The recent years saw the sudden and steady rise of cryptocurrency. Bitcoin, in particular, demonstrated its value to the world and now dominates the online exchanges. Crypto experts surmise that bitcoin could enable social and economic growth across the globe. The crypto achieves this by providing better access to financial services.
Presently, more than 200 cryptocurrencies are listed on the internet, and new ones keep emerging every day. According to various experts, the global blockchain market size could reach 69.04 billion USD by 2027. The experts also claim that the market could exhibit a compound annual growth rate of 56.1% during this growth period.
The widespread use and adoption of cryptocurrency caught the attention of many savvy businesses and entrepreneurs. There are currently two options available to people interested in earning a profit in the burgeoning crypto field. They are: create a unique cryptocurrency with stellar financial capabilities, and the other is to develop your own crypto exchange platform. This platform will enable users to trade actively and exchange blockchain-based currencies.
This article covers option two: the steps involved in crypto exchange development, the main factors to creating a crypto exchange and the security measures a crypto exchange must have.
Overview of a crypto exchange platform
A typical crypto exchange platform is a digital marketplace where users buy and sell cryptocurrency. You can use these platforms to trade one crypto with another. Alongside crypto trading, these platforms show price discovery through trading activity.
Types of crypto exchanges
Centralized exchanges– This exchange is the most common type. These platforms require you to trust a third-party operator to monitor and secure the assets. This exchange uses an IOU-based system to track deals and transactions.
Decentralized exchanges– The DEX is similar to a centralized business, but the difference here is that you don’t need to rely on a third party. A decentralized exchange stores all the funds in the blockchain.
Instant exchange– This exchange is where users instantly exchange cryptocurrencies with others. This platform is easy to use and requires a user to register for trade orders. These exchanges have a single service providing access to the trading parts of various exchanges
P2P exchange– Peer-to-peer exchanges removes any third-party involvement and allows direct trade between crypto-market users.
Before you get into the crypto exchange development phase, first take a moment to list down the core features for your platform. Listed below are the must-have features for any crypto exchange platform.
- User registration, verification and authorization
A good crypto exchange will have an intuitive onboarding experience for users. Users like it when they only go through a few steps and register their accounts. Also, the user verification feature plays a vital role during the crypto exchange development phase. This feature is critical to minimizing fraud and increasing transaction transparency. Consider integrating the app with an anti-bot verification and two-factor authentication API.
- Trading engine
The trading engine is the foundation on which the rest of the app operates. This feature processes information surrounding price, commissions, matches offers and bids, creates schedules, tracks currency fluctuations and more.
Developing a robust trading engine will always be the most challenging part of creating a crypto exchange. This feature requires a veteran crypto development team.
- User interface
Though the UI is not a ‘feature’, it still includes parts of the platform that connect with the user. Ensure to build a user-friendly interface during the development phase. The UI should be intuitive by design and interactive enough to engage new users unfamiliar with trading.
Crypto exchange dashboards should provide quick access to features like:
- Market monitoring
- Order history
- Funds withdrawal
- Create and cancel trade order
- Support and feedback
The digital wallet is the feature where users can send, receive and store their virtual currency. It is always good practice to integrate the wallet with every top crypto. A crypto exchange has two types of wallets: a hot wallet and a cold wallet. A hot wallet is linked to the internet and is open to cyber-attacks from fraudsters. A cold wallet stores the tokens in offline mode, providing better security to the user.
Consider web sockets, FIX protocol, private and public API when adding an API to the crypto exchange platform.
- Admin console
The admin console oversees and enables the exchange between buyers and sellers. The console also manages the many operational parts of the crypto exchange. Typically, the admin console is customizable according to the specific requirements of the app. Every console should provide the admin with an option to add new currencies, edit the trading fees, manage crypto listings, credit or debit funds from the user and address any issues raised by the user.
Analytics is a feature that could add veteran crypto traders to the platform. Good analytical tools allow traders to understand the market and develop strategies based on those changes. Traders use different technical indicators like relative strength index, moving average convergence divergence, and moving average.
- Alerts and notifications
Push notifications are beneficial to the users as they will maintain communication with the users. You can use these features to notify users about new promotions, offers and news.
These features were the must-haves during crypto exchange development. However, that is not all. An exchange platform heavily relies on security. Exchange owners rely on these security measures to safeguard the site and the user’s assets.
Here are the security features required in a crypto exchange platform
- Registry lock
Registry lock provides extra security to the crypto exchange platform by locking the domain at the registration level. The feature prevents hackers from removing vital elements from the site or making unauthorized changes. At present, two percent of platforms use registry locks. 6 Ways ERP Can Save Your Business Time and Money
A domain name system security extension (or DNSSEC) is a set of protocols that authenticates the DNS queries. It utilizes the digital signature and public keys to authenticate the data. This feature can reject fake DNS entries to the server. Having a DNSSEC prevents users from entering counterfeit websites or getting hit by cache positioning.
- Anti-DDoS modules
A DDoS is an attempt to disrupt the regular traffic of the target network, server or service by flooding the target site with internet traffic. Many exchange platforms are victims of DDoS attacks, resulting in those platforms suffering heavy downtime losses. Integrate features like network firewalls and load balancers to prevent DDoS attacks from hitting your platform.
Always remember, operating a crypto exchange means you are dealing with other people’s money. Hence, entering the market with a robust, highly reliable, and fast exchange is ideal for standing out from the competition.