Interested in knowing how to create a bitcoin exchange website? In this article, we will discuss the same in detail.
As with any new software, there is a lot of work to be done before you get anywhere near the programming part. When it comes to creating your own bitcoin exchange you will need to get a clear understanding of your target exchange market before you begin.
Another extremely important part of the planning stage is to research the laws in your particular country that may or may not exist governing cryptocurrencies. Finally, you will also need to define exactly what kind of exchange you plan to set up and decide how it will function.
The question “How to build a bitcoin exchange website” can be best answered through a series of steps that you need to take. Let’s discuss these steps.
How to Create a Bitcoin Exchange Website
Step 1: Brush up on the competition
A really great place to start building a cryptocurrency exchange website is to do some research on existing bitcoin exchanges. For a list of the most popular exchanges that handle the vast majority of the entire world’s bitcoin transactions click this link.
It is advisable to do plenty of research to find out exactly how these exchanges came to be as successful as they are today. Not only is this an extremely interesting bit of cryptocurrency history but it will also give you plenty of great ideas on how to create a bitcoin exchange website and how to market it so it becomes a success.
An important bit of advice is not to let any of this information water down your own new and innovative ideas. Right now the entire cryptocurrency industry is being fueled by innovation.
Fortunately, this new technology is proving just how much innovation and new ideas there are out there.
Because of the threat that this new technology poses, it is being attacked by traditionalists from all different backgrounds. Bitcoin has been repeatedly called a ‘bubble’ by countless bankers and has been dismissed as something that is little more than a valueless fad.
The irony of this statement is that this is exactly the accusation made by people in the know about gold trading, which as this interesting article highlights might have for years been made off the back of poor quality gold or gold reserves that don’t exist at all.
Step 2: Decide where your business will operate
Do you want your exchange to do business globally or will it just be for a few select countries?
This is an extremely important part of planning a new cryptocurrency exchange business. Why? Well, the reason is that while a large global exchange is more likely to earn you lots of money, it also means that your exchange has to conform to the laws in every country in which it operates.
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Falling foul of the law in any country could mean that you end up with massive court fees or worse, end up in jail. You only need to take a look at another peer-to-peer technology, file sharing, to see the dangers of operating bitcoin exchange websites that fall foul of the law.
The creators of the file-sharing site The Pirate Bay, found themselves in jail for their actions while Kim Dot Com is currently fighting extradition to the United States for similar charges.
You will almost certainly need to get some form of operator’s license in every country or territory that you choose to operate. This will not only require a load of paperwork and address/business registration but will also most likely require expensive lawyers to ensure you are in compliance with all the local laws and regulations.
With nearly 200 countries in the world, this can get expensive.
Keep in mind that due to the fast-changing landscape of the growth of cryptocurrency technology, things such as regulations change from day-to-day. For example, do you know that the European Union has recently announced that it plans to bring in new laws requiring all individual’s identities to be recorded by their bitcoin exchange?
Step 3: Access your target audience market
This is the part of pre-planning that will ultimately determine how successful your site will be. Knowing your target market will allow you to create both a product and marketing strategy that will allow your site to flourish.
While in the case of a bitcoin exchange the answer might seem obvious, believe us it is a lot more complicated than it might at first appear. People of all ages from all types of backgrounds are now investing in bitcoin.
Not only that, some bitcoin exchanges operate in numerous countries around the globe and so are available in different languages. These are the kinds of things you will need to think about before you can define what your site is going to be.
Step 4: Define your site
The final step before you get programming is to work out exactly how you want your bitcoin exchange to look and function. While any site should look professionally done and secure, these two features are particularly important for any bitcoin exchange.
If people think that the site looks insecure or find themselves frustrated by slow page loading times or other functionality issues, they simply won’t use it.
The key to your site’s success will be its security. There have been several high-profile hacks of cryptocurrency exchanges over the last few years, including Mt. Gox which resulted in nearly 1% of all the entire Bitcoin in circulation being stolen.
A more recent example was the South Korean exchange Youbit, which was reportedly hacked by the North Korean government in 2017.
Another thing you can decide is whether you will allow users to trade in other cryptocurrencies too. This will certainly boost user interest and satisfaction in your exchange as people will be able to conduct their investments entirely under one roof.
The drawback is the logistical challenge of incorporating all these currencies. For a list of the most popular cryptocurrencies, you can click this link.
One of the main ways to make the development side of creating your own bitcoin exchange as smooth and painless as possible is to hire a top blockchain developer or a good dev team.
