A Guide on How to Build a Cryptocurrency Exchange Platform | Trends, Cost & Features
Table of content
- A Guide on How to Build a Cryptocurrency Exchange Platform | Trends, Cost & Features
- What is a Cryptocurrency Exchange Platform?
- Types of Cryptocurrency Exchange Platforms
- Crypto Exchange Development Challenges
- Must-Have Features of Crypto Exchange Platform
- How to Build a Crypto Exchange Platform
- How Much Does it Cost?
- How Can Interexy Help?
- Final Words
The Crypto market is now the second one after the NFT industry. Even though we have seen lots of issues with currencies during the last few months, this market tends to fail and rise with immense speed. In addition, it is the best time to enter the industry with your exchange platform as people rush to buy new tokens that seem to grow over those who have filed recently.
COVID-19 pandemic gave a huge boost to the growth of this market. The global cryptocurrency market size is now estimated to be worth USD 915.8 million. Experts predict a readjusted revenue of USD 1125.8 million by the end of 2028, with a CAGR of 3.5% during the review period. Only in the US is the market suggested to grow from USD million in 2021 to USD million by 2028.
Even if you don’t want to become the next Binance, you still have lots of opportunities to enter this space with a successful and demanding application. But how to build a cryptocurrency exchange app? We are here to show you how, what features you will need, how much it will cost and what trends you can consider. Let’s get started.
What is a Cryptocurrency Exchange Platform?
To put it simply, a cryptocurrency exchange refers to a website, platform, or mobile application that is designed to allow users to buy, sell, and exchange crypto and fiat currencies. The key benefit of these software products is their security, transparency, and enhanced speed of transactions. The more secure, fast, and easy to use your product is, the more chances you have to attract numerous users. Which, thereby, comes with higher profit.
Types of Cryptocurrency Exchange Platforms
- Classic Exchange Platform
The classic cryptocurrency exchange platform is focused on trading, similar to a stock exchange. You can exchange both fiat money or cryptos by putting a limit order that would be later set in an order book and wait there until matched. You can also exchange assets by placing a market order that is usually quickly matched with a user’s request already placed in the exchange’s depth of market (shortly DOM).
- Peer-to-Peer Crypto Exchange Platform (P2P)
This is one of the most popular types that is not limited to cryptocurrencies. Most common representatives of this type are Over-the-counter desks (OTC), which allow users to buy or sell digital assets from some other customers or companies, but in a confidential manner.
This type does not allow an order book and does not provide a direct effect on the price of the asset. A good example of this exchange type is the LocalBitcoins.com website, which has achieved that the supply meets demand in the meaning, meaning users trade through peer-to-peer systems.
- Brokers and CFDs Trading Platforms
By using this type of crypto exchange, users who want to buy assets or sell them can find the counterparty for their trade, which in some cases can also be done by the broker himself. The broker (known here as the middleman) takes a fee for the trade while also offering safety and security for both parties.
- Derivatives Exchange Platform
Finally, the last type of crypto exchange platform. In the derivatives type of platform, you can trade the underlying token price, which allows you to benefit from maximizing your profit if you trade in a correct and wise way. Another great benefit of this platform is the high leverage trading through specialized instruments such as futures or perpetual swaps.
Crypto Exchange Development Challenges
Today most cryptocurrencies like Bitcoin and Ethereum have a limitation in their growth thanks to the fact that when a specific level of user activity is reached, the performance of the system drops immediately. In addition, with the time needed to confirm transactions increases, the fees also rise. In some cases, the transaction approval time took over 5 days, while the fee increased to $50.
Usability and Market Acceptance
Cryptocurrencies are not widely accepted yet. Therefore, users cannot use them for regular payments, as they are too complicated, usually have an unstable price, and are accepted by a small number of small stores that offer goods and services: shops, airlines, hotels, and similar ones.
Microtransactions represent transactions that happen with very small amounts, which usually occur when purchasing and selling low-value goods. For instance, when buying a cup of coffee. If you want to provide such services, you will need to create a payment system that offers high speed and very low commissions.
Security, in general, is the number one issue in any NFT or blockchain software. Many hacker attacks have happened on crypto exchange platforms during the last few years. And the research shows that the activity of hacker attacks on various crypto services in 2018 increased by 700% compared to last year, and the number increased every year.
However, modern technologies offer various ways to solve this problem; where most popular are:
● Biometric data for authentication;
● AI, quantum entanglement, and other advanced technologies;
● Transition to platforms made on the basis of decentralized blockchains.
