Guide to Building Your Own Cryptocurrency Exchange.
The entire cryptocurrency market is almost completely online, available to most users. Those looking to make a tremendous profit can create a cryptocurrency exchange to provide customers worldwide with services of trading blockchain-powered currencies.
So what is a cryptocurrency exchange, and how to make such a platform effective?
Simply put, a cryptocurrency exchange is an online platform that allows buying, selling, and exchanging crypto and fiat currencies. The core principles of such products are advanced security, transparency, and enhanced transactionsspeed. The more reliable, fast, and convenient your platform, the larger audience it will captivate and hold. Which, accordingly, results in increased revenues.
Thus, even if you’re not willing to become the second Binance, crypto copy trading strategy you still have every chance of succeeding with your crypto exchange business. How? This post will help you find out, relying on Softermii's deep expertise in developing robust cryptocurrency exchange solutions.
You will learn the key crypto exchange platforms’ types, features, development frameworks, design best practices, architecture specifics, and why the cost starts from $100 000 based on Softermii’s experience in creating a successful crypto exchange platform EXtoBit.
Types of Cryptocurrency Exchange Platforms.
Before learning how to make a crypto trading app, let's look at its types. Online trading provides an opportunity to conduct speculative transactions and make real profits since cryptocurrencies feature high volatility. Users can exchange crypto assets for fiat currencies on cryptocurrency exchange platforms. Other web resources allow exchanging cryptocurrencies only for other digital coins.
Let’s consider the second option, embarking on the road to creating a bitcoin exchange website and solving the design challenges therein. You may choose one of the types listed below.
Centralized Exchanges (CEX)
CEX is the most common type of crypto exchange platform. Such online resources have a centralized operator or use a third-party organization to assist in transactions. Users trust this third party, responsible for security, functionality, and assistance in finding trading partners. Centralized exchanges manage order books that record all buying and selling transactions.
Simple and user-friendly interface; Many features for trading; Millions of operations per second.
The fee can reach up to 8%; Wear protection against hacking; Users have to keep their money in the accounts offered by a crypto exchange.
Choose among 120 software specialists.
Hire an offshore dedicated team or a few team members for your project. We guarantee 10% of deviation in deadlines and cost.
Decentralized Exchanges (DEX)
If you want to create your own cryptocurrency app, pay attention to the DEX platform. Decentralized platforms do not use intermediaries, unlike centralized cryptocurrency exchanges. DEXs provide funds transfers directly between users' wallets using blockchain technology or distributed registries. Buying and selling cryptocurrencies occurs without control from the main server or third-party organization.
Registration and verification of new users are required; User funds are not stored on exchange accounts, so the probability of losses is reduced; The maximum fee is 0.25%.
The third-party moderation is absent, so all the responsibility falls on users; Users have to wait until other traders are ready to close the orders; Other traders can revoke the payment by PayPal or bank cards.
Peer-To-Peer Exchanges (P2P)
These exchanges provide cryptocurrency sales and purchases directly between users. Traders place their bids, and other users can respond to the offers and agree on the terms. The only intermediary in P2P exchanges is software that transfers cryptocurrency confidentially from the sellers’ deposits to the buyers’ wallets.
Users are protected by seller rating and cryptocurrency blocking; Availability of only two functions (buying and selling) makes these exchanges suitable for beginners; The buyer does not pay fees for the deposit, exchange, and withdrawal.
Difficulty to dispute charges after transactions; Errors, such as sending money to the wrong users, may happen; Exchanges may take time.
Consumers and businesses sent nearly half a trillion dollars with Zelle in 2021. Sent payment values increased by 59%, while transaction volumes increased by 49%.
Instant Exchangers.
Instant crypto exchanges are easy to use. They allow users to instantly exchange one cryptocurrency for another thanks to access to the best rates of trading pairs. Instant crypto exchanges typically aggregate prices and liquidity from multiple custodial trading platforms. These platforms offer easy registration with a simple exchange UX. Instant crypto exchangers receive and deposit funds directly to users’ wallets.
