There are many things you need to know about cryptocurrencies and blockchain technology. The first thing that comes to mind is Bitcoin. Bitcoin, which was the first-ever digital currency created, is followed by other cryptocurrencies like Litecoin and Ethereum. Within ten years of inception, cryptocurrencies have gained popularity at a rapid pace, as it provides numerous benefits such as low trading costs, security, user anonymity, irreversibility of transactions, and decentralization.
Building a cryptocurrency exchange website has become a highly profitable business venture these days. If you want to learn how to create an exchange platform for exchanging one cryptocurrency with another (cryptocurrency to fiat or fiat to crypto), then this article is just for you. Here are some best tips which will help you develop your crypto exchange platform in no time.
Why Create Your Cryptocurrency Exchange Software
There are plenty of reasons why you should create your cryptocurrency exchange software. First, the demand for cryptocurrency exchange software is growing, and it’s predicted to grow even further in the upcoming years. As stated by Statista, Bitcoin ATMs worldwide increased every passing month since 2015 and reached new highs in early 2021.
Second, cryptocurrency exchange software allows you to trade multiple cryptocurrencies—a great opportunity for you as a businessman to gain as much profit as possible. Third, you can create your exchange software without having to do any coding whatsoever. With ready-made Cryptocurrency Exchange Scripts available on the internet today, creating your crypto trading platform is just a breeze.
In addition, this type of script offers several out-of-the-box features that allow the users to instantly launch their crypto web platforms. And last but not least, this sort of script allows you to get your site up and running within a few weeks—saving you from expensive development costs without sacrificing quality at all.
Launch an Exchange Software With a Unique Trading Fee Concept
The platform users should have an easy time understanding your exchange fee model, as well as the fee percentage itself. It is important to note that a specific fee structure should not be complex or too difficult for the traders to understand. Your platform needs to offer competitive trading fees if it’s going to attract users who are looking for a cryptocurrency trading space with low fees. So, you should consider how much other cryptocurrency exchanges charge for their services and make sure that your exchange’s fees are competitive.
You also need to avoid being unfair when setting up the exchange fee structure of your platform. Make sure that all people who use your services will be treated fairly, irrespective of their cryptocurrency trading volumes. You can offer discounts or trade waivers based on certain criteria, such as frequent use of the platform, but make sure it is fair across all users.
List Popular Cryptocurrency Like Bitcoin, Ethereum, and Polkadot
Popular cryptocurrencies like Bitcoin, Ethereum, and Polkadot are always in high demand. By listing these cryptocurrencies on your exchange software, you can attract a large number of users. If there is a cryptocurrency that people want to buy or sell but is not available on your platform, they will go elsewhere.
There are more than 1,800 cryptocurrencies at present. So it may be difficult for you to decide which ones to include in your exchange software. Moreover, make your platform informative so that if a user has confusion like how to buy Polkadot, what is DOT, why should I buy DOT, and more, they don’t have to leave your platform.
To make an informed decision, you can look at the factors like market capitalization and the trading volume of cryptocurrencies. You can also use third-party tools like Coinmarketcap that display information about all listed coins, such as their rank based on market capitalization and their daily trade volume.
Make the Process of Deposit and Withdrawal Simple
You should make the process for deposit, withdrawal, and trading simple for beginners. They will not be able to understand complex processes, and if the process is long and complicated, they might get irritated. You can even lose potential customers in this way.
While making it user-friendly, you should also keep an eye on security measures. The crypto world has seen a lot of hacking cases, so your exchange platform must be secure enough by using advanced technology to protect the data of users and the company against hacks or thefts.
The most important thing that users are concerned about is how fast they can withdraw their cryptocurrencies when they want to cash out their holdings in fiat currency or another cryptocurrency. So, you should focus on providing them a fast transaction with multiple payment methods supported like a credit card, debit card, bank transfer, etc., so that users don’t have to wait for days to get funds on their bank account from your exchange platform.
