“You can’t stop things like Bitcoin, it’s like trying to stop gunpowder. It will be everywhere, and the world will have to readjust. World governments will have to readjust.”
John McAfee, founder of McAfee Inc.
The words of John McAfee seem to be turning into a reality as the world is running after something that they aren’t even sure about for now. If talking in layman’s language cryptocurrency is a digital form of decentralized units where you can invest your money.
Crypto indeed has brought a revolution in the way the world will trade in the nearing future.
If you have decided to enter the domain, and aren’t sure about the cryptocurrency exchange business model, then here’s some help.
Before we talk about the crypto business, let’s find out how the world reacts.
How Does the World See Cryptocurrency?
The popularity of any new thing in the market is guided by how popular it is in the market or among its users. When talking about cryptocurrency, here are a few stats that would clearly reflect how technology has taken over normal transactions in very little time.
As per the reports on Statista, Q1 of 2020 saw 60 million crypto wallet users and it increases by 3M users crypto wallet users making it 63 million users by Q4. The surprise came in when in February 2021 the number of crypto wallet users around the globe was recorded to be 68 million users.
It is expected that banks around the globe would save around $27 billion by end of 2030 by adopting blockchain technology.
The crypto market is expected to rise to $28 billion by 2023 from $1.2 billion in 2019.
The numbers here are a clear reflection of the popularity of cryptocurrency and the hopes that people put on it.
In this scenario, with skyrocketing growth on papers, it is the right time to enter the market with a crypto exchange application that would earn you great ROI.
Although the growth is significant, there are a few myths about crypto that restrict more people from adapting to the revolution.
Myths Around Cryptocurrency!
If you are looking forward to entering the market with a crypto exchange app, you need to be aware of the talks about the technology in the market and how you would burst them. These are major challenges for your business to grow. You need to hire a marketing team that markets facts in a way that reaches the layman, and your solution should be designed in a way that reflects credibility and reliability.
Myth: Cryptocurrency is just a thought bubble that will burst soon.
Fact: With the numbers reflecting the apparent growth of cryptocurrency and the trust people show in technology, crypto is here to stay and take over other transaction methods helping humanity to make easy investments.
Myth: There is just one blockchain that regulates all the crypto coins.
Fact: One blockchain for each coin not one blockchain for all coins. People are a little unaware of how this is functioning. Understanding the whole concept and popularizing it would take some time.
Myth: Many people believe blockchain and bitcoin are the same things.
Fact: Again, since the concept isn’t that popular lack of awareness here is to be blamed. There are over 4000 cryptocurrencies that run around the world. Blockchain is the distributed technology that is the foundation of bitcoin and other cryptocurrencies.
Myth: Most people around the world think this is simply an investment strategy and not a mode of transaction.
Fact: A lot of people don’t know, but the first bitcoin transaction was made to buy two pizzas. Tesla has already announced accepting transactions from bitcoin. Cryptocurrency has been one of the strongest domains and in a few years, it would turn to be a real-time transaction method.
Myth: When talking about intrinsic value, cryptocurrency has none.
Fact: Since this is a digital ledger, it need not have a commodity value.
Also, if we talk about other fiat currencies, they are dependent on the commodity too. Their value comes from the government’s end and what the government decides.
Myth: Cryptocurrencies are used for dubious and illicit purposes.
Fact: Since crypto is not that popular yet, the myth holds no grounds. Most dark web activities are supported by fiat currency and not crypto.
This is one place where its unpopularity pays off! (*wink*wink)
Myth: Cryptocurrencies aren’t regulated legally.
Fact: With the awareness of crypto spreading, regulation policies are being developed and implemented.
The awareness for cryptocurrency may be low, but with the rise in regulation and popularity, it has become quite obvious that things have become quite easy. We make it a point that the solutions that are being delivered to you are interesting and reflect the importance and credibility of crypto on screen.
Related Blog: Tech-Talk with Octal – Bitcoin App Development
If you want to enter the market with a solution that sells well, then hire a cryptocurrency exchange app development team that is well versed with the latest technology too.