Top-of-the-line match engines; The highest transaction speed; Large orders are supported.
The platform is more complicated to use; The security level is medium; Difficulties to get refunds may arise.
Other Types of Cryptocurrency Exchanges.
You can also find hybrid crypto exchanges that combine the properties of centralized and decentralized exchanges to improve the quality of services. For example, third parties can operate such exchanges to give users more control over their funds. Orders and transactions are encrypted, fixed in time, and stored in blockchain, while order approvals are performed outside blockchain on a third-party node.
Cryptocurrency Exchange Architecture Types.
To start your own cryptocurrency exchange, you should think first about its architecture. It will help you get a comprehensive and logical summary of how everything will work in your platform and how its components should interact with each other. Thus, your cryptocurrency exchange architecture will entirely depend on your platform’s type, its functions, and scalability.
Normally, the components considered regarding crypto exchange architecture are:
User login Trading engine Multiple wallets generator Control panel User authentication User interface Security functions APIs Databases, etc.
Each of these components is a crucial part of creating your own crypto exchange. And each of them matters both separately and in interaction with the others. So the way you define the connections between those layers affects data processing speed, page loading, the maximum possible number of orders, and the platform’s capacity.
Generally, there are two main types of application architecture:
Monolithic architecture. Such platforms are usually built on a single server. Consequently, their functionality is limited, and request processing speed is lower. Such online exchangers are cheap to create, but their profit is not high. Microservices architecture. In so-called modular systems, each component is located on a separate server. As a result, you can achieve higher throughput, system efficiency, and customer requests fulfillment. Such a system is more expensive to create and maintain, but it can significantly increase the platform's scalability.
Suppose that you opt for a microservice architecture that is much more suitable for creating a reliable cryptocurrency exchange. Then, considering all the factors listed above, let’s look at the three most common structure types.
Synchronous Architecture.
A typical example of synchronous communication across microservices is HTTP, where the sent request always requires a response. Synchronous architecture applies to small and non-complex exchanges that process each order streamlined. Cryptocurrency exchange with synchronous architecture may have poor scalability. So if your audience expands, large trading volumes may cause order book failures.
Asynchronous Architecture.
The asynchronous architecture is better suited for highly scalable systems. In a nutshell, asynchronous microservices involve many separate layers that pass their own requests. Thus, the users don’t wait for the responses. The requests are served individually on multiple queues running as separate services. Then, the user interface receives status updates.
This type of cryptocurrency exchange provides every significant feature with a distinct service, and they all function on different layers. Also, the users aren’t involved in maintenance processes. These benefits make the asynchronous structure perfect for a robust crypto exchange platform.
Distributed Architecture.
Similarly to the asynchronous approach, distributed application architecture involves dividing services into separate groups that operate independently. However, this type of structure goes even further and provides each user with a single logically built environment. The customers’requests are split into shards that are processed individually. But a communication network ensures the components can interact with each other for achieving a common purpose.
Distributed architecture is suitable for complex cloud-based exchange platforms requiring unlimited growth capacity.
Cryptocurrency Exchange Design Best Practices.
Blockchain services and crypto-related operations evolve from a specific niche to mainstream technology used by a growing audience. The cryptocurrency market size is expected to reach almost $5 billion by 2030, with an impressive CAGR of 12.8% from 2021.
It means that your exchange platform will likely serve a larger audience of inexperienced users who need to get a convenient, intuitive, and seamless user experience. So when hiring a dedicated development team to build your own bitcoin exchange solution, pay extra attention to UI/UX design. It’s one of the keys to your product’s success.
The following UI/UX design best copy trade cryptocurrency practices will ensure your platform will be accessible and easy to use.
User Research.
Initially, ensure you know your business goals, audience needs, and market specifics with user research. Prepare requirements document specifying the project’s core milestones and deliverables. Relying on this information, your tech partner can conduct efficient qualitative and quantitative research, including user interviews, surveys, and competitor analysis.
