More and more people are using cryptocurrencies and decentralized technologies. The value of the markets has increased, the number of transactions has grown exponentially, and people, businesses, and governments worldwide are using cryptocurrencies. Bitcoin was made on January 3, 2009, and it was worth $0 when it was first produced. It went over $64,863.10 in just twelve years.
You probably already know that Bitcoin isn’t the only cryptocurrency on the market but is the most popular one. Each more than 10,000 cryptocurrency has its purpose and interacts with Bitcoin in some way.
What is a Platform for Trading in Cryptocurrencies?
A cryptocurrency exchange is where customers can quickly buy and sell cryptocurrencies.
With these trading sites, users can trade one cryptocurrency for another. For example, they can trade Ethereum for Bitcoin or Litecoin for Binance.
Clients can also trade their digital coins for real currencies like the US or Australian Dollar using crypto exchange apps.
Also, exchange platforms show how much their cryptocurrencies are worth on the market right now. Users can turn bitcoins back into the currency of their choice. Then, they can leave the amount in their account as cash if they want to trade it for crypto later, or they can take the whole amount out of their performance.
Several Exchange Platforms for Cryptocurrencies
To get a good idea of how cryptocurrency exchanges work, it’s essential to know about the different kinds of crypto exchange platforms, which include:
Centralized Platforms for Trading Cryptocurrencies (CEX)
The most common type of cryptocurrency exchange is one that a single company runs. It is primarily a place where digital goods can be sold and bought. In a centralized exchange, you must rely on a third-party operator to oversee the transaction and protect the assets of both the buyer and the seller.
In CEX, transactions are not recorded on the blockchain but an IOU-based system. Three well-known centralized cryptocurrency exchanges are Binance, Coinbase, and LocalBitcoins.
Decentralized Exchanges (DEX)
Regarding DEXs, no one is in charge of the assets. Using decentralized software and smart contracts, the buying and selling of cryptocurrency are done automatically. Also, you should know that most decentralized solutions use Ethereum, so it might not be the best choice for Bitcoin. Unlike CEX, DEX does not require users to keep cash on their trading accounts.
P2P exchanges let users trade cryptocurrencies directly with each other or swap coins for regular currency. Like a bulletin board, merchants can post offers and talk with other members about terms. Security should have been your top priority if you started a peer-to-peer cryptocurrency exchange. The world is still talking about how Binance lost $40 million in a phishing scam in 2019.
As its name suggests, the instant exchange lets people instantly trade one cryptocurrency for another. The exchanges are easy to use; all you have to do is sign up for a trader order, which will be done immediately.
Instant Exchange is a central service that gives access to the trading pairs of different exchanges.
How to Set Up an Exchange Platform for Cryptocurrencies?
1. Figure out the problem
2. Set the scope of operations
3. Choose a type of exchange
4. Figure out who has jurisdiction
5. Pay close attention to rules and laws.
6. Make a deal with a payment processor or bank to work together.
7. Identify a Liquidity Supplier
8. Set high standards for security
9. Add a way for customers to get help
10. Help with cryptocurrencies
11. Put your cryptocurrency exchange to the test
Key Things Your Cryptocurrency Exchange App Should Have
The first step in making a cryptocurrency app is to figure out how your app will exchange cryptocurrency. Start with the basics of your platform, whether you want to let people trade a single cryptocurrency or several.
1. Verifying and Permitting Users
Give your users a clear and interactive way to get started. Also, remember that verification is an integral part of crypto applications because it reduces the chance of fraud and keeps the integrity of transactions. For users’ data to be completely safe, your software needs two-factor authentication and anti-bot verification.
At Systango, a company that makes crypto apps, our skilled UI/UX designers use unique design elements to complete the user sign-up process quickly.
2. User Interface
People see it when they visit your exchange platform, so make sure it is easy to use. A user-friendly interface makes transactions go faster, reducing trading time. The dashboard should simplify things like order management, order history, withdrawing and putting money in, statistics, and so on.
3. Trading Engine
The trading engine is the most essential part of a cryptocurrency exchange solution. Without a trading engine, software for exchanging cryptocurrencies is useless.
Usually, a trading engine function keeps track of all open orders and bids and lets new deals be found and made. In short, this function takes care of:
- Transactions that use cryptography are carried out.