These individuals will have the expertise and experience to ensure that your project is a complete success. It might cost more money but the investment is certainly worth it.
Step 5: Synchronous, Asynchronous, or Distributed?
Most cryptocurrency exchanges currently operate the asynchronous model. While synchronous exchanges are the most simple to set up and operate, they don’t allow for much in the way of scalability.
Asynchronous, on the other hand, allows for large increases in trading volumes as it works by passing requests between the UI and dedicated machines that queue and update the request with the UI after it has been executed.
Step 6: Get coding
At this stage, there are several options as to how you go about creating your own bitcoin exchange.
1. Download an existing open-source exchange program
Open source cryptocurrency exchange software has a number of benefits over developing your own in-house software. Firstly, it is completely free and secondly, it saves huge amounts of development time.
You can download a number of existing open-source bitcoin exchange programs and therefore theoretically open a bitcoin exchange within hours.
If you choose to go down this road, sites like GitHub are a great place to find the software that best suits your needs.
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The main drawback to this approach is that what you will end up with is exactly what is already being used by at least one other exchange. Therefore, you will still need a specialist to develop the unique features that you would like to incorporate into it.
Also, should you have problems pertaining to the original code, there is not much in the way of help to fall back on.
2. White Label Bitcoin Exchange
White label software can be customized to suit your business model and saves from having to do much in the way of software development.
Another hugely important benefit is that the software will already be tried and tested meaning that the chances of bugs, etc. are greatly reduced. The main drawback is that the options are relatively limited when compared to writing the code yourself.
One company that offers a reliable software package that enables you to set up your own bitcoin exchange is BTCTrader. Their package allows individuals and companies to “start your local bitcoin exchange in 45 days.”
3. In-house software
Should you feel that you want to create an entirely new bitcoin exchange from the ground up then you can enlist the help of several freelance programmers or a dedicated dev team to do the hard work for you.
While this route is certainly the most expensive it can also be the most rewarding.
Because of the detailed planning, time to write and debug the code, as well as test the exchange, this route also is by far the most time-consuming. Typically, creating an exchange from scratch will take around a year, though a large dev team can accomplish the task in a shorter time.
Step 4: Find a bank or other payment processor
In order to operate an exchange, you will need a bank or other payment processor to process fiat money. This will give your customers access to digital money exchange and buy and sell bitcoin.
You will need to keep in mind that at the current time, most banks won’t touch bitcoin with a barge pole, so finding one which will allow you to open an account for your bitcoin exchange might be easier said than done.
Since the aim of your exchange is to eventually process a high volume of bitcoin transactions, you will need to make sure that the account you plan to open is suitable for such use. If you try to use a personal account, for example, it will most certainly get shut down within a week.
Another extremely important tip when choosing a bank is to find one that offers fast payment processing. While the average time banks take to process these sorts of transactions is 2 days, some banks do manage to do it faster.
Step 5: Fire up your marketing strategy
You should have already put in motion your marketing strategy before you launched your Bitcoin exchange. Setting up an account with all the social media sites along with writing posts/articles to inform people of the impending launch of your site is just one of the important steps.
Try to use the unique features of your site to create a ‘buzz’ about the launch. Recent research has shown that the growth of cryptocurrencies is very similar to the pattern created when social media first emerged.
This seems to indicate that word of mouth is the most important way to spread the news about cryptocurrencies and exchanges. Try to tap into this the best you can. The great news is that it is completely free!
Targets you will need to meet to ensure your site grows:
Even if you have done plenty of work before launching your site there is still no guarantee that people will immediately jump on board. Setting realistic growth targets will help to keep the motivation that you will need to make your exchange a success. Hard work is essential, as is a can-do attitude combined with a never-give-up approach.
One area you can help things along is by utilizing the help of the Market Maker service to simulate liquidity. This service will create virtual transactions to generate activity on your exchange. Since the price of bitcoin never remains the same, this service will create the impression of a healthy exchange.
Security is a vital part of your ongoing bitcoin exchange development. Any security weakness or breach should be dealt with immediately and with extreme seriousness. Even if it means you stay in the office the entire weekend, making sure your site is secure is of the utmost importance.
Hackers will almost certainly target your exchange at some point or another so be prepared.
Since your site will hold sensitive information such as credit card details, you should have a series of procedures in place to cope with any breaches of data. While past breaches have sought to steal users bitcoins, hackers might choose to steal credit card information and other personal data too.
Keep in mind you also need to protect this data from internal staff members too. For more information on the security risks related to bitcoin exchanges, you can read this helpful article.
