How to Create a Cryptocurrency Exchange: All Questions Answered

If you want to create a cryptocurrency exchange, it’s important to have a grasp on what they are and the different forms they can take. Similarly to other Web3 businesses that deal in the exchange of value, like if you were to create a crypto casino, there are different approaches to the process. You could be a fully centralized (CEX) or decentralized (DEX) exchange, or perhaps explore a way to combine the best elements of both with a hybrid model.

Regardless of this underpinning approach, you’ll need to account for several key features. Everyone who’s looking into how to create a cryptocurrency exchange will have to plan out crucial functions like secure crypto wallet integration, trading charts, a display for order books, tracking and order history options, a trade matching mechanism, a slick user interface, and an onboarding process that includes know your customer (KYC) checks.

A lot goes into working out how to create a cryptocurrency exchange, so let’s look at what it takes to build an exchange from scratch and then work from there.

How to Start a Crypto Exchange: Start from Scratch

For many people, the process of working out how to start a crypto exchange will lead to them doing so from scratch. This means creating a bespoke platform that you think refines the current crypto exchange space or enhances it with an infusion of inventive features. It’s the option that requires the most meticulous refinement, from the quality of the end product to its security measures. Generally, these are the steps that you can expect:

• Development Team Collaboration: From the outset, you’ll want to collaborate with a strong development team. Begin with the concept of your project and then work through elements like your expected technical specifications and key performance indicators. With that established, you can set a timeframe and price for the collaboration before formalizing the plan.
• Prototype the Exchange: Anyone who wants to know how to start a crypto exchange and is willing to start from scratch will need to conceptualize the platform. From here, you can refine it with the help of expert members of your development team, other stakeholders in the business, and analysts to ensure that you’re prototyping a platform that will be optimized for the end user.
• Create the User Interface: Get an insight as to what traders and the admin team will experience with the user interface (UI) by building a compelling platform design from your wireframe layouts.
• Write the Code: Whether you’re a skilled coder or you need to bring some skilled programmers into the team, this is the stage that transforms all of your design work and tech specs into the code that underpins the whole experience. This will develop mobile compatibility, create the front and back-end, and integrate your crypto exchange with blockchains.
• Test Your Platform: The first big test for anyone looking into how to start a crypto exchange: with a functional model programmed, it’s time to try the platform. You’ll need to rigorously test the software, identify issues and have them fixed, and perform general quality assurance tests to get it ready for launch.
• Time to Launch: With everything built and tested, it’s time for the final stage of the how to start a crypto exchange from scratch process. Now, you launch your product alongside a marketing program to get the word out. Throughout this stage, it’s important to offer continuous support for the platform and users, remain reachable through social media, and be visible on business listings.

How to Create a Crypto Exchange: White Label, Open Source, and Hybrid

Not everyone wants to reinvent what the core platform is when they plan how to create a crypto exchange. Instead, the preference is to draw on what’s already out there, working with proven software to get a more assured footing. Here’s how to create a crypto exchange with existing solutions.

Open Source: Harness the power of the crypto community when working out how to create a crypto exchange by tapping into existing open source exchanges. With these, you’ll be able to make use of predominantly decentralized platforms and you can customize the technical aspects to better align them with your ideals for cost, launch time, and other such business objectives.

White Label: If you want to launch quickly, white label solutions are the way forward. You’ll need to perform a few customization tasks to fit your branding and business model, but the white label approach with software-as-a-service (SaaS) is the fastest route to market.

Hybridize: For a versatile approach that’s more streamlined than the method of how to create a crypto exchange from scratch, you should hybridize. You’ll essentially meld together community-made solutions that help to innovate your exchange with sturdy proprietary features to get the best of both worlds.

Start Your Own Crypto Exchange: Each Step Explained

When you start your own crypto exchange, you’ll have to tick more boxes than just building the platform and launching to the public. Here’s what else you can expect from the steps required to start your own crypto exchange:

1. Jurisdiction: Picking where you’ll base your crypto exchange will have major regulation, compliance, and tax implications for your business. InteliumLaw can help you pick the perfect jurisdiction, inform you as to what regulations like MiCA mean for your operations, and keep you compliant.
2. Audience: A key part of your business plan will be naming a target audience for your product. When you start your own crypto exchange, you’ll want to research the preferences and needs of your target audience to ensure that you’re building a platform that suits.
3. Licensing: There’s a good chance that you’ll need a crypto license to be able to operate. Whether you want a Lithuania crypto license or a Hong Kong crypto license, InteliumLaw can help you get it and then remain compliant with its AML and KYC requirements.
4. Development: As we delved into in the section higher up, you’ll need to bring together a top-notch development team to put your vision for a crypto exchange into action.
5. Security: High-quality security measures are essential for all crypto exchanges. To start your own crypto exchange without elements like encryption, defenses against cyber attacks and hackers, storage solutions, a plan for regimented security audits, and two-factor authentification would be folly.
6. Testing: Before you launch, you’ll need to conduct an exhaustive stage of testing that ensures that everything’s in working order.
7. Launch: Next, you officially start your own crypto exchange! Launch to the public, send out your marketing campaigns, and begin to build your reputation as a reliable and user-friendly exchange.
8. Optimization: After you start your own crypto exchange, it’s important to continue to monitor how the platform performs and to keep on top of your competitors to see how you can further optimize.

How to Start a Cryptocurrency Business: Pros and Costs

There are many strategic advantages to capitalize on when figuring out how to start a cryptocurrency exchange. Naturally, the potential for profit, enhanced return on investment opportunities, and current high market demand are the clearest advantages to commencing this venture. Once established, you’ll also find that a good crypto exchange is very scalable and flexible, allowing you to adapt to and benefit from changing market dynamics.

On the flip side, there are many costs to consider. The final price, and even the price range, will be different across the board, but your main expenditures will include: development costs; legal fees; compliance fees, such as when getting a crypto licence; investing in high-security measures; and deploying user acquisition programs. To put a figure on the cost to start a crypto exchange, a CEX could range from $300,000 to $350,000, while a DEX will be in the region of $50,000 for the development stage alone.

Challenges to Consider When You Create Crypto Exchange Platform

If you want to create crypto exchange platform, there are many challenges that you should consider before committing to the idea. Along with all of the steps to launch detailed above, you also need to consider the wider crypto environment.

There’s regulatory uncertainty due to the technical complexity of the crypto world, and remaining compliant as an exchange can be challenging. Further, not only is the market very competitive right now, but users new and existing tend to go with what they trust, so you’ll need to exert yourself to win the favour of the crypto community early.

The path to create crypto exchange platform and a business around the platform isn’t easy or cheap, but there is an opportunity right now to win over users and enhance the crypto exchange scene from within.