Crypto Exchange Vs Trading Platform – While all other industries have experienced a significant slowdown in growth, the fintech industry has experienced tremendous growth during the pandemic, enjoying massive investment and increased adoption of its services. According to ABN Amro Ventures, there are already 473 fintech startups worldwide, but not all fintech startups survive. How to create a cryptocurrency exchange program that will stand out from the competition and meet the needs of customers? For many startups, it is difficult to create a universal step-by-step plan and start your crypto development journey.
With extensive experience in building fintech software solutions, the team has created this ultimate guide to help fintech enthusiasts avoid common mistakes when building their own cryptocurrency exchange platform.
Crypto Exchange Vs Trading Platform
Before diving into the wonderful world of crypto trading and answering the question of how to build a crypto trading platform, let’s examine some statistics on the crypto market.
Simplifying Crypto Trading: The Importance Of User Friendly Cryptocurrency Exchange Software
Building a cryptocurrency platform or crypto app can be difficult, but rewarding. By considering the key aspects required in a crypto platform, you can ensure that your product is the right and perfect way for customers to get into cryptocurrency.
As the crypto application and platform market continues to grow and customer needs continue to grow, many crypto software packages combine multiple features to satisfy customers.
Centralized cryptocurrency exchanges operate much like stock markets. Buyers and sellers are connected as the platform acts as a middleman. In other words, “centralized” means that someone has the authority to manage the system of operations.
Decentralized cryptocurrency entities aim to follow the basic principle of the cryptocurrency industry. DEX does not rely on intermediaries to manage and manage transactions. It works as a marketplace where buyers and sellers meet and exchange crypto directly.
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The main advantages of centralized platforms are the availability of currency and lack of liquidity issues. It is the most common and popular type of crypto platform, so we will focus on the development of crypto trading software and create a detailed CEX exchange.
Cryptocurrency exchange program is a complex thing, but from the beginning you should start thinking about how to improve the crypto trading experience of your future customers. When you decide to build a crypto trading platform, determine how it will attract customers. While it’s always a good idea to add cool features, some essential features are essential.
It all starts with user authorization and authentication. The main factors that determine the quality of this feature are simplicity, reliability and security.
To ensure a high standard of customer security, it is possible to set up multi-factor authentication from scratch or use third-party services. Both options have advantages and disadvantages. Building a crypto exchange’s authentication module from scratch allows you to use unique authentication schemes, control all functionality, and gradually expand authentication features. Choosing a third-party service can be easier because these solutions are already feature-rich, tested, and reliable. However, this approach is expensive; these services are usually calculated per user, the cost will increase significantly when the product has more active users.
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Adopting a third-party solution seems like a good option for early stages of cryptocurrency app development. If the number of users is not very high, this approach can be affordable, while still getting best-in-class recognition service. An example of a third-party solution is Auth0. The service offers a full suite of features, including two-factor authentication, passwordless authentication, social network authentication, and advanced session control, and each of these components typically takes several weeks to develop, test, and produce. .
When it comes to verification, you should ensure the reliability of your cryptocurrency platform with a well-designed KYC (Know Your Customer) procedure. Although it may be against the original principle of anonymity in cryptocurrency transactions, many crypto applications use KYC to ensure reliability and attract more customers. There is an option to manually verify documents submitted by new users or you can use third party services (Sumsub, Trulioo or Veriff for KYC). However, there is a more advanced option, such as building an authentication module with an identification procedure using databases (PEP, criminal lists, etc.).
For startups that don’t have a guaranteed business idea and have a small team, it’s best to automate as many routine processes as possible, so using third-party identity verification and verification services may be the best option. If you opt for manual verification, it is advisable to create a KYC system from scratch, meaning you need to hire someone to scan documents and photos and compare them to databases.
Building an auto-authentication module can help you develop complex AI/ML systems, support international ID formats, and more. is demanding, which is not budget and time friendly for startups. Integrating a third-party solution only takes a week or two and can be affordable, especially for a startup with a small customer market. On the other hand, creating custom modules should be put on the roadmap as an option. All of this means that any AI feature must be planned at an early stage in terms of gathering relevant data.
The Advantages Of Building A Blockchain Based Cryptocurrency Trading Platform
A trading engine is responsible for the core functionality of any crypto trading software. The main factors that determine the quality of this feature are reliability and speed. In summary, features include:
From a development perspective, the compatibility engine is one of the most complex components involved in creating a cryptocurrency trading platform, and is usually where hidden know-how is stored. Just one example: a good shopping engine should be able to handle more than 100,000 requests per second on average.
Depending on your goals, creating your own matching engine may (or may not) be necessary. If you consider a trading engine to be a key feature of your system and want to stand out from the competition by offering the fastest transactions, then writing a matching engine from scratch is for you. At the same time, if this is not your most important feature and the speed of processing requests can be compromised, some solutions such as OpenDAX can be used.
OpenDAX is an open source software hybrid of public and private libraries designed to build a full-featured exchange service. It’s one of the most sophisticated products you can buy as a feature-rich solution, offering basic and ultra-high performance and a variety of plug-in components at different price options depending on the performance you want.
Best Crypto Exchanges (bitcoin & Altcoins) & Their Trading Apps
The complexity of trading engines depends on the types of orders supported. There are usually at least two types of requests:
There are other order types, such as Stop limit orders, which allow users to buy/sell as much as possible when the price crosses X, but stop when the price goes above/below Y. Scheduled order types are more advanced. If implemented, the trading engine will be more complex.
Another key feature of your crypto exchange is the crypto wallet. You can create and customize this feature to provide the best user experience for customers, including multi-crypto functionality while maintaining convenient payment gateways and high security standards.
The withdrawal process is risky because it’s actually a way to get money from your platform, and there are a lot of steps and checks that need to be done to prevent theft. One way to do this is to perform manual withdrawal verification (at least to prevent hackers from withdrawing large amounts of money). A risk diversification approach is usually used – small amounts of crypto are automatic and fast, but larger amounts can be withdrawn – some automatic reputation checks are required (preferential history / rating / KYC / KYT and others).
How To Trade Crypto
A crypto wallet is a user-assigned crypto address where deposits are made. As users interact with addresses assigned to “per-user”, the entire exchange platform periodically communicates with the “main platform wallet” – which must handle the amount of crypto deposited on the platform. These “big crypto containers” are the biggest security risk.
In this regard, crypto wallets are a lucrative target for hackers: for example, in 2020, according to AtlasVPN, criminals carried out 27 successful attacks targeting crypto wallets, costing $3.03 billion or $112.12 million. Therefore, various fund retention schemes are developed here. Instead of keeping all your funds in one wallet, it is recommended to use at least 3 types of storage:
Typically, hot and cold wallets are built independently by fintech startups; the whole process takes several weeks to several months. However, a custom solution provides complete flexibility and control. From an engineering perspective, only a general knowledge of crypto application development is required (but a lot depends on the number of cryptocurrencies you want to host initially).
Third-party wallet services have their advantages
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Originally posted 2023-08-04 11:28:31.