Now that we know the myths and the facts, let’s have a quick glimpse of the reason why these rumors see the light of the day.
The major reason behind these solutions being so unpopular is the reason that most people do not understand their functioning.
How Does Cryptocurrency Work?
When talking about operations of various cryptocurrencies the method is almost the same. The process is called mining.
Crypto mining is basically the process where new currencies go into dissemination. Along with this, it is also a significant part of the maintenance and development of the blockchain record. It is accomplished utilizing exceptionally modern PCs that take care of amazingly complex computational mathematical problems.
Digital money mining is meticulous, expensive, and way fulfilling. Mining has an attractive interest for some investment enthusiasts who are keen on mining digital currency on account that these miners are compensated for their work with crypto tokens. This might be on the grounds that enterprising sorts consider mining to be pennies from paradise and if you are a technology geek interested in innovation then why not do it?
However, before you decide to invest in your crypto exchange app development, understand the details of the mining process and its complications.
Our blockchain experts share here the detailed mining process that you would need to know if you want to get into the crypto business.
As discussed, most crypto miners are paid in terms of tokens and all to work as auditors. One needs to work for the legitimacy of the cryptocurrency. This convention was developed by the bitcoin users host Satoshi Nakamoto.
The transactions need to be verified to avoid double-spending.
What Is Double Spending?
Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value. Eric Schmidt, former CEO of Google.
Double spending is an event where a cryptocurrency owner illegally spends the same Bitcoin twice. This problem doesn’t exist with fiat money. Once you make the transaction, you don’t have the money anymore and you cannot use the same money again for any other purpose. Although fake currencies once circulated in the market ruin the economy but can always be controlled.
A crypto miner makes sure that none of the investors use the same coin twice to buy various things.
Well, the simple process is, the miners have to verify at least 1MB of bitcoin transaction to be eligible to be rewarded with bitcoins. This limit was set by the founder of bitcoin himself and is often debated by the miners for better results. Some bitcoin miners believe that the block size should be increased to add more data that would increase the effectiveness and more transactions in the bitcoin network can easily be verified in lesser time.
Thus, there is a possibility that even after transaction verifications, one doesn’t get any bitcoin!
This is just the basics of data mining and how double-spending is controlled.
You can read in detail about data mining in our future blogs.
How to Start Your Own Crypto Exchange Business?
As the world is buckling up to invest in crypto exchanges like Binance app, it is the right time to enter the market with your own crypto exchange app development process. If you are looking forward to building a solution that is interesting and engaging then you are at the right place. Our tech-geeks share here how you can start your own crypto exchange business and what it can earn for you.
Unlike any business, this too needs some legal acceptances and certifications before we move to perfection. We would share the complete process in two parts.
- The Pre Market Journey
- The Post Market Journey
So, let’s start here.
The Pre Market Journey
Before you enter the market to promote and sell your product do not forget the development team for the development process. Be sure that you have a mind map of the tasks that are to be accomplished and a strategy that would save you time, energy, and effort.
Choose the Kind of Crypto Exchange You Would Offer
Well, the crypto development process works in various ways. It is crucial that before you reach the crypto exchange app development team you are aware of the type of exchange you want to offer the end-users. There are various kinds of crypto exchange in the market and you can choose to offer services for one of them or all. Well, there are three different ways in which crypto exchange can take place:
- Centralized Exchange
- Decentralized Exchange
- Hybrid Exchange
Various Kinds of Crypto Exchange
- Centralized Exchange
A centralized exchange is a quite known methodology for a crypto exchange that offers a platform to the users who want to sell and buy cryptocurrencies. Thus in this case the platform owner holds the responsibility of the investors’ funds.
Further, these centralized exchange platforms carry with them very simple, yet well-defined UI and UX designs. They offer simpler access to the flat gateways and have a simplified registration process. The clients get enough time to reach customer support and find a wide range of trading partners.
