The use of cryptocurrencies and decentralized technologies is on the rise. Market capitalizations have surged, transaction volume has increased exponentially, and adoption by individuals, organizations, and governments has reached worldwide. Bitcoin was created on January 3, 2009, and its initial value was $0. In only twelve years, it surpassed $64,863.10.
As you are likely aware, Bitcoin is not the only cryptocurrency on the market but the market leader. Each over 10,000 cryptocurrencies has its purpose and interacts directly or indirectly with Bitcoin.
What is a Cryptocurrency Trading Platform?
A cryptocurrency exchange is a platform that enables clients to purchase and trade cryptocurrencies quickly.
Users can trade one cryptocurrency for another using these trading sites. They can, for instance, exchange Ethereum for Bitcoin or Litecoin for Binance coin.
In addition, clients can trade their digital coins for conventional fiat currencies such as the US Dollar or the Australian Dollar using crypto exchange apps.
Additionally, exchange platforms display the current market value of the cryptocurrencies they possess. Users can convert bitcoins back into their preferred currency. They can then leave the amount in their account as cash (if they intend to swap it into crypto later) or withdraw the entire amount.
Various Cryptocurrency Exchange Platforms
To acquire a good understanding of the features of cryptocurrency exchanges, it is necessary to comprehend the many types of crypto exchange platforms – namely, the following:
Centralized Cryptocurrency Trading Platforms (CEX)
The most typical sort of cryptocurrency exchange is a centralized one. It is essentially a platform for selling and purchasing digital goods. In a centralized exchange, you must rely on a third-party operator to oversee the transaction and protect the assets of the buyer and seller.
In CEX, transactions are not recorded on the blockchain but on an IOU-based system. Binance, Coinbase, and LocalBitcoins are three prominent centralized cryptocurrency exchanges.
Decentralized Markets (DEX)
In the case of DEXs, no organization is responsible for the assets. Utilizing decentralized software and smart contracts, cryptocurrency purchases and sells automatically. Additionally, you should be aware that most decentralized solutions use Ethereum, so it may not be the most excellent option for Bitcoin. DEX, unlike CEX, does not need user cash to be stored on trading accounts.
Peer-to-Peer (P2P)
P2P exchanges allow users to trade cryptocurrencies directly with one another or swap coins for fiat currency. Similar to a bulletin board, merchants can make offers and negotiate conditions with other members. If you founded a P2P crypto exchange, security should have been your top priority; the world still recalls Binance’s $40 million loss in a 2019 phishing attempt.
Instant Exchange
As its name suggests, the instant exchange enables users to exchange one cryptocurrency for another instantly. The exchanges are simple to use; register for a trader order, which will be performed immediately.
Instant Exchanges provide access to the trading pairs of various exchanges through a central service.
How to Establish a Cryptocurrency Exchange Platform?
1. Determine The Issue
2. Establish The Operational Scope
3. Select an Exchange Type
4. Determine the Jurisdiction
5. Pay Attention To Compliance And Regulations
6. Form a partnership with a payment processor or bank
7. Identify a Liquidity Supplier
8. Establish superior security standards
9. Introduce a channel for customer support
10. Cryptocurrency Assistance
11. Test Your Cryptocurrency Exchange
Key Features for Your Cryptocurrency Exchange App
Understanding your app’s essential cryptocurrency exchange functionalities is the first step in developing a crypto app. Start with your platform’s basic features, regardless of whether you plan to offer to trade a single or several cryptocurrencies.
1. Authentication and Authorisation of Users
Offer your users a direct and interactive onboarding experience. Also, notice that verification is an essential component of crypto applications to reduce the risk of fraud and preserve the integrity of transactions. To provide users with complete data security, you must include two-factor authentication and anti-bot verification in your software.
At Systango, a crypto app development firm, our skilled UI/UX designers apply unique design features to make the registration process user-friendly.
2. User Interface
It is the public face of your exchange platform, so ensure that its design is straightforward and intuitive. A user-friendly interface expedites the execution of transactions, hence lowering trading time. The dashboard should allow easy access to elements such as order management, order history, withdrawals and deposits of funds, statistics, etc.
3. Trading Engine
A trading engine is the core of a solution for a cryptocurrency exchange. Without a trading engine, cryptocurrency exchange software serves no use.
Typically, a trading engine function monitors all open orders and bids and enables the discovery and execution of new deals. In brief, this function handles:
- Cryptographic transactions are executed.
- Balances computation.
- Order-book accessibility.
- Match the exchange’s transactions (buying and selling).
4. Wallet
The wallet facilitates the sending, storing, and receiving of virtual cash. The greater the number of cryptocurrencies the wallet supports, the better. The wallet for a bitcoin exchange software such as Coinbase should contain the following features:
Integrate multi-wallet capabilities to support a variety of transaction types.
Integration with leading banks and payment gateways is necessary to buy and sell cryptocurrencies in real-time.
Users should be able to withdraw or deposit funds by email, QR code, ATM, and transfer, among other methods. Typically, trading and deposits of digital currencies occur without account verification, but withdrawals require account verification.
Therefore, including an e-commerce platform is essential for reaching the largest audience possible.
Hot and cold wallets are the two most common types of bitcoin wallets. Let’s investigate both wallets in depth:
Hot Wallet
Hot wallets are connected to the internet; therefore, they are less secure. Therefore, digital wallets are more susceptible to fraudster assaults and security issues. While hot wallets are user-friendly, consumers always have significant security and privacy risks.
Cold Wallet
Cold wallets store cryptocurrency tokens offline, hence enhancing security. Users should be able to move funds from hot wallets to cold wallets and vice versa to prevent hacking.
5. Analytics
Analytics is an excellent instrument for constructing effective crypto solutions.
It places the power of data in your users’ hands. This functionality can assist app users in optimizing profits by making better-investing selections in real-time, thereby maximizing every trade opportunity.
Let’s examine some of the most common technical indicators used by traders for making decisions:
The Relative Strength Index indicates the strength of a trend and the probability of a trend reversal. This indicator may, for instance, display the amount and rate of recent price fluctuations.
Moving Average: It displays the average price over a given time frame.
Moving Average Convergence Divergence: It aids in the forecasting of price variations.
Stochastic RSI (StochRSI): StochRSI is exceptional in identifying oversold and overbought zones.
In addition to real-time information tracking, your software must provide customers with a visual trading experience.
6. Notifications Push
Push notifications have become one of the most critical aspects of most cryptocurrency trading apps since they facilitate communication between app users.
You may notify and alert users about special deals, coin exchange listings, price changes, the newest trends, and other relevant information with push notifications.
Customization allows users to select which notifications they desire to receive.
7. History of transactions and order book
The order book is a collection of open orders that enables users to navigate current bids. Users can track their activity using transaction history. It is a summary of completed trades that includes transaction details such as the trade rate and time of the transaction.
8. API
Consider the following while building an API for your cryptocurrency exchange platform:
Websockets
Websockets, permit the transmission of information about trading changes and market movements. Undeniably this technology enables an event-based server response without polling the server for a reply.
Public and Private API
Private APIs or Internal APIs offer developers an accessible infrastructure to operate. This strategy makes it simple for developers to connect to the data, backend system, and applications.
Public APIs, on the other hand, is the set of instructions that must be followed to access data and services that are shared outside of a business and the public domain.
FIX Protocol
Regardless of the traded asset, FIX Protocol is a need for any trading platform. It allows app developers like Binance or Coinbase to integrate numerous trading platforms easily and quickly.
9. Admin Panel
An admin console is a fantastic feature that helps the owner and traders of a cryptocurrency exchange to control many operational issues.
You can modify this functionality to meet the specific needs of your cryptographic application. Nevertheless, each administrative interface must be able to add new currencies, change trading costs, manage cryptocurrency listings and credit/debit funds, and address support-related concerns.
How Much Does It Cost to Construct a Cryptocurrency Exchange?
The cost of developing a cryptocurrency exchange specifically depends on the features implemented, the number of currencies and tokens to be integrated, the level of security, etc. After discussing your concept and vision with Suffescom’s specialists, you can surely calculate the approximate cost.
Typically, a clone of an existing platform costs more than $7,000. Particularly it is an inexpensive and accessible solution for many entrepreneurs.
To participate in the cryptocurrency exchange industry, especially a solution with integrated cryptocurrency exchange applications, a high level of security, and excellent scalability is optimal. It is certainly conceivable to design and run your cryptocurrency exchange platform.
Last Words
Mining, farming, and trading cryptocurrencies are currently more popular than ever. The price of Bitcoin and other cryptocurrencies increases daily, evidently giving investors enormous returns. You can also profit from the evolution of the world’s financial systems. If appropriately implemented, creating a bitcoin exchange is generally a brilliant business idea. In conclusion, employing a crypto exchange development company to design a secure crypto exchange platform could be your golden goose for the foreseeable future.
