Blockchain technology has disrupted the functioning of several industries and is poised for huge growth in the years to come. Its application is hugely seen in cryptocurrency which has witnessed an increased adoption over the past decade. Let us understand how to develop a cryptocurrency exchange, the features to implement, and the obstacles to face.
Figuring out how blockchain works
It is a publicly accessible database that gives priority to decentralization. Immutability is ensured as no one can erase information once it has been added. It ensures top-notch security as the records of users are distributed all over the world. Anyone can create their own blockchain network as it is open-source software.
A huge requirement of computing power would be needed. Security is highly important in the blockchain network as it can lead to a loss in the value of the cryptocurrency if it is compromised.
While Bitcoin gained a huge advantage of being the first-mover, other cryptocurrencies have kept up the pace by being quickly developed. Though their popularity has increased, cryptocurrencies are deemed to be illegal in many countries.
Though many exchanges have emerged, they have significant differences in the number of currencies supported, commission charged, and other features offered.
Analyzing the rise of Binance
Launched in 2017 with Chinese origins, Binance is led by its founder and CEO, Changpeng Zhao. While being one of the top cryptocurrency exchanges, handling billions of trading volumes, it has also gone for an ICO (Initial Coin Offering) recently to consolidate its presence in the market. Its ICO had more than 40,000 token holders.
Though the Chinese government issued a blanket ban on token fundraising, it had already raised a huge amount of funds from plenty of venture capitalists.
The company also launched its own customized coin, Binance Coin (BNB), providing lucrative benefits to investors. It can be used for internal service purchases by users.
Its valuation is a whopping $2 billion currently. Their success can be attributed to their solid team behind product development with immense experience in exchange trading. They offer high-quality services at very low trading fees compared to the other competitors in the industry. Its primary source of revenue is through trading fees and withdrawal charges.
While high trading volumes, a huge number of new users, and availability of a large number of digital currencies have contributed to its growth, they have provided out-of-the-box solutions through virtual gifting (Gifto) and an exclusive launchpad token sale program. They also provide expert guidance for startups working in the cryptocurrency space along with funding assistance and listing services.
The procedure to execute for developing a cryptocurrency exchange company
Owning a cryptocurrency exchange has become a profitable business today. Despite the number of platforms available currently, there exists a stark difference in the quality of services provided. While volatility is a normal phenomenon in the market as the rates cannot be solely controlled by any authority, upswings and downswings are quite common.
As the market continues to break records, it gains more trust from interested users. Some of the steps to implement are,
- Make the login page secure – Since it is the first point of communication while a user commences his operations, the system must be safeguarded against unauthorized logins, hacking attempts, and any deliberate manipulation. Highest security standards should be implemented, such as two-factor authentication and database encryption.
- Verify each user thoroughly – Make sure to verify each user’s background completely before registering them. Verified users would have advantages like a higher withdrawal limit when compared to non-verified users. Verification ensures a greater level of transparency and minimizes the chances of a scam.
- Facilitate acceptance of deposits and withdrawals – Permit traders to deposit money into their wallets and withdraw money whenever they require it. Fix a specific limit.
- Speedy processing of transactions – Ensure that the trades are executed quickly. Eliminate all glitches that may occur in the initial stages. Include different types of orders and assist the trader to choose the most convenient one.
- Provide insights through data – Create interactive graphs and charts that indicate the price changes and market movements. It will help in improving decision making.
- Availability of liquidity – A huge trading volume and increased trading activity can be handled only with sufficient liquidity. Hence form APIs with the leading exchanges in the market.
- Have a robust admin panel – Monitor the daily trades that occur on the platform and keep a watch over all the activity of the users. Report any suspicious activity immediately.
Other factors to consider while building a Cryptocurrency exchange company
- Design – Make sure that it is user-friendly and aesthetic. Consult the needs of the client before implementing it. It generally comprises of wireframes where key features would be implemented and a prototype where user experience will be formulated where the user’s interaction with the application would be visualized.
- API – API stands for Application Programming Interface. It governs the backend functioning of the software. It helps in user authorization and assists the admin panel in carrying out basic functions. API can also be used to store the details of deals created by users, circulating newsletters. It can be shared with other third-party organizations.
- Application of Blockchain technology – It should be utilized for storing and processing the data. An enhancement in trading experience must be ensured.
- Testing – Ahead of the official launch of the application to the members of the public, make sure to do both internal and external testing, and eliminate the bugs in the user interface.
- Security – Threats such as data breaches and hacking should be neutralized through top-notch security measures. User data and funds must be kept confidential. Usage of encryption keys and two-factor authentication should be encouraged.
Developing a Cryptocurrency exchange company in the current market scenario provides rich opportunities for traders as well as for entrepreneurs. It has immense growth potential in the days to come.
Hence, make sure you follow the above guidelines before indulging in the development process.
