How to build a cryptocurrency exchange like Binance in 2021
Foreign exchange and stock markets have proved to the world that even uncertainty and volatility can be capitalized on and made into a wonderful profit-making opportunity for the common investors. An extension of this notion into the crypto world is the concept of cryptocurrency exchanges.
What are cryptocurrency exchanges?
Cryptocurrency exchanges, as the name implies, are platforms where a trader can trade crypto assets with another crypto asset at predetermined prices. The prices are dictated by market dynamics like the demand, the supply, and the magnitude of acceptance of a certain crypto coin.
Cryptocurrency exchanges are available for both web platforms and mobile applications.
One of the Utopian use cases of cryptocurrency was that it could be immune to economic uncertainties. Until the first quarter of 2020, no one expected this uncertainty to barge into everyday lives. However, the COVID-19 pandemic has changed the dynamics not only of the economy but also of the whole life as we know it. In these times when burning becomes difficult, cryptocurrency exchanges presented a lucrative opportunity for common people to make a profit.
Coinciding with the growing awareness, a few jurisdictions like India have relaxed the rules restricting people from participating in any crypto business. With the legalization of a cryptocurrency exchange as a valid financial business, and with the extrapolation that more and more countries/jurisdictions will accept cryptocurrency exchanges as valid financial businesses, 2020 is probably the perfect year to start a cryptocurrency exchange like Binance.
There are a lot of instances where the pioneers are not always the market leaders. Just like how Altavista and Yahoo lost to Google, a lot of cryptocurrency exchanges lost to Binance. Binance is probably the first name that comes to the mind of everyone when we talk about cryptocurrency exchanges. It has been so powerful that Binance ended up introducing its own cryptocurrency.
What made Binance successful?
In the wide and vast user base of cryptocurrency exchanges, there are amateurs and there are professionals. For a crypto exchange to be successful, It is imperative that the exchange catchers to both ends of the spectrum. Binance did exactly that.
Binance offers two trading options. Basic trading is available for beginners and advance for trading is available for experts and professional traders.
While KYC is viewed as a security measure by crypto exchanges, it might come in sometimes, because it is a compromise on privacy by users. Arriving at a balance between both, Binance does not mandate that the KYC/AML formalities are completed. However, the withdrawal limit of these users is limited to two bitcoins per day. This ensures that a huge chunk of money is not siphoned out for malicious activities.
With the completion of the KYC formalities, however, the trader can withdraw about 100 bitcoins per day. This method attracts both kinds of users. Going in line with high-security standards, Binance also brings in a two-factor authentication process to ensure that there is no malicious access.
Binance offers a wide variety of trading pairs. Although the bitcoin, Ethereum, Tether, and BNB are popular, it offers a wide array of cryptocurrency‘s to trade with, inviting a whole lot of users who might be interested in investing in a certain type of crypto coin.
Binance offers multiple trading options like a market order, limit order, and stop order. These options attract advanced users who might not be satisfied with a simple bartering technique and who, in addition to their understanding of the market, also rely on the decision-making capabilities of the platform.
Although some features might not make Binance advanced cryptocurrency exchange, some features make them attractive. For example, Binance has a virtual gifting solution and also has a token sale program where worthy products can directly get their tokens listed on Binance.
How to Build a Cryptocurrency Exchange & It Cost | Start to Create your Own Crypto Exchange and…
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Building your own crypto exchange
In a crowded space of products, it is the garnish of features that makes the difference in terms of marketability. Binance has achieved that with a lot of features. However, Under the hood, there are a few features that are common to all crypto exchanges. Even if you were to go for a white label cryptocurrency exchange solution, these features need to be in place to ensure that you get your cryptocurrency Exchange like Binance.
Your crypto exchange should have a simple sign up/registration page. The page should be made simple and elegant. To enhance security, two-factor authentication needs to be enabled By bringing in a pin and passcode verification method.
One of the biggest concerns in the crypto realm is the possibility of funds being used for terrorist activities. Therefore, your cryptocurrency exchange should have a KYC/AML verification in place. It might be quite a demanding process, and it is highly recommended that you automate the KYC verification system.
Your cryptocurrency exchange should be integrated with a multi-cryptocurrency wallet. There should be a facility to swap between hot and cold wallets, so traders can prioritize between security and utility.
Your cryptocurrency exchange should be able to handle a huge volume of users. The TPS or the transactions per second rate is one of the indicators of the performance of your crypto exchange. There should not be any downtime or lag in the trade. This is of vital importance as cryptocurrency is extremely volatile and even minutes of difference can mean millions in losses.
Another abstract factor that determines the quality of your cryptocurrency exchange is liquidity. In the context of a crypto exchange, liquidity is the volume of transactions that occur on the exchange. It might not be possible for new cryptocurrency exchanges to showcase liquidity. They can opt to simulate trade between two artificial accounts or can choose to integrate with another existing exchange using an API.
The trade engine or the matching engine can be considered the heart and soul of a cryptocurrency exchange. The matching angel is responsible for matching the buying and selling orders. In most cases, it is the quality of the matching engine that serves as an indicator for the quality of the exchange.
Your cryptocurrency exchange should be garnished with an intuitive and interactive user interface. It is to be remembered that the users of your crypto exchange are not experienced and technically sound professionals, but lay traders. They should be able to execute the desired action in as few steps as possible.
Outside the tech
As much as a cryptocurrency exchange is about technology, it is also about business. Therefore, your crib to exchange also needs to have a few additional aspects figured out.
Although the magnitude of legal acceptance has been increasing, the laws that govern anything related to crypto are quite uncertain and shaky. Therefore, it is strongly recommended that you hire a competent legal advisory team. They need to be updated with the latest rules and regulations regarding cryptocurrency and exchange business.
After building an impeccable crypto exchange, one should not forget the importance and vitality of marketing. Your crypto exchange should be marketed in the right places and it should be remembered that a lot of mainstream advertising platforms like Google and Facebook have heavy restrictions regarding advertising crypto exchanges and coins. Therefore, you should plan your marketing with additional importance given to forums and influencers.
Now that the profitability of a crypto exchange has been established, the next step is to get your crypto exchange like Binance. As discussed earlier, instead of going for building your cryptocurrency exchange from scratch, you can opt to go for a white label cryptocurrency exchange that brings all the features of Binance, and also offers extensive customizability.
This will ensure that you are able to launch your cryptocurrency exchange business in the shortest possible time, especially During a face when the competition is fierce and cutthroat, and the time to hit the market plays a vital role in determining the magnitude of your profitability.