A bitcoin exchange business can be really profitable to those who know how to work with it, though it is highly unpredictable, inconsistent, and very risky.
Here are some twist pointers to guide you on starting your own crypto exchange and what you should consider before doing so.
RESOLVE LEGAL ISSUES
To confer legal status on the bitcoin exchange platform will help gain the confidence of your clients. Obtaining a license needs a lot of paperwork and monetary cost. Though many companies operate without a license, the norms may change in the future so it is safer to obtain one. It gives you a good reputation among customers, banks, and government regulators.
Whether your exchange functions worldwide or within a few countries, it has to be in conformity with the laws of each country. The specific local government should approve cryptocurrency as a legal currency.
Most governments will want your exchange to adhere to KYC (know your customer) and AML (anti-money laundering) to resist illegal intentions. Documents of customers (passports or id-cards) needed to be obtained and recorded. There are many crypto-friendly countries like Switzerland, Japan, Mexico, Canada, Singapore, and Malta.
Violating laws and regulations can lead to fines, litigations, and criminal matters. Hiring an experienced law specialist is the best option.
KNOW ABOUT BANK AGREEMENT
When you open an account for business transactions your clients can buy and sell bitcoins for money. The primary purpose of withdrawing funds using payment processing and a payment gateway (API) is provided for the users. Most banks hesitate to open accounts for cryptocurrency- linked companies. It depends directly on your environmental regulations.
SET UP A WHITE-LABELED CRYPTOCURRENCY EXCHANGE WEBSITE FOR YOUR USERS
The development of bitcoin trading software is a major & vital step. It is very challenging and complicated. Before programming, you have to think through the UI and functionality of your future site. Security is also a crucial factor. It is better to hire an experienced professional in cyber-security.
Liquidity being the most essential aspect of success to a market is also a significant problem of cryptocurrency exchange. Investors and traders provide liquidity. Implementation of an API interface that shares trade volume information between your exchange and another can improve liquidity position. Becoming a part of a big cryptocurrency exchange also helps improve liquidity.
PROVIDING STRONG CUSTOMER SUPPORT
Create a rapid and courteous support team with real profile pictures. Make sure they are friendly with the clients. Lowering your fees when compared to competitors will attract the clients. Adding new coins to allow customers to allow traders to trade multiple cryptocurrencies, providing customers with token issuing support, providing fee-based advisory services will all help strengthen customer support.
CRYPTOCURRENCY EXCHANGE DEVELOPMENT in TWO PHASES
There are two types of exchange platforms.
This exchange acts as a middleman between buyers and sellers. It handles its assets and earns trading fees. The high liquidity and rapid transactions make it easier to use. At the same time, they are less secure as clients of centralized exchange feed in their private key to move digital assets from wallet to exchanges. This leads to keylogging attacks since they need personal data from clients.
All trades here are peer-to-peer. There is no intermediary as trades are made directly between users. Assets and private keys are managed by only users. Transactions are slow since this platform has higher entry barriers. Hence liquidity and volumes are much lower.
ESSENTIAL COMPONENTS OF YOUR FUTURE CRYPTO EXCHANGE
The following are the vital components that form the foundation of your exchange.
- Trade engine
- User interface
- Admin panel.
Future scope of Bitcoin Exchange Business:
Still, the Bitcoin exchange business startup is not able to take the easy way. It’s very critical to start in a very short time. But, it’s possible at a ready-made bitcoin exchange script.
We hope that this article has cleared some misconceptions and will help you better understand how to start a successful bitcoin exchange platform to run a business. You can also read more about technology solutions to look out how Bitcoin exchange script works and how to get started or check out the lightweight license, a sleek UI-only version of the exchange that allows full customization of the UI while being connected to one of the full-fledged exchanges.