Lesser known to many, there are almost 2000 cryptocurrencies existing in this modern world, and the new ones are actively trying to rise & shine. It is all accredited to the modernistic Blockchain Technology. You will be amazed to know that according to Fortune Business Insights, the global blockchain market is estimated to reach $69.04 billion.
It won’t be wrong to say that cryptocurrencies are now the newest way to invest. Besides, if you are a player who is constantly indulged in this market, then you might have any time in your life popped up with the idea of creating your cryptocurrency exchange. If you have this desire, then you are at the right place.
In this blog, we shall study the important aspects of creating a Cryptocurrency Exchange. Let’s start reviewing them in a little brief.
How Does a Cryptocurrency Exchange Work?
Cryptocurrency exchanges are online platforms that allow a user to buy, sell, and transfer cryptocurrencies. High transaction speed and lower costs are the pillars that make it eye-catching for investors of any scale. You can buy & sell digital money, pinpoint any fluctuations in the exchange rate, and make profits on these exchange platforms.
A transaction is carried out following these steps:
- The user creates an exchange request by mentioning the volume and value of the cryptocurrency.
- A deal is instantly done once between users once a satisfactory counter-offer has been recorded on the site.
- The exchange earns by extracting a certain percentage share of the transaction amounts. The amount of percent share varies depending on the type of cryptocurrency exchange.
Above all, a cryptocurrency exchange must possess a variety of features to support account creation, balance check, fund transfer between wallets, and currency withdrawal.
Types Of Cryptocurrency Exchanges
Mainly, there are 4 types of cryptocurrency exchanges.
- Centralized Exchanges- These exchanges are handled by a centralized operator responsible for updates, security, and functionality. However, these exchanges lack security as the coins are stored in coins themselves which makes them vulnerable to hacker attacks.
- Decentralized Exchanges- This is a much-secured platform as the transaction is carried out between the users without any storage of coins in the real exchange. However, the lack of moderating third-party passes all responsibility relating to security & bugs on users themselves.
- Peer to Peer Exchanges- Likewise, in a decentralized exchange, the transaction is carried out between users. The network participants respond to the offers (whether to buy or sell) put up on the bulletin board by the traders.
- Instant Exchange- Since these exchanges allow the instant exchange of one cryptocurrency to another, these are simple to use. You just need to add a trade order, and it will be executed soon. This is only possible because instant exchanges provide access to many trading pairs of various exchanges on one central service.
Prominent Features Of a Cryptocurrency Exchange Platform
A cryptocurrency exchange is a complex platform, and to build a good software product, you need to think over its functionality in the best possible way. You need to start with the core features no matter if you want to offer trading for one type of cryptocurrency or many. Here are some of the key features of a cryptocurrency exchange platform.
1. User verification and authentication
You need to offer a simple onboarding process because the user’s path to cryptocurrency exchange initiates with authorization. Verification is also important because the users expect the members of this network to be trustworthy and with good intentions.
2. Trading engine
The trading engine is the core of your cryptocurrency exchange platform. The trading engine of your platform is responsible for the functionality of your exchange. The trading engine development process is one of the most complex parts of developing a crypto platform. For this task, you need a truly experienced blockchain development team.
3. User interface
It is important to ensure a simple yet clear user interface of your exchange. By providing users with an impressive yet enhanced trading experience, you can ensure your loyalty amongst them. A simple interface reduces the time to create and conduct transactions while ensuring the efficiency of your exchange platform.
A wallet service on your exchange platform allows your users to store and transfer your digital money. When a user registers on the platform, one immediately receives a wallet. The e-wallets for digital currencies must offer secure transactions.
5. Order book and history
So other features of a good exchange platform are order book and transaction history. An order book allows users to go through the current bids while the list of completed trades contains key information about the transactions. History feature allows users to track the performance of their activities.
6. Analytical tools for traders
The next feature that will attract experienced traders to your platform is the internal analytical system. Analytical tools enable users to get additional information about market trends and prepare their trading strategies.
7. Push notifications
There is another feature known as alerts. Push notifications or alerts help you maintain communication with your users and traders so that they do not miss any opportunity. You can even notify your users about promotions, news, and special offers.
So this was all about the procedure to start building a cryptocurrency exchange platform. If you’re looking to develop a robust cryptocurrency exchange platform, reach out to Webcom Systems. Webcom Systems have a team of cryptocurrency platform developers who bring years of experience designing and developing a powerful yet simple exchange platform. We blend all the important features like wallet, analytical tools, user authentication, trading engine, etc., on a single platform to offer a better trading experience.