There is no denying that the craze for cryptocurrencies has drastically increased over the past few years, these digital currencies have revolutionized the business sector and are soon expected to become the mainstream currency for business transactions. And the best way to make profits out of these popular cryptocurrencies is by exchanging them. Many entrepreneurs in the crypto space have achieved million-dollar profits by creating their own exchange which is why there is constant demand and an increase in the volume of exchanges in the market.
Although crypto exchanges turn out to be a lucrative business most of the time, to some extent, it is still considered unpredictable and risky. Also, some entrepreneurs still find it confusing and challenging to figure out how to go about their cryptocurrency exchange development. If you are one of them, this article will help you. Here, we will discuss the most essential components that you shouldn’t miss, to create a solid cryptocurrency exchange platform and to remain protected from any pitfalls. So, let’s get going.
Key aspects for building a cryptocurrency exchange
- Strong legal framework
Obtaining a proper license is the first step that should be in your mind before commencing your cryptocurrency exchange business. Firstly, you need to decide whether your exchange is going to operate globally or just within your country and get licensed accordingly. The regulatory norms differ from country to country. Hence, it is mandatory that you deeply analyse and abide by the regulations according to your jurisdiction. And, in most of the countries, you cannot commence an exchange business without abiding by AML (Anti-Money Laundering) and KYC (Know Your Customer) rules. So, it is essential for you to keep a record of your customer identity details which will help with authenticity for your platform.
- Robust exchange architecture
You need to give undivided attention to building a robust architecture for your exchange for a sustainable future. Below are the crucial components that your exchange architecture must comprise,
- Trading Engine– This is the core component of an exchange that helps access order books, match buyers and sellers with each other, execute automated transactions and calculate balance, etc. You need to make sure your exchange has a steady trading engine.
- Crypto wallet– Your exchange should possess a secure, multi-currency crypto wallet for users enabled with multi-signatures and maximum security to protect from hack threats. Both hot and cold wallets should be available to diversify the risk factors.
- Advanced, user-friendly UI– Your cryptocurrency exchange software must have an attractive and user-friendly interface to make it efficient for the customers to use. Providing the best user experience for your traders must be your priority which will drive them towards your exchange over your competitors. The following steps should be made easy for your customers in your exchange platform,
- Easy Login and registration process
- Deposit and withdrawal of crypto and fiat currencies
- Place buy and sell orders
- View their balances, transaction histories, etc.
- Admin Backend Panel- A strongly built admin panel is necessary for a crypto exchange platform. It will help the exchange owner to efficiently manage the platform, user funds, and transactions, alter liquidity, order requests, KYC requests, etc.
- Core Technical Features to integrate
- Multi-currency and multi-lingual support integration
- Automated KYC/AML verification
- Powerful Matching Engine with order book
- High TPS
- Multicurrency wallet
- Deep Liquidity integration
- API and SDK integration
- Payment Gateway integration
- Firewall/Firebase implementation
- Mobile trading support application
- Core Security Features to integrate
- HTTP Authentication
- HTTP Parameter Pollution Protection
- Data Encryption
- Jail Login
- DoS( Anti Denial of Services) protection
- DDoS ( Anti Distributed Denial of Services)
- Escrow system
- SSRF( Server Side Request Forgery) protection
- CSRF(Cross-Site Request Forgery) protection
- Two Factor Authentication
- Risk Management
As we discussed earlier in the article, cryptocurrency exchanges in spite of their tremendous popularity, are still prone to hacking threats, security breaches, stealing of funds, unauthorized access,etc. Therefore, executing proper risk management strategies for your exchange should be given the utmost importance.
Among the above-mentioned issues, the most common one is the loss of funds. It might happen due to various reasons such as either natural reasons, or virus failure or malware attack,etc. Therefore it is absolutely necessary to look into procuring a secure server system from reliable server providers for your exchange platform and enable different servers for each functionality which will enhance the security. Also, additionally, you need to make sure to have back up for all the exchange data, and update the data file on a regular basis encrypting them with a strong password that ensures protection against such hack threats.
It is clearly evident that in recent years, the adoption of cryptocurrency exchanges around the world have seen a massive spike, and the entrepreneurs involved have gained a considerable amount of profit through the business. Ever since the advent, blockchain and cryptocurrencies have been gaining constant popularity and growth, and java entered the space of many business industries. The considerable amount of increase in the trading volumes each day shows that cryptocurrency exchanges are here to stay, and is a highly lucrative opportunity for both the exchange owners and the investors.
Recently many countries have adopted and legalized cryptocurrencies and crypto exchange businesses in the countries, which means the revolution is already happening and there is a promising future awaiting. In this highly competitive scenario, if you want to launch your own exchange in the shortest turnaround time possible, the best option is to conduct extensive research and choose the best cryptocurrency exchange software development company whose services will comprise all the above-mentioned factors, and every legal, development, marketing and launch services you need at nominal costs. Choose your company at the earliest, launch a solid exchange platform, and utilize the favorable market situation to make the maximum profit revenues out of your crypto exchange business.
