🔸 With the advent of blockchain technology, many industries across the world are finding lucrative solutions for their businesses. Blockchain gained its popularity after people came to know that it is the technology backing the ‘hot talk of the world,’ the Bitcoin.
🔸 Blockchain has impacted different industries, and one such industry is Cryptocurrency Exchange. With the number of crypto traders increasing every day, many individuals and enterprises found the profits lying in exchange businesses and stepped foot on starting their own. One such dynamic crypto exchange is Binance.
🔸 From the day of its launch until this day, Binance is the largest exchange platform and has a significant trading volume.
What is a Crypto Exchange?
🔸 A cryptocurrency exchange is a digital trading platform that allows a trader to exchange cryptocurrencies and other digital assets with another trader on the same platform. The exchange rates of the given assets depend entirely on the market value. Crypto exchanges are helpful when you have a crypto wallet that does not allow buying of specific cryptocurrencies.
🔸 Now you have understood what a crypto exchange is and decided to build one. Before diving directly into the development process, let’s a little more information about Binance and its working structure.
How Binance Became the No.1 Cryptocurrency Exchange?
🔸 Changpeng Zhao started Binance in July 2017, combined together with blockchain and crypto experts. As of today, Binance is the best and leading crypto exchange platform by trade volume across the globe. Traders from more than 180 countries have accounts on the platform. Besides, Binance is the fastest exchange in the world and has more than two million active users per day. Within a short span of time, Binance became one of the highly profitable companies globally, with more than 100 digital currencies in trade.
What made Binance gain huge popularity?
- Binance exchange platform offered traders two different trading options: Basic Trading for beginner-level traders and Advanced Trading for expert/professional traders.
- Users registering on the platform do not have to submit any documents or undergo KYC verification. However, those users can withdraw only two bitcoins a day.
- But, if a user submits documents for KYC verification, then he/she can withdraw up to 100 bitcoins per day. Binance is protected by higher security standards, including 2FA.
- The platform offers various kinds of trading options such as Market Order, Limit Order, and Stop Order, whereas some crypto exchanges do not provide the same.
- Binance also rewards existing users with its referral program. When a new user joins the platform using the referral link, the existing user receives a bonus from Binance.
- There are many trading pairs a trader can benefit from. The popular ones are BTC, ETH, USDT, and BNB (Binance’s own cryptocurrency).
🔸 In addition to the features mentioned above, Binance has also developed a few unique services. One is Gifto, solely created for virtual gifting, and the other is the LaunchPad token sale program.
🔸 Now, it is clear why every individual wants to build a crypto exchange similar to Binance. So, let’s get into that.
Let’s see the 7 significant features required to build a cryptocurrency exchange
1️⃣ Authorization Page
- The first thing a regular user sees on your exchange website is the Sign-Up / Sign-In page. It is advised you design this page simply and elegantly.
- The credential boxes and other functionalities should be maintained with additional security layers. You can enable 2FA or PIN & Passcode verification methods.
2️⃣ KYC Verification (AML Method)
- The primary factor required to attract a large user group is ‘Trust.’ And that trust can be achieved by employing a simple, yet secure KYC method.
- After completing the registration process, all users have to undergo KYC verification. KYC is usually done to avoid fraud and counterfeit activities by traders.
- It’s better if your exchange has an automated KYC verification system. It is easy to embed and saves a lot of time.
“However, KYC is not a mandatory one in all exchanges. Some exchanges allow users to trade without submitting the necessary docs. But those users have certain limitations like ‘Withdrawal Limit’ imposed on them.”
3️⃣ Deposit & Withdraw | Multi-Cryptocurrency Wallet
- Having a multi-currency crypto wallet linked to your exchange gives a lot of leverage over others.
- Users should be able to deposit cryptocurrencies of all types in the wallet linked to your exchange.
- Likewise, users should find no difficulties in withdrawing their funds to their desired crypto wallets.
4️⃣ High TPS (Transactions Per Second)
- All users in your platform should be able to connect with each other hassle-free. Also, the TPS rate is one of the deciding factors of a reliable crypto exchange.
