How to Open a Crypto Exchange Platform in 5 Simple Steps
It's over ten years now since Bitcoin became popular, yet only a few could have predicted that its growth would explode and give rise to the over 20,000 cryptocurrencies we know today.
It means that as more and more cryptocurrencies are being developed, there is no better time for businesses to capitalize on the globality and growth of these crypto projects and start a crypto exchange.
However, just when the thought comes, the question arises: how are exchanges built and how do I start one? There’s nothing to worry about. This article gives you a head start on how to create a cryptocurrency exchange platform.
What are Crypto Exchange Platforms
A cryptocurrency exchange is a platform that allows individuals to buy, sell and swap virtual coins, tokens, stablecoins and other digital assets.
There are two sides to the coin. As a user, after creating an account, you can purchase and trade various cryptocurrencies such as Bitcoin (BTC), Dogecoin (DOGE), Ether (ETH), and so on.
However, when you start the crypto exchange yourself, you have numerous opportunities to offer buying, selling, and converting many blockchain-based currencies in exchange for a commission charge calculated as a percentage of each transaction. This latter part of the coin is what we will be dwelling on.
Why Do You Need to Open a Crypto Exchange?
Numbers scream louder than words so let’s take a look at some statistics:
- In 2024, the overall cryptocurrency market capitalization is estimated to be $1.77 trillion. Bitcoin alone has a market capitalization of over $845 billion.
- Binance is the world's most popular cryptocurrency exchange, with a total daily trading volume of $14.14 billion.
- In 2023, Binance recorded $7.9 billion in revenue.
- In 2023, more than 425 million individuals worldwide owned or used cryptocurrency.
- The global blockchain market is anticipated to grow to $469.49 billion by 2030.
Are these reasons enough?
If it is anything to go by, then you know by now that building a crypto exchange allows you to capitalize on these growing trends and earn a cut from the massive number of blockchain operations.
Types of Cryptocurrency Exchanges
If you want to start a crypto platform, you need to fully grasp the various types and their distinct qualities. Better believe that a lot of things about your exchange will be determined by whether you choose a Centralized exchange (CEX) or a Decentralized exchange (DEX). Generally, centralized exchanges store users’ digital assets while decentralized exchanges do not.
You may hear of a peer-to-peer cryptocurrency exchange from time to time. When you do, there's no need to be confused; a peer-to-peer exchange is basically the same thing as a decentralized exchange or a specific use case within a centralized exchange. For example, Binance lets users trade cryptocurrency P2P through an escrow account, which is something that no other centralized cryptocurrency exchange does.
Let’s differentiate CEX and DEX in a table format to make things easier.
| Criteria | CEX | DEX |
|---|---|---|
| Location | centralized servers | blockchain network |
| Control | company | customer |
| Anonymity | No (Onboarding includes thorough KYC/AML procedures.) | Yes, customers can remain anonymous |
| Transaction speed | Faster transactions | Slower transaction |
| Liquidity | CEXs provide more liquidity | DEXs provide less liquidity |
| Customer support | Available | Not available |
| UI/UX user-friendliness | Intuitive graphical interface and tutorials. | Can be difficult to navigate |
Features of a Crypto Exchange
You have to be in the know of certain features a crypto platform should possess.
Onboarding.
Just as every other platform you know and similar to the crypto exchange you probably use now, registration is a must. The only difference is that with a crypto exchange, customer registration must pass through a thorough KYC (Know Your Customer) process and AML (Anti-Money Laundering) regulations.
Crypto Wallet.
Ever heard of a crypto exchange without a crypto wallet? If you're creating a centralized crypto exchange, you'll need to create a cryptocurrency wallet where users can keep their coins and tokens. They will be able to receive and send cryptocurrency to and from their wallet.
APIs.
Would you like your crypto platform to stand out? Then having an API tied to the user’s account is the answer! What it does is that it gives your crypto exchange a second life outside its own boundaries. To do this, you have to fix API layers so that your customers can make use of other crypto-focused applications. Pro traders will thank you when you do this.
Other features include, a friendly user interface, advanced trading options, order book, etc. Now, let's get to the juicy part - how to create your own crypto exchange in 5 simple steps.
Open a Crypto Exchange with these 5 Steps
Create a Business Plan.
Just like every other venture, this is serious business and you need to draft out a business plan to show that. In the plan, you have to identify your target market, exchange platform type, the countries you want to serve and how you will promote your business.
Review Local Regulations and Get a License.
When it comes to crypto, you need to always think of “laws and regulations”. It might be helpful to get a lawyer to help you understand the crypto regulations surrounding the jurisdiction you choose to operate in. Next up after this is to get a license.
Determine Your Crypto Exchange Features.
We talked about a few must-have features for a crypto exchange. This is where you decide on which features you want to incorporate. This is very important because the features you choose are what determines if clients will be attracted to your platform or not.
Start Developing Your Cryptocurrency Exchange.
At this point, you have to decide on the method you want to use to create the crypto exchange platform. You can decide to build your own crypto exchange website or use a ready-made solution. A ready-made solution is also known as a white-label solution and we have a track record in delivering the best white-label services. Once you decide on that, you can now move to the last stage.
Test and Launch Your Exchange.
Here, you have to test your product to ensure that all the features work as intended and the server runs smoothly without downtime or crashes.
Once you’re done with this and it's all good, you can then release your crypto exchange to the world. Come up with a marketing plan to promote your website and persuade investors and crypto communities to use your platform.
Final Thoughts
It can be hard and stressful to build a crypto exchange website. You need to think about a lot of things from a business, technical, and legal point of view.
Explore the services offered by WL Global today to launch your own secure and compliant CEX exchange.
FAQs
Q1: Why should I start a crypto exchange?
You should start a crypto exchange to make your own profits from the ever-growing crypto industry.
Q2: How long does it take to start a crypto exchange?
Typically, it takes anywhere from 5-9 months depending on the type and features you want to add.
Q3: What are the key steps to open a crypto exchange?
Start by planning your business, reviewing the regulations and getting a crypto license, determining the software features, developing the design, and finally launching your platform after successful testing rounds.