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How to launch a cryptocurrency exchange?

Cryptocurrency has become a new asset class, especially when we consider the rapid rise in its value earlier this year. Recently, the total value of the cryptocurrency market topped $2 trillion for the first time.

As more people embrace crypto, it is essential to have efficient cryptocurrency exchanges to meet their trading needs. In this article, we’ll learn how to launch a cryptocurrency exchange using white label crypto exchange solution. Before jumping into the topic, let’s brush up on the basics –

What is a crypto exchange?

A cryptocurrency exchange is a platform that allows users to buy/sell or trade different cryptocurrencies. It is similar to a stock exchange, but instead of stocks, you buy or sell crypto assets. The exchange platform enables traders to do fiat-to-crypto currency transactions and cryptocurrency-to-cryptocurrency transactions.

Types of crypto exchanges

Based on the nature of its operations, crypto exchanges can be classified into broadly three categories. They are,

  • Centralized exchanges (CEX):

This cryptocurrency exchange platform will be managed by a centralized entity, for example, an individual company. This company will have total control over all the transactions taking place on the platform. For example, Binance is a centralized crypto exchange.

  • Decentralized exchanges (DEX):

As the name indicates, this type of crypto exchange is an alternative to centralized exchanges. Here the transactions are controlled by automated processes, not a centralized manner. No central authority has control in a DEX and it is based on a peer-to-peer model. For example, Binance DEX is a decentralized exchange launched by Binance, that is completely autonomous.

  • Hybrid exchanges:

This type of cryptocurrency exchange is a combination of centralized and decentralized exchanges, taking the best from both. It has the low latency and fast transaction speeds of centralized platforms without a central figure like that in decentralized exchanges. It offers better security for your information. The upsurge in the number of cryptocurrency users has led to an increase in the number of cryptocurrency platforms. Many businesses have even started their cryptocurrency exchange platforms. Joyso, TRON Joyso are examples of hybrid exchanges.

How to launch a crypto exchange?

If you are planning to launch a crypto exchange, you have two options in front of you. One is to build the exchange platform from the scratch. The second is to use a Whitelabel solution.

Building a platform directly from scratch is difficult and involves a lot of risks. Likewise, by spending more money, you will have to wait for a long time for the execution to take place. The development of exchange generally takes 8 to 12 months. But the risks pay off in many cases and when you have the funds to build the product, it becomes a game-changer.

Also, when you are building on your own, you can decide what you will want in the setup. The business will work just how you have imagined it. If you do not have enough funds, developing a cryptocurrency exchange from scratch will be a risky venture to try.

White label cryptocurrency exchanges can help you start your business much faster. You will be able to have your business up and running in just a few weeks. White label solutions are cheaper options and thus the smartest way to start a decentralized cryptocurrency exchange platform.

What is a white label cryptocurrency exchange?

Developing a crypto exchange from scratch would take at least 6-12 months. And for an exchange with advanced features, trading options, and security measures, it would take 18-24 months. A Whitelabel crypto exchange solution enables you to launch your cryptocurrency exchange in a matter of days. It can help you save a lot of time, energy, and money.

For example, Coinfactory’s Whitelabel crypto exchange solution is a turnkey crypto exchange platform built with state-of-the-art technologies and audited by multiple security agencies. It is already successfully used by several crypto exchanges in the market.

white label cryptocurrency exchange

How to launch a crypto exchange using a white label solution?

For launching a cryptocurrency exchange using a white label solution, you need to understand the pros and cons of having a white label cryptocurrency exchange.

Pros:

  • A white label cryptocurrency exchange avoids all the extra time, development and effort required for building an exchange from scratch. 
  • It can be customized as per your requirements. 
  • It offers a higher return on investment (ROI). 
  • Enables you to instantly launch a ready made exchange platform within minutes. 

Cons:

  • You will need an upfront short-term capital to buy the white label crypto exchange. 
  • Since it is a ready made solution, in-depth customization is hard.

Once you decide on the software vendor, you will be all set to launch your white label cryptocurrency exchange within a span of a few weeks. All of the security features and customer support will be provided by the vendor. This means you can focus on more important things, other than handling the headache of developing and deploying the cryptocurrency exchange.

Benefits of using a white label cryptocurrency exchange

Now, let’s consider the various benefits of using white label solutions in building cryptocurrency exchanges. First of all, it eliminates the endless hours of putting together software and saves money. The white label solution allows businesses to focus only on the essential products and it helps in giving more time towards running and growing the business. 

The best feature of a white label solution is the security that comes with it. White label cryptocurrency exchange comes with anti-phishing features, two-way authentication, and advanced data encryption. and these platforms can be deployed within a matter of days. 

Things to consider before investing in a white-label platform

White label products have been in the market for decades. Besides, many of the startups will love the possibility of white labeling their products with other companies. This is a question you must ask yourself before moving ahead:

  • Checking the competitive advantage:

The white label cryptocurrency exchange market is growing rapidly since it is a ready-made platform. Make sure to do extensive research if you are starting from scratch. Check out your competitors and find out their value in the market. And check out the price in the market as well. 

  • Whether white label provides a good exit strategy:

The traditional markets do not provide the exit strategies like white labeling. White label licensing helps you to find the right label partner and the business pays a good amount as well. It also goes on without the investment that is generally required investment to sustain a start-up organization. White labeling is not for all kinds of businesses, so be sure to check if it provides a good exit strategy to your business or not. 

  • Checking the sales cycle:

Check out the sales cycle as a white label cryptocurrency exchange is a B2B product source. The potential buyer will have no obligation to purchase a white label if it made you jump through expensive hoops to demonstrate the greatness of it. 

Must-haves for white label cryptocurrency exchange

While looking for a white label cryptocurrency solution, make sure it comes with the following solutions:

  • Robust trading engine:

In order to boost your user engagement, make sure you are able to carry out high-level transactions every minute, in a faster way. 

  • Payment gateway and wallet integration:

Implementing a multi-currency payment gateway or wallet can help in ensuring each cryptocurrency exchange token has a different wallet address to deposit and withdraw funds.

  • Know-Your-Customer (KYC):

Make sure that all KYC and AML norms are set and allow users to exchange only if these details are filled in properly. This can support you in Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) efforts.

  • Interactive charts or graphs on price movement history:

This will give cryptocurrency traders a clear idea about the past and present token prices, enabling them to do predictive analysis on the future price.

  • High volume liquidity:

This enables efficient transactions, unaffected by the price fluctuations in the market.

  • Top-notch security features:

Since you are doing crypto and fiat currency transactions, make sure there are strong security features like multi-security encryptions in addition to blockchain technology security measures.

Development of a white label cryptocurrency exchange

Some of the major steps involved in the development of a white label cryptocurrency exchange are listed as follows-

  • Deciding on the business needs:

The first thing is deciding on the exchange in which you will be willing to do the business. It must be a platform for all the opportunities to come together.

  • Fulfilling the legal formalities:

After choosing the exchange, the next step is completing all the legal formalities. The rules and regulations vary from place to place. So be sure of the legal formalities you must satisfy.

  • Choosing a banking partner:

A banking partner is necessary for completing the finances in fiat currency. Likewise, select a trustworthy bank that provides adequate digital services to help the business.

  • Choose an exchange providing liquidity:

Liquidity must feature to create a white label cryptocurrency exchange. Join a network that helps in improving liquidity.

  • Be sure the platform goes live after beta testing:

Firstly, do the Beta testing and then go online. Further, Beta testing helps to bring all the flaws out that have occurred while developing the software.

  • Have an active customer support team:

There should be an active customer support team to help the customers in times of need. With constant development, the support team will also grow.

Final Words

With more and more crypto fans joining the crypto space, businesses are looking forward to launching their own cryptocurrency exchanges. But developing it from scratch can be challenging in terms of cost, time for the deployment, and the effort needed for it. 

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That’s where launching cryptocurrency exchanges using white label solutions comes to the rescue. With this, you can build and deploy fast, secure, and customizable cryptocurrency exchanges, at a comparatively low cost. This way you can make the best of crypto growth possibilities, which can take your cryptocurrency trading business to a whole new level.

Author

Rahul A R is a technologist and full stack developer who specializes in Blockchain technologies and Cryptocurrencies. Though he’s worked within numerous privacy and security sectors, Rahul’s recent emphasis has been on solutions built on Ethereum, Tezos, smart contracts, and smart signatures, in particular, decentralized self-sovereign identity. He’s Helped clients, from start-ups to Fortune 500 companies, across North America and Asia, develop their blockchain strategy and build several decentralized applications using blockchains and smart contracts.

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