K.A, Lebledparle.com
Do you want to start a Bitcoin exchange? If so, here is a guide on the steps you can use to create this digital money exchange.
Running a Bitcoin trading platform can offer excellent business potential, with global demand for this virtual currency trading on the rise. While there’s no guarantee of starting a successful Bitcoin exchange platform, a massive inflow of money from retail traders and financial institutions created a significant business opportunity. Likewise, strong advocates of blockchain technology can build a Bitcoin exchange to increase the global adoption of this digital currency. However, there are three different types of exchanges.
Centralized Exchanges
A centralized exchange is the most popular type of Bitcoin exchange that acts as the custodian to store clients’ Bitcoins. This centralized exchange uses its infrastructure as an intermediary between buyers and sellers, similar to banks. In return, the crypto exchange will charge a trading fee that varies from one Bitcoin exchange to another.
Decentralized Exchange
In comparison to centralized exchanges, decentralized exchanges are non-custodial. Therefore, the crypto exchange does not store its client’s Bitcoins. The infrastructure behind the Bitcoin exchange facilitates the transaction between buyers and sellers, sending the funds directly from each wallet on the blockchain. These decentralized exchanges offer the highest security but are limited in features to maximize revenue and come with low trading volumes and liquidity.
Peer-To-Peer Exchanges
A Peer-to-peer exchange is similar to a decentralized exchange where the platform provides the background infrastructure and hardware to facilitate direct transactions between two people without an intermediary. Instead of connecting two wallets, a peer-to-peer exchange connects buyers and sellers using an escrow service. And this ensures that a successful transaction completes at an agreed price and payment method.
On the other hand, starting a new Bitcoin exchange from scratch involves a high degree of technical expertise, knowledge, resources, and time to develop an initial concept into a Bitcoin business. Here is a step-by-step guide on how to start a Bitcoin exchange.
Conduct Thorough Market Research
With any new business venture, it is essential to conduct due diligence and research the market. An excellent place to start is forums and social media to find interest groups in the Bitcoin market. Find out if there is a demand for a type of exchange or a specific feature unavailable locally. Understanding your potential customers is a necessary process that requires no rush whatsoever. Also, before deciding on the exchange model, particular features and products will assist in developing a tailored marketing campaign.
Select Which Countries to Support
The best place to start a new Bitcoin exchange is within your country, where you have some understanding of government policies regarding this electronic currency exchange. While scaling the crypto exchange is lucrative to attract more users, it can come with higher risks, such as complying with financial licensing requirements. The crypto exchange will have to support multiple fiat currencies and implement a payment processor to accept Bitcoin payments, such as credit and debit cards. BitIQ is an excellent example of an exchange that supports multiple fiat currencies.
Keep Up With the Legal Requirements
Governments have different regulations and legal requirements regarding this digital money investing and trading in several countries. So, you have to thoroughly understand the rules where you plan on launching your Bitcoin broker. Failure to comply with regulations such as Know Your Customer {KYC} can result in civil and criminal charges.
Partner With Experienced Developers
Unless you are a skilled developer, you will need to hire a team or outsource the development of the exchange to a third party. Companies charge different rates, so you have to do your homework.
The Bottom Line
Bitcoin trading platforms have become immensely popular in the last few years. So, if you decide to create a Bitcoin business and begin a Bitcoin exchange platform, you must research your competitors and create a trustworthy and reputable brand.