Test Your Software Before Launching
As a business owner, you will want to make sure that the software you are launching is secure, user-friendly, and has no bugs. So be sure to test it before launching it officially. This includes testing your exchange platform on different devices such as smartphones, tablets, laptops, and desktops. That way, your users will have a variety of options when using your product.
You should also ensure that the exchange platform works smoothly with other third-party programs that are frequently used by traders, such as wallets and cold storage devices. That way, their experience will be seamless, and they won’t have any problems when using your platform to trade cryptocurrencies.
Make Use of Multi-Layer Security Measures
As cryptocurrencies are always prone to malicious attacks and hackers, you must ensure that your platform is equipped with the latest security features. Here are a few things to consider:
- Advanced DDoS protection: This can be achieved by partnering with top-notch cloud service providers like Google Cloud, AWS (Amazon Web Services), Rackspace, Vultr, etc.
- Know Your Customer (KYC) and Anti-Money Laundering (AML): Integrate KYC/AML tools in your platform as they will help you avoid fraudulent users on your exchange platform.
- Two-Factor Authentication (2FA): Provide users with 2FA security measures such as SMS verification or email verification so that their funds cannot be misused in any way.
- Backup of private keys and offline storage: Store private keys offline rather than on online servers so that user funds cannot be hacked or stolen easily by malicious attackers. Also, make regular backups of private keys so that if perchance one set gets lost or damaged, another one could be used for recovery purposes.
- Cold Wallet and escrow arrangements: These measures are necessary for keeping customer assets safe from theft and other hacking attempts as cold wallets remain offline most of the time, and escrow accounts ensure great control over customer transactions on the exchange platform.
Provide Maximum Liquidity to Users
In simple words, liquidity means the ability of a market to allow assets to be bought and sold at stable prices. Liquidity is an important factor for traders, as it helps them avoid slippages when buying or selling cryptocurrencies. It can also help traders get better rates for their orders. For example, suppose you place a buy order on an exchange that has poor liquidity for the currency.
Having a good level of liquidity on your cryptocurrency exchange can help you in many ways:
- It helps attract more traders to your exchange
- You can always complete traders’ orders without delay
- You can provide better trade execution speed
- You can make sure timely settlements of payments
Enable Users to Scale their Trading Experience
The key feature to attracting more traders to your platform is to provide the ability for traders to scale their trading experience. You should add features such as:
- Margin trading: One of the most vital features of an exchange platform is margin trading, wherein a trader can get a loan from the broker and use his collateral as security against the loan. In this way, a trader can avail more funds from brokers than they would otherwise have without going through complicated bank loans and other formalities.
- Futures Trading: Futures trading works in a similar way as margin trading. However, futures contracts are standardized by different exchanges and involve buying or selling goods at a future date at an agreed-upon price. In simple terms, it involves you betting on the price of crypto-currencies at some point in the future. It would either pay you handsomely or losses just like any other financial instrument.
- Stop-loss orders: Another feature that can be added to your cryptocurrency exchange platform is stop-loss orders which allow users to buy/sell crypto-currencies when they reach a certain value. For example, if you’re willing to buy ten bitcoins at $10,000 but don’t want them past $12,500. Stop-Loss can help you by automatically selling these bitcoins when their value touches the $12,500 mark. It ensures that you don’t lose too much money on something that may or may not happen in the near future.
Create a Mobile App
The development of a mobile exchange app is an essential part of the process. Users are now used to using their phones to do all sorts of things, and they want easy access to their money. An app will allow them to trade on the go, and it will make you look up-to-date.
It’s also important that you integrate your cryptocurrency exchange platform with social media systems like Facebook and Twitter. This will help users build communities around cryptocurrencies and help your platform become more popular as well.
Bottomline
Following the above tips will help you to build a cryptocurrency exchange website. If you are not clear about this process, then you can hire a cryptocurrency exchange software development company. They will help you in building your cryptocurrency exchange platform from scratch.
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