All this information is required to develop efficient UX solutions and ensure a frictionless customer journey.
Prototypes.
Before dealing with full-fledged design, it’s worth building basic wireframes and a visual prototype of the future exchange platform. This move will allow you to assess UX solutions and address potential issues. A prototype tested on real users will show how efficient user-system interactions are and how well the implemented features perform their functions.
Robust Functionality.
Regardless of the features you’ve prioritized for your app development, implement them wisely for the sake of the users’ convenience. If you’re not sure that the functionality of your platform will be result-driven, start with building an MVP. It will help you estimate the product’s viability and the feature’s relevance without expanding your budget.
Do your best to address common crypto app challenges like lack of tokens and coins to opt for, poor customer support, unnecessary restrictions, etc.
User-friendly Navigation.
Any platform related to crypto or fiat transfers, whether cryptocurrency exchange or a common fintech product, should be credible and easy to operate. Ensure the user journey is smooth and clear: people don't trust an exchange that seems confusing and too complicated.
To achieve this goal, stick to the following design best practices:
Easy sign-up Frictionless onboarding experience Seamless customer journey.
Good navigation ensures your customers will easily learn how to use your cryptocurrency exchange and quickly find what they’ve come for. Therefore, thinking about how to create a crypto exchange, it is necessary to foresee this moment as well.
Simple and Intuitive Interface.
A simple and consistent interface satisfies customers with their trading experience and invites them to keep using your platform.
Here are a few things you could do to keep the right balance between your crypto exchange app’s UI and UX.
Don’t misuse graphics and animations. Make the interface modern yet non-overwhelming. Design a user-friendly dashboard. It’s one of the users’ main tools, so make it clear and precise. Use colors wisely. They can represent your brand identity and provide visual signals, especially when grouping and visualizing data.
Integral Elements to Sustain the Exchange.
The online exchange of cryptocurrency for fiat is arranged on a similar principle with financial institutions. Users have such primary criteria for is copy trading illegal quality services as reliability, availability, security, and a high level of customer focus.
Therefore, the platform owner should pay attention to customer support and online chat in selected languages. Good exchange sites usually operate at strictly defined hours with the participation of real people, not chatbots.
A Large Base of Active Users.
For a cryptocurrency exchanger’s successful operation, you should attract many buying and selling customers. The owner can invest significant funds to initiate trading. Still, due to the small audience, trading volume can eventually shift, rates will deviate greatly from other exchanges, and significant funds will be quickly spent.
Therefore, the owner must ensure the balance of supply and demand and maintain rates in case of large requests.
Fast Server Performance.
User orders must be processed instantly. When users trade with set prices, the rates are constantly changing. For this reason, some exchanges confirm the order on the users’ side and cover possible costs. The speed of the crypto exchanger is achieved through memory caching. However, you cannot achieve it at the expense of the calculation quality, as a crypto exchange requires high performance.
Security.
Platform security is the cornerstone for a crypto exchange startup. Your project must be reliable as online exchanges are popular targets for hackers. Intentional malicious activity can be external in origin or from team members. Besides cybercrime, various factors can lead to the complete bankruptcy of a crypto exchange.
You need to be careful when providing leverages. Also, damaged software and hardware can cause some negative impacts. When dealing with huge amounts, such problems can wreak havoc on your capital.
Cryptocurrency Exchange Functionality.
During the cryptocurrency exchange app development, pay special attention to the tools and functionality. Crypto exchange is a one-stop marketplace that connects people who buy cryptocurrency with those who sell it. At the same time, the main and additional functions should work properly.
Here is the set of basic and additional features your platform will benefit from.
Authorization and Verification.
Verification is important to ensure transaction transparency and minimize the fraud possibility. Developers should exclude any risk of unauthorized access to accounts to ensure the users’ safety. It also confirms that the cryptocurrency exchanger complies with international standards. The registration should be easy and fast. Good UX/UI design can help you make the registration process consistent and streamlined.
