, Switzerland, and Estonia. Registering an exchange in any of these countries will provide its relatively smooth operation in the future.

Then you need to take care of license acquisition because many countries dictate that activities related to storing and exchanging cryptocurrencies shall be properly licensed. A spectacular example is Estonia, the legislation of which requires the obtainment of two licenses at once – one for crypto wallet operation (storage of cryptocurrency), the other for exchanging crypto for fiat money.

The next issue of principle, or rather three issues of principle are KYC, KYT, AML compliances.

Firstly, as a financial system member of a certain state, the owner of the exchange will be obliged by anti-money-laundering regulations (AML). The 5th AML Directive that is to come into legal force on 10 January 2020 in Europe, stipulates severe requirements on identifying customers and their transactions.

Secondly, it’s an obligatory personal (and possibly, registration) identification of every user of a new exchange (KYC policy – Know Your Customer). Of course, you can collect user documents and carry out identification procedures using databases on your own. However, why spend time on manual labor when you can apply to finished services (Veriff, Sum & Substance, Trulioo) that allow easy and cost-efficient implementation of verification processes.

Thirdly, another important regulation has recently appeared – KYT (Know Your Transaction). Essentially, it prescribes that all crypto exchanges are obliged to verify cryptocurrencies users transfer to them, and block transactions from so-called «dirty» sources. This is driven by the fact that cryptocurrencies are heavily used in crimes: terrorism financing, drug dealing, counterfeiting. You shouldn’t lay on your shoulders the tasks that various services can fulfill, the most convenient and cost-efficient of which is Traceer at the moment.

Under the legislation, a crypto exchange staff must include a certified AML officer that is responsible for tracking suspicious transactions and filing SARs (Suspicious Activity Reports) to financial monitoring authorities. That officer must have a degree in finance and a certificate issued by one of the accepted global communities; for instance, ICA (International Compliance Association) or ACAMS (Association of Certified Anti-Money Laundering Specialists).

Development cost

Developers usually do not specify an exact cost of similar work because its scope is unknown. One could barely estimate the amount without preliminary negotiation as different customers have different expectations. That being said, there should be at least indicative figures. Market investigation shows that prices have been adjusted after the 2017 rush and they have dropped. We have picked up the average prices depending on the macroregion and which exchange the client chooses:

Northern Europe:

  • Ready white label exchange — €5 000 to €16 000;
  • Crypto exchange from scratch — €90 000 to €260 00.
Northern America:
  • Ready white label exchange — $6 000 to $19 000;
  • Crypto exchange from scratch —$110 000 to $320 000.

Cryptocurrency exchanger

More often than not, inexperienced users confuse the exchange with crypto exchangers in the process of trading or communication because both types of services exchange cryptocurrencies. That aside, there are several fundamental differences between them. Most notably, you should remember that the exchange is a platform, where users trade, and a regulator or intermediary between the buyers and the sellers. And the exchangers are a separate party in trading being directly involved in trading as a seller or a buyer. It’s no different from ordinary currency exchange offices in this regard.

This fact also controls the situation of token prices. Cryptocurrency exchanges are driven by a balance of supply and demand in their pricing policy, which helps them be more affordable (almost all participants influence the prices) whereas the exchangers’ prices are determined by their owners. Surely, this could be called a shortcoming, but it’s this factor that doesn’t allow the exchangers’ clients to carry out the «pump» (a rapidly provoked rise in the price) and «dump» (a process reversed to the «pump», i.e. a sharp drop in the price) schemes.

It’s not hard to describe the pricing process in the exchanger: the owner just binds the internal rate to the exchange one. As a rule, he aligns it with the most popular cryptocurrency exchanges; for instance, Binance, Bittrex, and EXMO, but not always: at times, many exchangers operate with a rate, which is considerably different from current prices of large exchanges. Upon that, a shortcoming of exchangers, which is conditioned upon the objective reality, emerges: the user can’t choose a token purchase price or a selling price that is acceptable to him since there is a local exchange rate established. And the exchange allows creating a limit order and conducting a transaction at the point when the price rises or drops to an acceptable level.

There is a set of nuances when creating an exchanger, which the user notes consciously or not:

  • operating hours;
  • rapidness of online support;
  • variety of currency pairs with popular crypto coins;
  • reasonable fees;
  • easy-to-use user interface;
  • smooth functioning.
If all these aspects or at least the majority of them are considered and implemented according to the users’ wishes, then the app is bound to succeed. Of course, it’s practically impossible to implement everything at once, so the works on the app should be carried out step by step and the app should be updated at the earliest opportunity.

Development cost

By all means, the cost of making a cryptocurrency exchanger is far lower than of a cryptocurrency exchange; however, it can't be carried out at minor expense because approximate prices depending on the macroregion are:

Northern Europe:

  • Ready white label exchanger —€3 000 to €10 000;
  • Crypto exchanger from scratch — €50 000 to €140 000.
Northern America:
  • Ready white label exchanger — $4 000 to $13 000;
  • Crypto exchanger from scratch — $70 000 to $200 000.
Certainly, there is a wide range of various hybrid apps, which are trying to combine the features of the above-mentioned ones to improve the things that everyone’s happy with. Whether to experiment with such projects or invest in something familiar, tested, and effective – is a personal choice, but hardly someone would recommend such a choice.

Good luck with familiarization with the world of cryptocurrency apps!


Cryptocurrency App Development: Features and Costs key takeaways:

#1. Cryptocurrency wallet
#2. Development and costs
#3. Exchange
#4. Legal and financial matters
#5. Development cost
#6. Cryptocurrency exchanger
#7. Development cost

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Yuri Musienko
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