- Balances the math.
- Access to the order book.
- Match the trades on the exchange (buying and selling).
The wallet makes sending, receiving, and storing virtual cash easy. The wallet is better if it can hold more than one cryptocurrency. The following should be in the wallet for a bitcoin exchange software like Coinbase:
Integrate the ability to use more than one wallet to support different kinds of transactions.
In real-time, you must integrate with central banks and payment gateways to buy and sell cryptocurrencies.
Users should be able to withdraw or deposit money in various ways, such as by email, QR code, ATM, transfer, etc. Most of the time, you don’t need to verify your account to trade or deposit digital currencies, but you do need to verify your account to withdraw them.
So, having an e-commerce platform is a must if you want to reach as many people as possible.
The two most common bitcoin wallets are “hot” and “cold.” Let’s take a close look at both wallets:
Since hot wallets are linked to the internet, they are not as safe. Because of this, digital wallets are more likely to be attacked by fraudsters and have security problems. Even though hot wallets are easy to use, consumers always have significant security and privacy risks.
Cold wallets store cryptocurrency tokens outside the internet, making them more secure. To stop hackers, users should be able to move money from hot wallets to cold wallets and back again.
It is an excellent tool for making crypto solutions that work well.
It gives your users control over the data. This feature can help app users maximize profits by letting them make better investment decisions in real-time, making the most of every trade opportunity.
Let’s look at some of the most common technical indicators that traders use to decide what to do:
The Relative Strength Index: shows how strong a trend is and how likely the direction will change. This indicator might, for example, show how much and how fast prices have changed recently.
Moving Average: shows the average price for a certain amount of time.
Convergence of Moving Averages Divergence: It helps determine how prices will change in the future.
Stochastic RSI (StochRSI): StochRSI is excellent at finding overbought and oversold areas.
In addition to keeping track of information in real-time, your software must give customers a visual way to trade.
6. Push Notifications
Push notifications have become one of the essential parts of most apps for trading cryptocurrency because they make it easier for app users to talk to each other.
With push notifications, you can let users know about special deals, new listings on a coin exchange, price changes, the latest trends, and other important information.
With customization, users can choose which alerts they want to receive.
7. Transaction History and Order Book
The order book is a list of open orders that lets users see what bids are going on right now. Using transaction history, users can keep track of what they’ve done. It’s a list of all the trades that have already been made, with details like the trade rate and the trade time.
When building an API for your cryptocurrency exchange platform, think about the following:
Websockets make it possible to send information about trading and market changes. This technology allows a server to respond to an event without being asked for a response.
Private and Public API
Private APIs also called “Internal APIs,” give developers access to the infrastructure they need to do their jobs. This strategy makes it easy for developers to connect to the data, applications, and back-end system.
Public APIs, on the other hand, are the rules that must be followed to access data and services that are shared outside of a business and in the public domain.
FIX Protocol is a must-have for any trading platform, regardless of the trade. It makes connecting to many trading platforms easy and quick for app developers like Binance or Coinbase.
9. Admin Panel
An admin console is a great feature that helps the owner and traders of a cryptocurrency exchange control many operational issues.
You can change the way this function works so that it works with your cryptographic application. Still, each administrative interface must be able to add new currencies, change trading costs, manage cryptocurrency listings and credit/debit funds, and answer support questions.
How Much Does It Cost to Build a Crypto Exchange?
The cost of making a cryptocurrency exchange depends on many factors, such as the features, the number of currencies and tokens to be added, the level of security, etc. After talking with Suffescom’s experts about your idea and vision, you’ll be able to estimate the cost.
It usually costs more than $7,000 to make a copy of an existing platform. Mainly it is a cheap and easy solution for many business owners.
The best solution to get into the cryptocurrency exchange business is one that has integrated cryptocurrency exchange applications, a high level of security, and good scalability. It is possible to build and run your platform for exchanging cryptocurrencies.
More people than ever are mining, farming, and trading cryptocurrencies. The price of Bitcoin and other cryptocurrencies goes up daily, making it clear that investors are making a lot of money. You can also make money from how the world’s financial systems change. Creating a place to trade bitcoins is usually a great business idea if done correctly. In conclusion, hiring a crypto exchange development company to make a secure crypto exchange platform could be your golden goose for the foreseeable future.