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Must-Have Features of Crypto Exchange Platform
User Authorization and Verification
When you wonder how to build a cryptocurrency exchange website or platform, you have to start with these two key features. Verification is essential if you want to guarantee transparency of every transaction as well as reduce the risk of attacks. This will also ensure your product complies with international industry standards. We recommend you add anti-bot verification and two-factor authentication (2FA) to improve protection, while it is also useful to ask users to verify their identity by downloading their ID and photo.
As you may expect, a trading engine will be the foundation of your product. It will be responsible for how your platform works. For instance, your system can check the funds in all accounts, as well as the chances of the transaction, process data needed to set prices and commissions, find matches up the offers and bids, and more things like this. It is essential to effectively manage user investments; you will need to provide them with real-time trading data and high processing speed.
Since this is the hardest part of the development process, you will need to use blockchain development services from an experienced team.
Wallets are required as they allow users to store and transfer their digital money. It usually happens at the stage of authorization. However, it is worth noting that the e-wallet that you add to your product has to allow for secure transactions for withdrawing users’ virtual money and converting currencies to fiat money.
Order Book and Transaction History
These are other features that you need to consider when you want to know how to build a cryptocurrency exchange platform. Groups are responsible for the actual buy and sell orders separately, while a conveniently formed list of available orders is better known as an order book. Every time an order finds an offer that matches specific conditions, an exchange automatically creates a deal between customers, allowing the executed orders to disappear from the list.
Analytical Tools for Traders
The next must-have feature that will allow you to attract experienced users is the internal analytical system. Such analytical tools provide users with an opportunity to get extra information regarding the latest market trends and develop their trading strategies.
Push Notifications and Alerts
The last ones are push notifications and alerts. While they deliver value to users, they also help you boost communication with your users. By providing alerts, your users will always stay informed about vital events. For instance, you can provide notifications about price changes, trend news, coin listing alerts, exchange listings, and more.
How to Build a Crypto Exchange Platform
Perform Market Research
First of all, you need to perform comprehensive market research to find the latest crypto trends as well as extra features that can attract advanced users. As we have already said, this market is highly volatile thanks to some social & economic reasons. This is why it is best for you to perform an in-depth analysis on whether it is the right time for you to enter this space and, if yes, what you need to consider.
Determine the Working Region
When you want to know how to make a crypto exchange website, you have to consider the location of your future users. You can either choose some primary countries but also make a note that Russia, Ecuador, and Nepal are the worst choices as they are not allowed to perform transactions with cryptocurrencies.
Design the Architecture of the Exchange
Once you are done with choosing the type of crypto exchange platform, the next stage is to design the architecture of your crypto trading platform. In order to do it successfully, you will need to provide four important elements that include the following:
- Trade engine
- Multi-cryptocurrency wallet
- Admin control panel
- Effective, user-friendly interface
Hire an Experienced Development Team
If you are going to create a successful crypto exchange platform, you need to ensure the app will be crafted by an experienced development team with relevant experience. Once the design is done, you are ready to start the development. We recommend you follow the Agile development process to boost the process and always stay informed about each step.
Partner with the Leading Payment Processor
If you want to provide fast and secure fiat transactions, then you have to partner with a trusted payment provider. You can choose a trustworthy payment processor that hosts various online facilities. However, the best choice for you is to partner with a well-known bank that has fast settlements of funds, as it will ultimately ensure the best user experience.
Run Beta Testing
It is essential to run beta testing before you host the platform to the server. This has to be done in order to identify bugs and resolve issues before customers can notice them. Once this is done successfully, you can deploy the crypto exchange platform with the help of your development team.
Provide a Customer Support
No one knows how to use your product better than you. This is why you need to provide consistent customer support on a 24/7 basis. By providing helpful customer and technical support, you will boost user engagement and retention rates.
How Much Does it Cost?
The final cost hugely depends on various factors, but if we take the average feature set, the cost of crypto exchange apps would be somewhere between $57,000 to $98,000.
If you want to develop both a mobile app and a website, the price will rise and fall somewhere between $1,32,000 to $1,45,000.
However, the price is usually lower when you hire an outsourced development company compared to freelance and creating your own team.
How Can Interexy Help?
Interexy is one of the leading mobile and web development companies. We are on the list of top Dubai & Miami blockchain development companies, so we work with large projects like the $11M NFT launch – Lil Durk NFT Drop with Gary Vee Involved – American rapper with the best album award 2022. During this project, we have also partnered with Sandbox and now work with them for all our projects.
Having in-depth experience and immense knowledge in the niche, we always provide specialized resources to guarantee the success of each and every project. Our clients value the speed, transparency, and support we offer. Check our crypto app development services to learn more about expertise.
Now you know how to start a cryptocurrency exchange business, features you need to add, costs you can expect, and challenges you can overcome in advance. All you need to do is to develop a bug-free custom solution and market your product to achieve success. And if you are still looking for your development partner, book a free call with our experts!