How to Start Your Own Bitcoin Exchange
Business in 2022

Despite early skepticism, bitcoin is taking the world by storm. As more people are becoming wealthy due to their bitcoin investments, its attractiveness is going through the roof for fortune seekers.

Everybody wants a piece of the pie! Before engaging the crypto-verse, you need to understand what you are getting into.

This article will let you in on the crypto-verse and how to build a crypto exchange. also, we have shortlisted the best liquidity providers for forex, which can help you to trade in forex

The Crypto-verse

Once you start doing some research on cryptocurrencies, you come across different terms that may need some explaining. It is important that as a newbie, you get to know what bitcoin trading is and how it works.

Bitcoin trading is how traders exchange bitcoins for fiat currency or other cryptocurrencies using a secure platform. There are three major players in this process that everyone should know:

  • Buyer; places a buy order to receive bitcoins.
  • Seller; places a sell order to sell bitcoins.
  • Crypto exchange: plays the intermediary role between the buyer and seller.

Without a crypto exchange, none of this is possible. Crypto exchanges are a great entrepreneurial venture because of the ability to raise revenue through different fees paid by users.

But not all crypto exchanges are the same. Therefore, you should know the different categories of crypto exchanges.

Categories of Crypto Exchanges

There are three categories of crypto exchanges. They are categorized based on their function, which determines the fees they can charge and profitability.

Centralized Exchanges

This is the most popular exchange because of its high volumes of trading. It acts as an intermediary between buyers and sellers. It works exactly like a bank but one that stores cryptocurrencies. An exchange can charge a trading fee from 0.1%-3.99% to ensure traders use a safe and secure trading environment.

The popular centralized exchanges include Coinbase, Binance, and Kraken.

Decentralized Exchanges (DEX)

DEX takes a different approach from centralized exchanges. Rather than store customers’ cryptocurrencies, it facilitates the conversation. Funds move directly between wallets onto the blockchain.

While the trading volumes and liquidity are low due to limited features, it offers the best security of all the exchanges. Examples of DEX platforms include Binance DEX, Uniswap, and Pancake swap.

Peer-to-Peer Exchanges

P2P exchanges are similar to DEX but with a twist. They facilitate direct transactions through an escrow service that allows buyers and sellers to agree on a price and payment method. The charges can range up to 1% of every completed transaction.

P2P exchanges are less popular in crypto-friendly countries and surging in Africa and countries that banned cryptocurrencies. Examples include Paxful and LocalBitcoins.

How to Build a Crypto Exchange

Once you have settled on a crypto exchange, it is time to take steps to build it. These steps will work well for your customers.

 

Legal Requirements

While setting up an exchange in any country, you will need to be up to speed with the legal requirements for your headquarter country and other countries where you plan to operate.

Different countries have different regulations. For example, your exchange should be registered under Money Transmitter Businesses in the US and may need to adopt KYC (Know Your Customer procedures to prevent money laundering.

Hiring a legal counsel with the right expertise will make this process much more accessible than going at it yourself. In the long run, legal counsel will help keep you up to date with changing legal requirements in the crypto industry.

Finding Funding

Every start-up needs financing. While it seems obvious to most crypto entrepreneurs to have enough capital to get the exchange off the ground, usually about $140000, few remember maintenance funding.

Entrepreneurs should have sufficient provisional funding to sustain the business expenses not only at the start but over time. This expense may include tech, legal counsel, and hosting fees.

 

Top-Notch Solution Provider

A great solution provider will ensure your platform has the best transaction software, best security, and features for trading cryptocurrencies. Customers especially appreciate software that will provide safe and secure transactions with a smooth trading experience.

White label exchange providers are a great option. Modular is one of the most experienced providers with over 20 years of experience. Other great alternatives include BitHolla, Espay, and Skalex.

You should ensure software providers have an update and maintenance plan to ensure your software is always at its best.

Payment Processors

You need to partner with banks or payment processors to process fiat payments. Not just any bank or payment processor will do. They should have reliable and trustworthy online facilities to facilitate quick and easy online transactions.

Marketing Your Exchange

Word needs to reach your target customers, and marketing is the way to do it. You will need to create a marketing plan and budget.

Your marketing creates customer awareness of your exchange and highlights the outstanding and valuable features it offers compared to competitors. It can be done through traditional marketing methods or digital methods such as social media.

Customer Support

Things will not always go according to plan when customers are on your exchange. Therefore, you need to make sure you have an available, responsive, and knowledgeable customer care team.

A ZenDesk ticketing system can go a long way in providing customer support. It would be best to have a team available 24/7 because trading never sleeps.

Conclusion

Crypto exchanges are a great investment idea because cryptocurrency trading is on the rise. To successfully create your exchange, you need to know how it works.

You can hire legal counsel, a great software provider, and alliances with reliable payment processors with the proper knowledge. This will put you ahead of the game.

Remember, creating an exchange will require funding. Therefore, you will need sufficient funding to get it off the ground and keep it running until it can sustain itself.