Creating a cryptocurrency exchange: basic aspects. Part 1

People usually think that one of the best ways to make money on cryptocurrency is to trade it. The fact that Bitcoin’s value has increased by 10,000% since its inception makes cryptocurrencies a pretty advantageous offer for any person who wants to make money. The cryptocurrency business is mainly associated with trading exchanges, and it accounts for about 80-90% of the total industry. The rapid growth of cryptocurrencies in 2017 and the volatility in 2018 allowed many investors to earn huge amounts. It can be said without exaggeration that cryptocurrency is slowly penetrating mass transactions. In countries like Australia, Bitcoin is allowed to pay bills, and Malta has become one of the best places to do business in the cryptocurrency industry. Given this evolution, creating a cryptocurrency exchange will be an excellent business solution for an enthusiast.

What is a cryptocurrency exchange? As the name implies, this is a platform on which users can exchange cryptocurrencies for other cryptocurrencies or a specified currency at a predetermined value, which is determined by the dynamics of the market.

What do cryptocurrency exchanges earn?

Not all crypto exchanges are equally designed. There are various types of exchanges on the cryptocurrency market.

Centralized cryptocurrency exchanges

This type of exchange is suitable for users who do not have much experience in buying or selling cryptocurrency. There is a simple interface with convenient functions and navigation. Exchange is carried out instantly between the user and the administrator.

Exchange profit – due to exchange margin. If the current Bitcoin exchange rate is $ 10,000, you can sell them for $ 10,500 if you bought them for $ 9,500 from another user.

A thousand dollars difference is your profit. As a rule, the spread varies from three to five percent of the current market rate.

Peer-to-Peer exchanges [p2p]

This type of exchange is very similar to the previous version, but at the same time, it works with the blockchain directly. An additional difference is that there is no control point. Transactions occur between users – for this the exchange connects them directly. Profit comes from the interest commission for the exchange with each transaction. Binance and Poloniex practice this.

Decentralized Cryptocurrency Exchanges

Decentralized cryptocurrency exchanges fully operate on the blockchain. As the name implies, they do not have a centralized management of exchange operations. There are various types of decentralized exchanges, such as on-chain, off-chain and cross-chain.

Such exchanges can be decentralized either completely or only partially. They have some functionality for working with the blockchain. Wallet and registration modules are generally decentralized. Decentralization provides a higher degree of security, since the funds are not stored on the exchange. However, the functionality offered by such an exchange is [relatively] very limited.

Proof of Keys: prove what you own

Cryptocurrency exchanges with margin trading and leverage
This is a new [far from new] trend that is gaining popularity and attractiveness among some users. Margin trading cryptocurrency exchanges help the trader “create contracts in monetary terms.” This increases profit in proportion to risk.

There are not many players in this area, and the target audience is also small.

Also, there are a few more points that need to be taken into account before choosing options for creating a cryptocurrency exchange.

Legal aspects

Following all the legal rules for a cryptocurrency exchange is not necessary, but it gives an advantage over other companies.

It will be good practice for any exchange to follow the standards of KYC (Know Your Client) and AML (Anti-Money Laundering). Legal requirements may vary by country.

Here are the countries most loyal to cryptocurrencies:

Estonia
Switzerland
Australia
Singapore
Seychelles

Staff

Gone are the days when the company’s revenue and turnover were proportional to the number of employees. Often in companies with a turnover of more than a million dollars, 10 to 100 employees work. However, when it comes to cryptocurrency exchanges, there are only a few key skills that are needed.

It should be noted that, in fact, the number of these skills is not proportional to the number of employees.

Managing Director to monitor all work and ensure optimal performance of duties by employees.

Marketing Manager, respectively, responsible for marketing and PR activities. It is marketing that distinguishes a successful project from an unsuccessful one.

Partnership Director, who will be tasked with finding partners and contractors.

Support manager who will check incoming tickets and answer questions to the support service.

Prompt response to customer requests is what helps to justify the superiority of your cryptocurrency exchange over competitors.

When creating a cryptocurrency exchange, technical work can be transferred to trusted companies.
It is clear that you do not need more than three people to launch a cryptocurrency exchange.

To be continued!