Current market conditions are extremely favourable for starting a brokerage business in the field of cryptocurrency exchange. Why? First off, this type of businesses are increasing and the crypto industry is showing a very healthy growth on a daily basis primarily because the profitability prospects for such ventures far exceed those that can be had through the trading of traditional financial instruments. This being said, it is also true that crypto-exchanges are more well represented and developed than the field of brokerage services in the cryptocurrency market, where there is a lack of awareness and exposure as to what is on offer.
What is certain is that while the most traditional stock and forex brokers are facing difficulties and there is a customer losing trend in their field, cryptocurrency brokerage services are on the rise and becoming increasing popular. Now is the time to jump on this bandwagon then and this post aims to provide a brief overview as to the hows and whys of starting your own cryptocurrency brokerage business, as the upward trend in this field is estimated to continue for the coming years, aided by improvements and new developments in the overall crypto industry.
A cryptocurrency or digital currency exchange is a business through which customers can trade cryptocurrencies or digital currencies in exchange for other assets, such as conventional fiat money or other digital currencies. As in the trading of other financial instruments, a cryptocurrency exchange is either a market maker, taking the bid-ask spreads as a transaction commission for is service, or simply a matching platform that charges the corresponding fees.
Due to the increase in the popularity of cryptocurrencies, there are many investors who seek to explore the different ways in which setting up business in this niche could enable them to make money. Such money-making opportunities include mining bitcoins, launching their own Initial Coin Offerings (ICOs), investing in digital assets and even creating proprietary cryptocurrency exchange trading platforms. However, not all of these are equally easy or accessible. For example, due to the fierce competition that has already developed in this field as well, launching an ICO is not as accessible, mining your coins is not an easy task and continuous volatility means that cryptocurrency trading is riskier that one would have liked. This is why cryptocurrency exchanges emerge as the go-to solution for those seeking to make money in the crypto world.
There are several benefits associated with a cryptocurrency exchange, chief amongst which are:
All these benefits and many more can be included in a Cryptocurrency Exchange Platform that you can acquire through an expert platform development company, in order to ensure it is robust and reliable. The demand for cryptocurrency exchanges is rising as the use of cryptocurrencies is gaining momentum and earns the confidence, preference and appeal of people across the globe.
However, before taking your next step into the crypto world, you should first consider that there are different types of cryptocurrency exchanges
There are three different types of cryptocurrency exchanges:
If you are intrigued and want to know what steps you should take and what options you have if you want to create your own cryptocurrency, the first thing to take into account is that there are three different courses you could follow, namely, white label solutions, open source solutions and the hard way of building it all from scratch.
Want Your Own Cryptocurrency Exchange? Here’s how:
The arrival of Bitcoin on the financial scene over a decade ago, revolutionized the way people thought of and viewed cryptocurrencies. Bitcoin’s success gave rise to numerous other alternative cryptocurrencies and all of them have built a trending, healthy and booming industry that offers substantially greater returns than the trading of traditional financial instruments, especially since this particular niche is still relatively unsaturated. The trading of cryptocurrencies then is rapidly evolving into an exciting and lucrative new sphere of financial trading that keeps attracting growing numbers of individuals and companies.
Starting a Cryptocurrency Exchange business involves the following basic steps:
Once you complete the steps listed above you will be ready for business and able to start promoting your offering to attract customers. But prior to that, lets us explore further the initial steps required for you to start your own cryptocurrency exchange.
So, once you tread this initial set of steps you will be ready to start your cryptocurrency exchange journey. However, the initial steps are not enough. Marketing and proper public relations are a crucial step of the process as well and they are as necessary as they are in other industries and business models. Simply thinking you can use social media to attract customers is not enough. You need to properly build and develop your brand and use the full array of available tools at your disposal, be they digital marketing or traditional marketing ones.
The successful launching and smooth initial operation of your crypto exchange are by no means a guarantee that you will succeed in the end. To ensure the successful continuation of the operations of your crypto exchange you will need to adopt a strategic approach that encompasses the need for continuous improvement of your offering and strengthening of your market position. As the industry grows with respect to cryptos as well and new players enter the game, increased competition will mean that only the truly best and truly able will survive in the long run.
It is evident that setting up your cryptocurrency exchange from scratch is by means an easy task. In fact it is rather a complicated, time-consuming, burdensome, expensive process that requires a great effort and investment. This is why many avoid this option and opt instead for the easier way to enter the crypto trading market, namely by setting up a cryptocurrency brokerage via a white label solution. Resorting to a white label crypto exchange software is clearly less expensive than starting from scratch and almost entirely hassle free. The license fee is significantly lower than the cost you would have incurred for developing a software on your own, while the fact that the white label provider offers you a solution that is already established on the market and it is thus tried and tested and has proven results, means that you don’t need to worry about technical requirements, hiccups in the smooth operation of the exchange platform and how to cover its ongoing maintenance needs. Moreover, if you choose a white label provider that offers a complete turnkey solution that this saves you the trouble of looking elsewhere to find your crypto liquidity provider or payments processor, since turnkey solutions usually have all aspects covered.
If you want to own a crypto exchange, a white label solution will help you save time in developing your own platform, it will definitely save you a lot money as well and it is the most swift and smooth method to get you into the market and into the action. By buying a license to an existing, white label solution you avoid the technical headaches and can focus on attracting clients immediately. However, bear in mind that not all white label crypto solution providers offer the same offering, so you will need to search and figure out what suits you best. Moreover, though white labeling is the easiest and fastest way in, it does not mean that it is always the best strategy to follow.
With the risk of sounding repetitive, it is clear that speed of access to the market is the greatest benefit of a white label solution to start your crypto brokerage. What makes market entry even faster and easier is the fact that the white label provider usually also undertakes the installation and sets up the whole operation on your behalf, so that you can start immediately. Thus, once you find the right white label vendor and pay the fee you will be good to go…
White labelling is also a great way to overcome the most usual problem that a newly set-up exchange would face, that of limited liquidity. Liquidity is essential and absence of it is a show stopper, while exchanges that can ensure high liquidity levels are those who attract the most customers, since they are after the increased profit making and trading opportunities that increased liquidity enables. Usually, white label providers will share their own liquidity pool with their licensed white labelers, so that problem is sorted too.
Besides developing the software for the exchange, a white label solution provider will usually also undertake its maintenance, future upgrading, troubleshooting and the fixing of any bugs so as to allow trading to be executed smoothly at all times. This is another advantage of resorting to a white label provider, as it would be very difficult to have to deal with all the technical aspects of the endeavor on your own.
However, not all white label crypto exchange solutions are perfect, or perhaps none of them is. Some offer features that may sound impressive but are of little real use, while they lack on their essential components. Moreover, very few providers actually offer truly all-encompassing solutions and it appears that competition in the market as well as regulatory demands will mean that some technical knowhow on the behalf of the white labeler is also required in order to manage the necessary modules for KYC, compliance, verification, support, administration/CRM, as well as the offered charts and trade view.
Also, though they all claim the contrary, you should have security concerns even when you do with a white label solution. In fact, it is better to hire an external, independent expert to perform a due diligence in terms of security, before you commit to buy a white label solution. In addition, though shared liquidity is a good thing, especially at the nascent stages of your crypto brokerage, but it also comes with the added risk in case of any breach that could affect your clients’ funds, who would then seek compensation from your exchange directly.
This being said, white labeling is still the fastest and most attainable method to set up shop in the crypto exchange market and attempt to attract a share of the huge profit potential of this industry. However, you need to choose your white label crypto exchange solution provider carefully and also built your own in-house team of experts who will be able to cover technical and security issues, as these are very important in the long run and majorly affect the smooth operation of the exchange. What white labelling in this case surely offer is time for you to focus, not on the mundane and demanding task of software development, but on other aspects that will help you succeed, such as creating a better user experience for your client, effectively differentiating your offering, creating a strong, recognizable brand and building it to be viewed as trusted and reliable. Achieving this synergy, between the right white label solution provider and your own effort and commitment is the true passport towards the longevity and success of your cryptocurrency exchange in the long run.
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Our company specialises in the sphere of B2B as a liquidity and technology provider of solutions for the crypto and foreign exchange (FX) industry.