cryptocurrency exchange development

Posted by suraj on March 16th, 2020

A cryptocurrency exchange or digital currency exchange (DCE) is a business that enables clients to exchange cryptocurrency or digital currencies for different resources, for example, customary fiat cash, or diverse computerized monetary forms. In other words, it is a platform which acts as a mediator between buyers and sellers of cryptocurrencies combining liquidity. Building a cryptocurrency exchange is a complex process, but not an impossible one.

There are several things to be considered before launching a cryptocurrency exchange and first of them is to calculate approximate costs involved in this project (the costs of legal concealing and registration, technology, hosting, market research, developers, project managers, design, advertising, etc). Not all of these costs will be needed during the initial phase, but it is essential to start with the right plan which involves funding of a project.

After calculating approximate costs, one of the first steps in building a cryptocurrency exchange is related to legal actions, or, obtaining a license. Different countries offer different regulations when it comes to cryptocurrency, so it is essential to make an initial plan in which countries one intends to have a trade accepted in. Regardless of whether one wants to operate globally or restrict to a particular region or country, it is generally required to get vital authorizing and endorsements for an organization or a company to open a cryptocurrency exchange. Laws differ from place to place, so it is necessary to consult a legal expert in regards to the authorizing, licensing and compliance with local/country laws and regulations.

Secondly, it is required to decide which type of cryptocurrency exchange it will be – centralized cryptocurrency exchange or decentralized cryptocurrency exchange. Additionally, market research on the cryptocurrency one wants to support needs to be done in an initial phase of building a cryptocurrency exchange.

The liquidity represents the foundation of any successful exchange, thus, it is advisable to connect exchange with others for added liquidity. If there is a need to convert dollars to crypto, one will need to partner with a payment processor, such as a bank. With the assistance of a proficient payment processing partner, one will have the capacity to give users the facility of adding and withdrawing funds however they see fit. As crypto industry rises it becomes a desirable target for hackers and cyber-crimes and this is the reason one will need to implement best security practices when opening a cryptocurrency exchange.

The idea behind each exchange is to be the safe place to meet supply and demand and exchange of funds, but not all exchanges are the same. Some directly buy and sell currency from investors while some are just a platform where investors directly meet. For building an efficient cryptocurrency exchange it is advisable to work with an expert (or preferably group of experts) in this area.