How to create and run your own P2P cryptocurrency exchange
Despite the bearish trend in the crypto market, the number of people using cryptocurrency is steadily growing. For Russia, this issue is especially relevant, since Visa and Mastercard payments have stopped working, and people have to look for alternative ways to send money to relatives abroad or make settlements with foreigners for services and goods. Mikhail Mishustin, prime minister of Russia, estimated the amount of funds of Russian citizens in crypto wallets at 10 trillion rubles, so the idea could be very promising.
Creating a P2P crypto exchange, however, is not an easy task and will require a series of sequential steps from you, which we will describe in detail in this article.
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Competitor analysis
First of all, you need to study the market and see which exchanges are popular in different jurisdictions and why. You have to offer your customers something that your competitors don’t have. It could be rare trading pairs, low fees, a user-friendly interface, etc. You need to analyze the market and understand what needs your competitors have not been able to meet and how your future P2P exchange will be able to meet these needs. If you are well versed in the crypto market, then you can try to do it yourself, or you can seek advice from specialists in order to do other things in parallel.
Choice of jurisdiction
Once you have decided on your key differences from your competitors, you need to decide on the jurisdiction. In different countries, legislation regarding cryptocurrencies varies significantly.
If we talk about Russia, even before the sanctions, the Central Bank tried to ban cryptocurrencies, but the Ministry of Finance and the FSB opposed it. With the onset of the sanctions era, the demand for cryptocurrencies has grown and the attitude of most Russian regulators has become more loyal towards cryptocurrencies. The Ministry of Finance, together with such ministries as the Ministry of Economic Development, the Ministry of Internal Affairs, the Ministry of Digital Development, began to prepare a bill regulating the circulation of cryptocurrencies in Russia. In general, even the Central Bank began to gradually give in on this issue.
But do not rejoice ahead of time, since the requirements for exchange operators in Russia are planned to be quite strict:
— the exchange operator must have a capital of at least 30 million rubles;
— you need to store information about users for at least 3 years and transfer data at the first request of law enforcement agencies.
If you are not afraid of the difficulties associated with sanctions, you can try to choose another jurisdiction for yourself. Interesting options may be Belarus, Dubai, Puerto Rico, Cayman Islands, Cyprus, Mauritius, Malta, Switzerland (especially Zug) and Japan. Although in many foreign jurisdictions, the company will be treated much better if you find someone from the locals for the post of CEO.
After choosing a jurisdiction, you will then need to collect all the necessary documents in order to pass all the necessary KYC and AML requirements. Legislation in the field of cryptocurrencies is changing very quickly in all countries, so here you need to constantly boil in the subject or hire specialists who can suggest in which jurisdiction it is better to launch your P2P exchange.
Renting or buying network equipment
There are two general approaches to this issue — renting or buying your own equipment. Renting servers, of course, will be cheaper, but it is very dangerous for a fintech project to trust its data to third parties, especially in the current era when disconnecting from services as part of sanctions pressure is the order of the day. Plus, there are difficulties with payment restrictions for servers that are not in Russia, because there is practically no “rent” of servers in Russia and the CIS if you need to deploy an Ethereum or BNB chain node, for example. Even servers to support websites and light software solutions in Russia will cost 2–3 times more than their foreign counterparts.
Buying your own hardware can cost several thousand dollars, but it’s a safer option for a large commercial application. And you can always start with a lease to get to the first launch.
Develop or buy a solution
So, you have chosen a jurisdiction, collected documents, you have a server part. Now you need a website, an app, a wallet, a trading engine, DDoS protection, and more, including marketing training and hiring a team.
You can buy a ready-made version, or you can develop everything from scratch. In the first case, you will be limited by the capabilities of the purchased engine and will not differ much from competitors using the same base. But after 1 month you will receive your working exchange.
On the other hand, to create all the necessary software from scratch, you need an experienced team of specialists. Of course, you can look for specialists individually, but it will take you a lot of time to find and build business processes within the team. And how many people will have to filter in the course of work, interviews and test periods for employees?
Let’s consider an alternative. Hire an experienced team of specialists who have established all work processes and have a proven track record. This is the fastest and easiest way to get into the blockchain business.
PR, marketing, promotion
Even if you have a finished product, you will not be able to monetize it without effective promotion. Now there is fierce competition in the market for the attention of users and you will have to spend a lot of effort to make your P2P exchange recognizable and popular. As in the case of the development team, you will also need an experienced PR team to promote in social networks, telegram channels and blogs to achieve good indexing, organize interaction with the media and purchase advertising space, post the project on industry sites, launch targeted traffic from by setting up targeted and contextual advertising — all this can be implemented by the AppsChain team.
Summarizing
A P2P crypto exchange is a very promising idea, but it will require a carefully calibrated strategy: from competitor analysis and jurisdiction selection to application development and product promotion. You need a well-coordinated team of professionals to put such an idea into practice and make money on it. The AppsChain team is ready to take on most of the issues related to the creation and promotion of a P2P exchange.
Our website: https://appschain.ru/
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Russian blog on VC.ru: https://vc.ru/u/1215222-appschain
English blog on Medium.com: https://medium.com/@AppsChain
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