Any new trending industry goes through a series of slow growth just after birth, craziness during its adolescents, and maturity when it reaches the right level! The crypto industry, just like the dotcom boom, suddenly turned to be the Apple of every enthusiastic investors’ eye. When new cryptocurrencies were born as a result of this enthusiasm, the need for exchanges started to grow proportionally.
The business of a crypto exchange is extremely profitable but with a humongous initial investment. Bitcoin exchange software and its lead has been growing steadily ever since investors and entrepreneurs discovered the potential - it is quite similar to that of a casino where the house always wins.
What makes the business of launching a crypto exchange even more profitable is the presence of white label solutions. These white label solutions completely eliminate the time and effort involved in creating an exchange from scratch, especially with the scarce availability of crypto development experts. In addition, they have also attenuated the possibilities of finding bugs that might interfere with the basic functionalities of crypto-exchange software.
However, in all of this, just because a white label solution is available doesn't mean that you, as a discerning entrepreneur, should blindly purchase one because it is available. Performing your due diligence pays you… Literally! We have given below a few pointers that you can use to validate your bitcoin exchange software.
The architecture of the software
The architecture might seem quite trivial, but it is the aspect that determines the speed, security, and usability. To understand the architecture, it is highly recommended that you read the documentation, so you understand the routing of your request.
Although there is no hard and fast rule for the architecture, it is mandatory that all exchanges need a wallet module, trading engine, an admin panel, and an intuitive user interface.
The insiders of the industry would call this aspect 'separation of concerns.’ There is no assurance of complete immunity against the vulnerabilities. However, if there is a point of vulnerability, the detrimental effect of those should be confined to that particular module that contains the point of infection. It implies that the 'concern' area should be separated from the rest of the areas, so it does not affect every part of the exchange ecosystem. If we have to give it a contemporary context, social distancing has to be maintained between the different models that are vital for the operation of the exchange.
The best way to go about this is to host the different models in different services. The user interface should not be in the same server as the admin and the trading engine. The wallet should be kept in a completely different server as it demands maximum security. The servers should only share information and must not probe into the other server to collect the information.
Launching a white label cryptocurrency exchange might be easy with the available solutions. However, if the exchange has to find its route through a chunk of investors participating in trade, the exchange has to exhibit liquidity. Without order books being filled and without transactions, investors are quite likely not to participate in your exchange.
Liquidity can be generated in two methods. One of them is to create bots within the exchange software, so they simulate transactions. The other way is to link your exchange to an account in another larger exchange so that transactions can be 'borrowed' from that exchange.
Also Read: Importance of Liquidity in Crypto Exchange
Accountability and compliance
A crypto exchange falls under the umbrella of an alternative trading system (ATS). Therefore, it comes under the purview of the Securities and Exchange Commission (SEC). Therefore, in line with the regulatory compliance requirements, it is mandatory for any exchange to complete the KYC/AML formalities.
At the same time, it should not be forgotten that the personal data of your users is extremely important and should be handled with utmost care. Therefore, the KYC/AML formalities have to be completed without any compromise in data/information security.
Making the process intuitive
It should be understood that not all traders are tech-savvy and they might not understand the nuances of cryptocurrency of the technology that goes behind it. All that they care for is the cost trend of different currencies and the profit that they can bring about by exchanging.
If you have to cater to these sets of investors, it is important for the user interface to be extremely intuitive and interactive. The user interface should have considerable levels of customizability and should also support external APIs that can support the provision of real-time trading information. API flexibility is important because most exchanges use external crypto and Fiat data.
Arrive at a list of supported currencies
Just because a crypto exchange software has been created doesn't mean that the software can be used to exchange almost any pair of currencies. As a business owner, it is your primary responsibility to finalize the coins that will make it to your exchange. Since we're looking predominantly at a bitcoin exchange, we can, at the least, ensure that other big currencies like Ether, Litecoin & Tether are a part of the possibilities that your exchange software provides.
The list of accepted currencies should be included in comprehensive documentation. If you are buying your white label exchange from a reputed development company, they should be able to build integrations for most coins.
Features for the admin
The administrator should have complete control over the functionalities of the software. They should also be able to handle key operational pockets like customer service, the content of the app, and other forms of communication.
There are different ways in which you can build your bitcoin exchange software. The first and most obvious option is to design your exchange from scratch. Otherwise, you can either consider using open source scripts and make minor modifications to them. There are also cheap scripts that are quite similar to open source but both these options might end you up in complications related to assembly and customization.
However, using a white label bitcoin exchange software brings you a fine confluence of customizability and reliability. On one side, you can be assured that there are no compromises on the basic functionality expected out of the app. On the other hand, you can also be assured that station options are available, so the app can pair your brand name and brand language.
All you need to do is get in touch with a white label crypto exchange service provider. They will take care to understand your requirements and create the perfect exchange software for you!