E-Wallets.
To create a trading platform for cryptocurrency, you should provide users with commonly used e-wallets. Electronic wallets for digital currencies should provide secure transactions for withdrawing virtual money and converting it to fiat currency. Usually, when registering, a user immediately gets a personal e-wallet, which can be cold or hot. Think about which option is better for your exchange platform.
Trading Engine.
The trading engine is the core of your crypto exchange. It is responsible for the functionality of your platform. It controls the funds in user accounts, creates charts, matches offers and rates, processes real-time prices and commissions, etc. Therefore, developing an engine for a custom crypto exchange is one of the most challenging tasks.
Dashboards and Charts.
Dashboards allow users to compare exchange rates of cryptocurrencies and view the history of exchange rates, so these tools are crucial for any trader. With the help of a client chat (normally a chatbot), users can receive qualified assistance from exchange service employees or an automated application based on AI around the clock.
Admin Panel.
This function is designed to track the current state of traders, wallets, transactions, and content. The automatic check system detects unusual user actions and notifies the administrators about them. The admin panel may include KYC/AML modules and reporting/analytical tools necessary to comply with the legal procedures of the crypto exchange.
Order Book and Transaction History.
An order book is a list of open orders to buy or sell a cryptocurrency. An online exchange creates it automatically by grouping orders for purchases and sales into separate lists. When users find an offer that matches their interests, the system automatically makes a deal between users. Completed orders disappear from the order book and move into the transaction history, which helps users track their trades’ performance.
Notifications and Alerts.
Notifications inform users about significant events on the exchange. You can integrate alerts into the system to show price changes of selected trading pairs and other important indicators. Notifications and alerts should be useful and customizable but not obligatory and annoying.
Analytical Tools.
Your users will need to get timely reports and information about the current crypto market trends, news, and changes. Thus, efficient analytical solutions can enhance the user experience and make your product more convenient. You can provide relevant analytical tools and integrations that will enable them to track this data in real-time. Consider popular APIs for financial and trading products like Coinlayer , CoinMarketCap , Crypto APIs , etc.
Basic Security Settings.
Cryptocurrency exchange is always related to sensitive information, personal data, and financial operations. So advanced system security is a must. You should ensure your platform’s safety and transparency to make your users confident that no data and funds can be lost. Do your best to prevent any risk of leaks or breaches.
Bank Cards Integration.
The exchange platform users should carry out transactions using their credit cards. Exchanging fiat to crypto and vice versa should be easy and accessible. Bank cards integration will allow your customers to top up their wallets and withdraw funds with their Visa or MasterCard. This function is crucial for any cryptocurrency exchange.
Arbitration.
Arbitration enables the users to compare the current rates of different cryptocurrencies and make money on successful exchanges on different platforms. Enabling your customers to conduct crypto trading on your exchange will enhance your platform’s popularity since this type of trading is quite common today.
NFTs integration.
Non-Fungible Tokens (NFT) is a unique digital asset that provides ownership of any digital object, whether it’s a piece of art, a game character, a video clip, etc. Like any crypto tokens and coins, NFTs are blockchain-based, yet they aren’t fungible. Therefore, they cannot be called currency.
However, NFTs are built using the same technologies like Bitcoin, Ethereum, etc., which makes them a promising target for trading on an exchange platform. Empowering your product with NFTs integration can attract a broader audience since its popularity is skyrocketing today.
Other Features.
Most of your customers are unlikely to use special features such as an extended list of cryptocurrencies, automatic selection of the best trade, compound orders, etc. However, such features may come in handy for attracting experienced traders.
Crypto Exchange Platform Tech Stack.
Technology stack is a very important step in bitcoin exchange platform development. The choice of the cryptocurrency exchange platform tech stack generally depends on the type of your product and the devices it’s developed for. Anyway, it’s always better to choose a robust and future-proof technology so that your platform will be scalable and powerful.
