- Key factors to give importance to while developing your crypto exchange
In the current digitally evolving era, cryptocurrencies and blockchain technology together are disrupting businesses and bringing in a paradigm shift in the way they operate and manage transactions. They are gaining rapid momentum with every passing day and the craze keeps growing that at least one in ten people aspires to be associated with cryptocurrencies, mainly creating their own crypto exchange software.
This is because cryptocurrency exchanges have offered lucrative opportunities and returns for many entrepreneurs and investors all around the world, and many entrepreneurs have turned millionaires by launching their own exchange. With that being said, there are also a few investors who are still in a bit of a dilemma to invest in a cryptocurrency exchange because they consider the business risky and unpredictable. Also, because exchanges also have a history of hacks and theft of funds even though they are successful 90% of the time.
If you are one of those aspiring entrepreneurs looking to create and launch your own exchange, this blog is for you. Here, we are going to discuss the most crucial factors to take into account before commencing your cryptocurrency exchange development, to achieve a solid, secure, and sustainable exchange. So, let’s go ahead and get started.
Key factors to give importance to while developing your crypto exchange
The first and most important step is to make your legal wing strong. No cryptocurrency exchange can function or any transaction can commence without obtaining a proper legal license. So, before you even begin with your exchange development, make sure to obtain a proper license. Also, you need to thoroughly analyze the other regulatory requirements based on your operational location. Regulatory frameworks differ from country to country. Therefore, you need to be well versed in the legal aspects of your specific geographical location to make your exchange legally strong. It is also important to adhere to the KYC( Know Your Customer) and AML(Anti-Money Laundering) norms to ensure authenticated users and transactions for your exchange.
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Collaborating with a bank/ payment processor
To facilitate a transaction in your cryptocurrency exchange, you have to first partner with a bank or a payment processor, especially for fiat currency transactions. This will help users quickly and efficiently withdraw/ deposit fiat currency and quick settlements. The agreement between the bank and you should be moderately regulated, that too depending upon your operational location and its regulatory norms. This helps with more accessibility to banking options compared to a highly regulated ecosystem.
Liquidity plays a crucial role in the success of a cryptocurrency exchange platform. Liquidity is the degree to which an asset can be easily transferred or converted into cash. Therefore, ensuring a proper liquidity management system is the key to elevate your exchange volume and profitability. You need to make sure your exchange offers promising liquidity compared to your competitors to attract potential investors towards your exchange. To achieve that, you can follow different methods such as,
- Creating artificial accounts within your exchange and initiating trades between them which will increase the volume of your liquidity.
- Connecting your crypto exchange with a third-party exchange API with higher liquidity volume.
- Becoming a part of a network of exchanges whose liquidities are tied together which will automatically boost liquidity for your platform.
Best security practices
As mentioned above, some investors are still uncertain about investing in a cryptocurrency exchange. Therefore, to gain their loyalty towards your exchange and avoid risk factors, you need to give utmost importance to the security of your exchange. The exchange platform should be implemented with bank-grade, multi-layer security protocols, and also enabled with 2FA( Two-Factor Authentication) for an added layer of security. You need to ensure the users’ data and the transactions are end-to-end encrypted.
Once your development part is over, it is time to rigorously test your exchange. Before making your exchange live, you need to make sure it is properly tested, any bug issues are identified and rectified right away to ensure a smooth launch and seamless functioning.
Maintenance and Customer Support
The process is not over yet once you are done with testing and have deployed the exchange. With the rapidly evolving advancements and business landscape, you have to ensure to segregate a dedicated team for constant maintenance of your exchange. The team has to analyze the market trends, investor preferences, competitor services on a regular basis and upgrade your exchange to help you remain ahead, and also keep an eye on other technical and security aspects to ensure smooth operations of your exchange. Also, there should be a separate customer support group who would be quick to respond and available round-the-clock for any customer requests or queries to build strong customer relationships for your business.
Utmost Customer Satisfaction
The volume of cryptocurrency exchanges in the market is constantly on the rise and the competition is intensifying by the day. Therefore, to stand out from your competitors and attract potential investors towards your exchange, you have to give priority to achieving the utmost customer satisfaction. Some of the factors that might help achieve this is minimal transaction fees, security verification services, a platform with an attractive, interactive, and user-friendly interface, a wide range of customizable options for the customers to be able to launch the exchange in their desired brand etc. The more client fulfillment you achieve, the more the trade volumes, therefore more revenue for your crypto exchange business. Thus, give it careful consideration.
Risk Management strategies
Emphasizing on risk management strategies is very important. You should keep in mind every factor that might make your exchange business go wrong such as hacking, unauthorized access, theft of user funds, virus/ malware attack, etc while building your exchange and pre-plan your risk management strategies. There should be a prior security system protocol used to deal with the security concerns of the exchange, and the data should be properly stored in a location that is independent from the operational servers. You should make sure to have a backup of the essential user data and constantly update a secure password to protect the data.
Like we discussed before, the popularity and adoption of cryptocurrency exchanges are rapidly growing and with the evolving technological advancements, experts also believe the glitches involved with crypto exchanges can be easily rectified. Crypto exchanges are here to stay and have the potential to revolutionize the industry on the whole.
To become a part of this profitable crypto exchange business sphere, in the shortest time possible, the best choice is to conduct deep research and choose an authentic cryptocurrency exchange development company. Such companies would offer ready-made solutions tailored to your specific needs and ensure a quick launch at competitive prices. Therefore, choose your company today, develop your crypto exchange and join the million-dollar club.