The centralized exchange users aren’t the owners of private keys and are more vulnerable to hackers. The KYC procedure here would need some personal details that not many are ready to share.
If you decide to build a crypto exchange platform that offers centralized exchange then before other features you need to assure one thing that is security.
Crypto exchange would need strong affirmation of safe and secure investments from the service provider.
Related Blog: Decentralized Exchange Development Cost & Key Features
- Decentralized Exchange
These are a little complex alternative to centralized exchanges that we were talking about previously. Here there is, in particular, no owner and all transactions that take place are via some decentralized application or some smart contract. Thus, this is a more secure alternative to centralized exchanges if the smart contracts are flawless.
Not everything is summer here. The major set back here is low liquidity, slow execution speed, lack of fiat gateways, no customer support, and poor UI.
Entering the market with decentralized exchange is a great idea but the major setback here is due to lack of fiat exchange and customer support you cannot expect many investors but security may attract a few of them.
- Hybrid Exchange
As the name suggests this exchange reflects the qualities of centralized and decentralized exchanges. Thus, when talking about the pluses here they are high speed, quality liquidity, and better security. These would offer your own private key. It is still an emerging technology and would take a few more years to see the light of the day. D
It can be anticipated they may replace their counterparts that we just talked about in the nearing future.
So, out of the three choose the one that fits your business objectives and let our experts know how you would like to present the information on your screen.
Get Legal Counsel to Meet Licensing Requirements
When talking about any business that talks finances, there are a few policies and state regulations that one needs to adhere to. It is crucial to get some legal counsel to comprehend the state regulations of the area you are in. You would need to get a proper license from all jurisdictions where you plan to launch your crypto exchange application. There are various places around the globe where no regulations work as the jurisdiction, government, and others have failed to walk as fast as the technology in the digital arena.
There are a few countries that offer limited regulations where you would have to register your business with some firm like Money Transmitter businesses and must stick to rules and regulations of SEC and CFTS for better understanding. Professional legal counsel here can help you stay in the business longer and save your expenses. To combat money laundering it becomes important that one must at least adhere to KYC regulations.
Look for Funds for the Venture
The cost of the development of the Crypto Exchange application is around $15k to $75k. If you calculate all the expenses to launch your crypto exchange business you would at least need $135000. This is the bare minimum amount that would be required to enter the market with your application. But this amount would cover most topics like software required, hosting of the website, technology, marketing, government formalities, and other legal formalities. To launch your application in the market you may not need all the funds right away but a part of it to at least commence the project.
This is one mistake that most startups commit. Once they have enough funds to pay for the cost of development, they forget to have some amount in spare to take care of the expenses till the business starts generating profits.
Another major fault is getting licenses from unregistered resources that charge heavy fees and still fail to mention most legal obligations.
Know the Technology Support You Need
When talking about the stability of your business, it is important that you enter the market with reliable and futuristic tech support that would not need modifications often and help you with a sustainable crypto exchange application. The right software would get you part one of the competition won. The software would impact the transactions your users would make, wallet operations, depositing and withdrawing crypto, and other activities. Choosing the right software would help you stem the cost of development and time to market your application.
Here’s a list of software that you may need.
Connect with the Liquidity Provider
Well in simple terms the ease of turning your asset to its money equivalent is liquidity. The higher the volume of liquidity, the more popular would be your business. With good liquidity, you would be able to offer your users a tighter spread.
How to choose a liquidity provider?
Choosing a liquidity provider is quite an easy task. All you need to do is just simply be a little aware and do a small three-step homework.
Analyze: First of all analyze the available alternatives. Check for their responses, reaction timing, and their cost-effectiveness.
Compare: Compare the trading conditions, the margin of trading, and other trading conditions before you finalize your liquidity partner.
Finalize: Once you have considered all the solutions, the next is to see what firms can help you achieve your goals and partner with them.