Maximize site uptime and page load speeds
People will be using your site to trade their hard-earned money, so your site should always seem like it is bulletproof. Slow page loading times not only frustrate users but also cost them money when it comes to buying and selling currencies. For the same reason, rapid server response to users is also vital.
As users prefer to buy using a set price feature, a delay in processing the transaction will mean a deviation in the buy/sell price from the one the user originally agreed to. While some exchanges actually make up the difference themselves, others use their terms and conditions to notify users of potential discrepancies.
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If your site has anything less than a 99.99% uptime, it will likely result in users turning away from the site believing it to be unsafe. If you do ever have to take your site offline, ensure that you issue a press release as quickly as possible explaining the causes.
Coinbase has managed to maintain its reputation and client base thanks to good communication.
Make sure your customers are happy
Your users won’t ever get much of a chance to interact with the human face of your site provided it has been well designed and managed. When things do go wrong, you should make sure that you have a dedicated and friendly team of customer support agents ready to help out.
Another way to keep them happy is not to play around with the user interface too much and not to fill your site with ads. While ads are a good way to fill space and generate additional income, most people these days don’t like sites filled with ads.
Always seek innovative new ways to keep your site ahead
It‘s not enough to build your own bitcoin exchange website. You shouldn‘t forget that innovation is king when it comes to any industry. Always keeping up to date with changes as well as trying to build in new ways to keep your customers happy will help your site to thrive.
As I mentioned earlier, allowing users to buy and sell multiple cryptocurrencies is one way to attract new users. Users have cited their frustration at sites such as Coinbase, which still only offers access to a limited number of cryptocurrencies.
Allowing users to automate buying and selling currencies is another increasingly valued service. Users can set prices at which they wish to buy and sell currencies as well as automate buy/sell volumes without needing to authorize the transition each time.
These are a few of the current changes taking place within cryptocurrency exchanges. For those crypto exchanges that are able to introduce new ways to make buying and selling bitcoin easier and more user-friendly, users will inevitably flock to them in droves.
More on security when you create a cryptocurrency exchange platform
We discussed the importance of security, however, we need to dive deeper. This is especially important when you develop it from scratch.
How do you secure your Bitcoin exchange? Take the following steps:
- Proactively mitigate key application security vulnerabilities like injection, broken authentication, XML external interface (XXE), etc.
- Include security and compliance testing in your CI/CD pipeline and don’t leave them as the last task in your project.
- Consider using a private cloud for running workloads that deal with sensitive information.
- Use tools and techniques like multi-factor authentication (MFA), encryption, real-time threat intelligence, next-generation firewalls, and antivirus solutions.
- Secure the APIs you develop. Use authentication tokens, encryption, digital signature, secure gateways, quotas, and throttling for this.
Need help with securing your Bitcoin exchange? Check out our guide “How to secure your Fintech app”.
The importance of code review when you build your own crypto exchange
If you are creating a Bitcoin exchange from scratch, then you need to plan for a thorough code review. Surely, you will test your Bitcoin exchange thoroughly. However, testing alone doesn’t unearth all defects.
Code review is especially important for security. Only experienced code reviewers can find some application security vulnerabilities.
You could find it hard to onboard experienced code reviewers. We at DevTeam.Space can help, as we have explained in “Why choosing DevTeam.Space to review your code can ensure your software product is a success”.
Choose the right cloud provider when you create your own crypto exchange
You already know the importance of site uptime, fast page loading time, and scalability for your Bitcoin exchange, don’t you? How do you achieve these?
While you need to use the right technology stack and follow coding best practices, these aren’t enough! You also need to choose the right cloud provider. I recommend that you use AWS, which has excellent cloud capabilities. AWS has excellent track record vis-à-vis availability, resilience, scalability, security, and performance.
If you as a business CTO are planning to build a competent blockchain development team, DevTeam.Space can help you with its expert software developers community experienced in all the latest technologies.
Simply, write to us your bitcoin exchange website development specifications via this form and one of our technical managers will get back to you instantly to further discuss project development details.
Frequently Asked Questions
You can buy Bitcoin via a Bitcoin exchange business online. Unless you have a Bitcoin ATM nearby, you will need a bank account or credit or debit card to buy virtual currency. Due to KYC (know your customer) anti-money laundering regulations, you will need to prove your ID and set up two-factor authentication for your account access. After which, you will get a private key that will allow you to buy and sell orders of Bitcoin.
After performing the target cryptocurrency exchange market research, you can choose from making use of an open-source exchange program, customizing a white label exchange, or creating in-house software.
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