Also, it’s important to pick a framework that has a sufficiently large developers’ community. Thus, you will ensure it won’t be challenging to find a team to build and maintain your crypto exchange.
Here are the most popular technologies to opt for depending on the platform’s type.
Web Application Development.
If you start a cryptocurrency exchange for the web, consider the following popular front-end and back-end development frameworks.
Front-end Development.
The most widespread front-end development technologies are:
Back-end Development.
The following server-side frameworks are the most common options for back-end development:
Common database solutions are:
Mobile Application Development.
If you want to build a crypto exchange mobile app, here are common technologies to use for iOS and Android development.
iOS.
iOS developers mostly work with the following technologies.
Frameworks : Swift, ObjectiveC Development kit : iOS SDK, CocoaTouch Analytics : Firebase, AppsFlyer, Amplitude Data storage : CryptoSwift, UserDefaults, CoreData, Realm, KeyChain.
Android.
As for Android developer, they prefer the following tech stack.
Frameworks : Kotlin, Java Development kit : Android SDK, Android Jetpack Analytics : Firebase, AppsFlyer, Amplitude Data storage : SQLite, Shared Preferences, Room, Realm.
Technologies We Use for Crypto Exchange Development.
When building a crypto exchange platform, our experienced developers choose frameworks that are suitable for the project’s specifics. They consider its goals and requirements like the expected performance and scalability.
Here is an example of the tech stack we selected for building a cryptocurrency exchange web application EXtoBit.
We’ve chosen C# programming language for back-end development. Each application (for customers, admins, managers, and employees) was isolated to enhance security. The API solution in our case was Binance. The main backend framework for this project was ASP.NET Core. The database solution we’ve chosen was MS SQL Server. Finally, our front-end developers worked with conventional Vanilla.js and React technologies.
Cost to Launch Own Crypto Exchange.
The cost to build a cryptocurrency exchange is determined after a meticulous study of your terms for cryptocurrency exchange platform development and the thorough calculation of all types of work. When developing an online cryptocurrency exchanger, we will find effective solutions for you, create a stylish design, and think through convenient site navigation. Besides, you can modify your platform by adding or removing some features.
To understand what budget you need to create a cryptocurrency exchange, consider its development stages and other significant aspects. The tech stack, chosen features, the timeframe for your project’s execution, the development company’s rates can all affect the ultimate cost of cryptocurrency trading platform development services.
Stage 1. Discovery Phase & Design.
Based on your requirements and market research, designers create the visual aspect of your crypto exchanger, provide multiple user interface alternatives, and assess which prototype is the most practical and easy to use. Detailed visualization will prevent possible UX-related issues and allow you to see the logic of user interaction with the exchange platform. This phase is not the most expensive, so it has little impact on the cost to build a cryptocurrency exchange.
Stage 2. Website Development.
At this stage, developers work on implementing user interface design. They create the visible side of your exchange for users. At the same time, back-end development occurs: writing the website’s core, securing it, and aplikasi copy trading crypto terbaik working with the database. A customized trading engine is being created. Then, the front-end phase takes place, when experts connect the back-end with the user interface.
Stage 3. API Integration.
API integration when creating a cryptocurrency website allows you to link it with other online resources. It allows systems to share data and keep them in sync without human intervention to make your crypto exchange service run and perform smoothly.
Stage 4. Blockchain.
The blockchain network allows you to track orders, payments, accounts, and more. Since all participants share a single source of truth, they can view all transaction details at any time to work with more confidence and get new benefits while trading.
Stage 5. Testing.
At this point, you have a beta version of the cryptocurrency exchange platform. Testing is needed to fix all the bugs, identify weaknesses, and improve your product. When your online exchanger reaches perfection, you can launch it on the market.
Here is a standard table of cryptocurrency exchange development cost to guide you on the prices for the main stages of work: