Is cryptocurrency going mainstream? Well, according to the statistics, it already has. The crypto market will grow from $910 million in 2021 to almost two billion by 2028. It means that the audience is expanding rapidly, involving both experienced traders and newcomers who want to use convenient exchange services.
Although the major part of the niche is taken by the biggest crypto platforms like Binance, FTX, Huobi, OKEx and Bybit, there still is enough room for your business to succeed with your own exchange app from scratch.
But how to build a robust and secure cryptocurrency system that will find its audience and satisfy their needs?
Drawing on Arounda’s expertise, this post will help you better understand the crypto exchange development process. You will find the difference between the platform’s types and the essential features to implement.
A cryptocurrency exchange is a platform where users can perform transactions and other operations related to digital money, crypto coins, and tokens. An exchange enables buying, selling, and transferring popular fiat or crypto currency like Bitcoin, Ethereum, Ripple, etc. Also, many exchanges allow dealing with other traders without third-party involvement.
Every crypto exchange business adheres to certain key principles like full transparency, high transaction speed, and advanced security provided by blockchain technology. The customers expect the platform to be reliable and convenient since they trust their funds and personal data.
Often, an exchange platform offers more than just crypto trading. Users may also store their funds in multiple online or offline wallets and monitor data about current currency rates. Certain exchangers have expended functions, depending on their architecture and type.
There are two main cryptocurrency exchange types that differ in their features, technical and operating specifics, transaction fees’ amounts, etc.
Depending on your business goals, you can pick either of them as each offers certain benefits and has some drawbacks. Let’s look at both options and consider the difference to help you choose wisely.
Centralized exchanges (CEX) are the most widespread ones. This model is very similar to a common stock exchange infrastructure. In a nutshell, CEX involves storing the customers’ digital funds in the service. A centralized operator ensures the platform is secure, up-to-date, and well-functioning. On such a platform, all transaction orders are recorded in an order-book.
The main benefit of a centralized crypto exchange system is its advanced liquidity ratio. However, the CEX model has a considerable drawback as well. The security is quite vulnerable since all customers’ funds are stored in online wallets within the system. It results in increased hacker attacks risk.
The most popular examples of centralized exchanges are:
Decentralized exchanges (DEX) are opposite to CEX in many ways. First of all, unlike centralized exchanges, DEX platforms enable users to perform any transactions without third-party involvement. It means that all transactions are more independent from the exchange system, and customers don’t store their funds therein. Such a model helps enhance security and reduce hacking threats.
On the other hand, decentralized crypto exchange apps have several. The lack of third-party involvement makes the users fully responsible for any risks regarding their transactions, which may result in deceptive offers and frauds. Also, DEX has poor liquidity and unstable exchange rates.
Common examples of decentralised exchanges are:
Serum DEX, etc.
The number and complexity of the features you need for your bitcoin exchange platform vary due to your business goals and system type. However, certain functions are essential to ensure your app or website is secure, convenient, and intuitive.
Here is a list of the most important functions that are a must for a robust crypto platform.
A trading engine is the central component of a cryptocurrency exchange platform. It ensures that all crucial internal processes go properly and provides the customers with their current balance verification, orders comparison, transactions processing, and more. On top of that, the trading engine delivers data reports about prices, rates, and commissions. Normally, this information is displayed on charts updated in real-time.
User authorization and verification of their identities are the initial steps to start using your platform. Ensure the registration doesn’t take long and the onboarding experience is frictionless. It will help explain why they should share their data and convince them of your platform’s complete security. The verification process is inevitable as it helps prevent illegal activity and is mandatory due to certain regulations your app should comply with.
A crypto wallet is an integral feature for centralized exchanges. It allows your customers to store their digital money, including fiat and crypto, inside your system. Enable the users to top up their crypto wallets and withdraw funds with the help of their credit cards, bank or crypto accounts, etc. Do your best to make wallet replenishment and funds withdrawal processes as fast as possible.
An admin panel is a tool that will be necessary for your administrators to control the system’s performance and track the key metrics regarding transactions, commissions, revenues, etc. The panel also allows monitoring of the traders’ activity, detecting suspicious accounts, and preventing fraud. Additionally, an admin panel is crucial for performing multiple management tasks and automating many internal processes.
It’s important to keep your users informed and report the latest news, platform updates, special offers, current cryptocurrency rates, trends, etc. It can improve user experience and make your exchange helpful, especially if you enable the users to control this feature and decide whether they want to get notifications.
The statistics report that cryptocurrency hacks and breaches grow by 41% every year. Thus, considering all potential risks, you need to ensure your crypto-exchange platform is as secure as possible. It’s especially important for the CEX model. Fortunately, there are numerous ways to build a powerful security system and strengthen your server, databases, HTTP, etc.
An order book is the list of actual transactions which includes all current purchases and sales of a particular user. Traders can monitor their activity and see when a suitable offer is found and the order is closed. Then, the system automatically removes successful orders from the order book.
The closed orders can be found in transactions history. Thus, every user can see all essential information about their previous orders, compare the rates, check the time, and estimate their activity on your platform.
The user interface is what your customers see when operating your crypto exchange. In most cases, it’s a good idea to make the interface clean, simple, and intuitive. The users should easily find what they’re looking for, quickly understand how the platform works, and navigate seamlessly. Also, consider making certain elements of your exchange customizable. It will allow the members to control their interface and adapt it to their needs.
A dashboard is one of the core components of a cryptocurrency exchange interface. It will allow your customers to get at-a-glance access to all information they need, including their orders, market statistics, cryptocurrency rates, account balance, and more. A dashboard is normally the users' initial screen, so it should be intuitive and consistent.
An advanced cryptocurrency platform may require much more functions to be implemented. You may enable your customers to benefit from arbitrage trading, sell or buy NFTs, use sophisticated analytical tools, enhance liquidity, and so on. It all depends on your business strategy and the type of product you want to build.
We at Arounda have rich experience building and transforming digital products of different nature and complexity. In particular, we’ve come up with successful solutions for an OTC crypto exchange. Our team created the business strategy, UI/UX design, and full-cycle development of this platform.
BlocFX is an OTC platform enabling users to buy foreign currencies and make payments. It includes a two-way exchange of cryptocurrency and fiat money.
The platform contains a personal account where the users can add bank accounts and wallets for their transactions. Also, the BlocFX crypto-exchange app allows viewing transaction history and offers an over-the-counter (OTC) service.
To develop a crypto exchange system, you will need to take many important steps. Many of them will depend on your project’s specifics, business goals, and certain technical aspects arising along the way. Choosing the platform’s type, defining the required features, following UI/UX design best practices, and enhancing your platform’s security are just some of the purposes to achieve.
So to ensure your project’s future success, choose a tech partner with sufficient expertise in crypto exchange solutions.
Sign up to our newsletter to get weekly updates on the trends, case studies and tools