Bitcoin has become a household name. With it’s meteoritic rise in value in 2017, where at its peak, 1 BTC (Bitcoin) equaled 17,900 USD, bitcoin and cryptocurrencies have been in everyone’s radar for the past year. From obscurity to fame; Bitcoin and cryptocurrencies are a regular topic in major news organizations such as CNN, BBC and more while a year back, bitcoin and cryptocurrencies were largely ignored. This meant that except for tech enthusiasts, the large masses were largely unaware of bitcoin, cryptocurrencies and blockchain in general.
Before I tell you how to start a bitcoin exchange, let me first iterate what happens in a bitcoin exchange. We have two separate identities: a buyer who tries to sell bitcoins at the lowest price possible while a seller tries to sell bitcoins the the highest price possible. These buy and sell orders are entered into an order book, where if the price dictated by the buyer and seller matches, then the order is automatically executed. The exchange keeps a small percentage of the trade as a commission.
This is where your profit as the one who started the bitcoin exchange. You get to deduct a commission from every transaction that happens on your bitcoin exchange. While this commission is quite low so as to garner more customers, a large enough volume in trading means you can be earning thousands upon thousands just with your commission. So this is the profitability of bitcoin exchanges.
However, starting a bitcoin exchange should be more than just its profitability. Bitcoin and Blockchain (the technology behind Bitcoin and all cryptocurrency) has vast potential behind it. Imagine you are in a foreign country, with blockchain you do not have to pay currency conversion fees, or if you get a loan with minimal interest fees, that would definitely be a better life right? With cryptocurrencies and blockchain technology, this future is within our grasp. This is the reason why governments and banks are so against cryptocurrency and the recent pop ups of bans all over the world, all in order to curb this growth. Starting a bitcoin exchange helps open the technology up to the public and helps revolutionize the world.
Now, in order to start a bitcoin exchange, of course, you will need to get your hands dirty with the gritty and nitty part of technological and programming part. You will need to build your own codes or acquire a cryptocurrency exchange platforms, have an user interface where your customers can trade (either a trading website or a trading app) and have extensive marketing strategy to acquire as much consumers as possible.
However, with this article, I wish to explore the correct way to go about starting your own bitcoin exchange.
In case you need more information regarding the coding part of the exchange, you will need a team of programmers or a dedicated developer team who will do the heavy lifting for you. You can also purchase white label bitcoin exchanges, or you can download them for free on an open source. You can also visit sites like bitexchange.systems, where you can download their source code for free and additionally you can purchase their numerous modules that can be seamlessly added to a new or existing bitcoin exchange. These modules are great features sure to brighten up your consumer’s day.
First and foremost, you will need to do extensive research. Do not limit yourself to just learning about the technicalities of bitcoin and cryptocurrencies, you should also research on your competition. Try to analyze why some exchanges are as successful as they are today and what differentiates them from those that are not as successful. However, do not conform to the norms. Bitcoin is the the very definition of innovation and currently these very innovations fuel Bitcoin. Be brave and be bold.
Secondly, you need to find your targets. You cannot cater to everybody, you will need to research and find a niche to fill. When you know your target, you will be able to easily determine the kind of bitcoin exchange you wish to create as well as find the proper marketing strategy to stand king of the hill in your niche. A strong foundation enables future scaling of your business.
Lastly, determine the type of bitcoin exchange you wish to create. Don’t just imagine, visualize your dreams and work out how you want your bitcoin exchange to look like. Aesthetics and designs are important, however don’t forget that ultimately your bitcoin exchange has to be security.