When it comes to providing liquidity an organization can do it in various ways. The most popular ways being
Related Blog: How Much Does It Cost to Develop a Bitcoin Mobile App
Prime of Prime Method: Where the service provider may collect liquidity from liable resource or is a client of a high-liquidity provider.
Liquidity Aggregation Method: Here the orders from various sources are aggregated and sent further through the liquid aggregator.
Liquidity is a strong tool that would make it easier for your audience to trust your application and help you grow further. Finding a great liquidity partner would surely help you through the journey.
Partner with a Development Team
Now that you know various software that you would need to build a strong, reliable, and futuristic solution, now the next step is to partner with an app development team. It is important that the team you select is in line with your business objective and keeps you informed about what is happening with the development process.
Choose a team that can provide bespoke solutions and helps you stay ahead in the market.
Get Your Application Developed
You can get your application built in three various ways depending on the ease of development you want the customization and the budget. You can get your application customized by developing it from the scratch or choose to work with a white label solution or customize a white label solution.
Developing from Scratch: This would surely be the best way to launch your crypto exchange business, but here you would need time and heavy investment. But here you would get fully customized solutions that would make it easier for you to make a strong presence in the market.
Buy a White Label Solution: Buying a white label solution is quite easier. Just pay the development firm for software that is developed beforehand and enter the market by modifying it according to your business solution.
Customize a White Label Solution: You can buy a white label solution and then pay the development firm to customize it according to your business needs. In this case, the final solution may or may not have all the features that you want to integrate with your application.
Choose whatever methodology you want to and connect with your blockchain solution providers for a world-class application that would help you earn profits and survive cutting-edge competition in the market.
Take Care of Security Practices
When you reach the on-demand mobile application development team, ensure they follow the best security practices to integrate into your product. With a lot of myths and stories around cryptocurrency in the market, security becomes a major concern for investors. Make sure your development team builds a solution that is secure, uses cold storage wallets, works with two-way authentication, and has an encrypted database.
Make sure you reflect strict conduct against data breaches and affirm confidentiality and privacy.
Go Live via Beta Testing
Now that you have built your application, the next step is to go live. Most organizations these days use agile software development methodology and thus keep you in the development loop all the time. You can check for each function as the milestone is reached.
Once your application is ready one final testing and Go Live!
The Post Marketing Journey
Once you go live now is the real challenge. Development task would be taken care by the exports and thus your product would be flawless. The real task is to convince your audience that the solutions you are delivering are much needed and can solve their problems.
Come Up with Smart Marketing Strategy
Once you have developed your crypto exchange app like Binance the world is your stage. All you need to do here is tell everyone that you are in the market. For this, you need to connect with magazines and websites that talk about crypto and tell them about your presence in the market.
Also, use your social media accounts in a smart way to bring an audience to your business.
Related Blog: NFT Marketplace Development Costs & Key Features
Follow Business Sustainability Technique
It is important for any business to make their audience heard. Make sure that your business sustainability plan is customer-centric and helps you be in the business for long enough. This would increase customer loyalty and earn you some great references too.
Some of the major things that would be accounted for here are:
If your business is available to connect with customers in the wee hours and resolve their queries in a limited time, then you surely are gaining some love and respect to survive the throat-cutting competition.
Asset Management Strategy
Once you are in the market, you must also take care of your assets. It is important that in the journey to the top you do not forget where you start from. With the right management strategy, you would be able to enhance user experience in a crisis.
If your staff isn’t customer-friendly, you can be sure that your crypto exchange business will be shut down in a small time. If customers find service providers dominating and unjust they would not buy from the same place ever and the same goes for eCommerce, e-commerce, and other online services.
Marketing your crypto exchange application would be a challenge, but with limited competition and growing trends, this is the right time to step in and mark your territory.
Crypto exchange is a booming business these days, and if you partner with the right service provider, then you may reach the top of your game. Over the years, at Octal IT Solution, we have provided enterprise mobility solutions and on-demand app development solutions that would help you build a strong presence in the market.
If you are all set with the information and want to enter the world with a crypto exchange business, we are just a click away!