- The trades on your exchange should occur quickly without any downtime or lags. The exchange should also offer multiple possibilities to choose for order creation.
- Traders can choose the available trade order on their own.
5️⃣ Trade Analytics
- Trade analytics reports help both buyers and sellers to predict the future values of cryptos.
- Provide a Download link on your exchange where users can download the analytical reports.
6️⃣ API Integration
- You need to preset an API for your exchange. This API should allow traders to create their own customized trading strategies.
- Besides, it also allows users to exchange data among the trusted participants using the crypto exchange script.
- API examples: REST API, Liquidity API, Quantity Market Order API, Trading Bot API, and Crypto Price Ticker API.
7️⃣ Admin Console
- A reliable admin panel is essential for your exchange to run smoothly. It’s the responsibility of the admin to monitor the trades and control other actions occurring on the platform.
Things you need to be sure of before starting an exchange:
- Legal requirements
- Manpower requirements
- Crypto Exchange Architecture
A typical crypto exchange has the following features:
- A Graphical User Interface
- Administrative System
- Crypto Wallets
- Trade Engine
Things to Focus While Developing Your Exchange
🔻 Design Phase
- In every application, the first thing that a client asks for is the design factor. It is vital that you design your application with an eye-catching design. The design phase includes
- Wireframes – They form the base of the future design. Here, the key features of your platform are implemented.
- Prototype – It is then an elaborated view of the user’s interaction with the app, and it helps to prevent UX-related issues.
🔻 Client-side Development
- The exchange platform’s application should comprise the client-side logistics of all the pages of your website.
- It is the role of the front-end developers to make this design function properly through HTML, CSS, and markup languages.
- API is the back-end part of the application. This server part is responsible for performing internal logic and handling the following functions:
- User Authentication and Authorization
- Admin panel
- Crypto Deals
- Third-party APIs
🔻 Testing Phase
- This is the most vital phase of developing an application. It is incredibly crucial as it distinguishes and eliminates most of the errors and fixes bugs within the logic, and as well as within the UI before launching the original app.
Your Exchange Should Have the Advantages like Binance
🔹 A Wider Altcoin List
- Binance has listed a lot of cryptocurrencies on its platform, and that’s one of the reasons for its popularity. There are more than a hundred cryptos in Binance.
- According to research by coinmarketcap, there are more than 5000 cryptocurrencies in the world, with new ones getting added to the line every day.
- So, you have to follow the same method. Your exchange should have a wide range of popular cryptocurrencies such as BTC, ETH, XRP, LTC, and smaller coins like CMT & XZC.
🔹 Lower Transaction Charges
- All exchanges impose a transaction fee on their users when they trade crypto-to-crypto or crypto-to-fiat.
- Binance is one of the few exchanges that levies the lowest fee. It charges traders 0.1% on every trade.
- So if a trader trades 1 ETH, then he will be charged 0.001 ETH as a transaction charge.
- Your exchange should not burn a hole in the users’ wallets. Make sure your fees are lower when compared to others.
- Depositing in an exchange is usually free. However, there is a charge for every withdrawal made.
- The Withdrawal fee differs from each cryptocurrency and changes depending on the value of the currency.
🔹 Reward the Traders
- Binance usually offers traders a chance to win prizes. If a trader meets the requirements to participate in the contest, he/she will get the opportunity to win prizes.
- You should follow the same in your exchange. Reward regular active traders with attractive gifts: like crypto coins or other assets.
🔹 Security Layers
The application you develop is bound to record sensitive information of its participants. So it is essential that it has effective security measures in order to prevent unauthorized system intrusion, data leaks, and hacking attacks. A few steps to strengthen the security part of your app:
- Secure Architecture – A safe way is needed to store and exchange confidential information. So it is better you place the critical components of the exchange at different servers with an option to interact through dedicated channels. Also, store the encryption keys in a different location.
- User Authorization – To prevent any unauthorized logins, you should incorporate multi-factor or two-factor authentication. Every time a user signs into the app, he/she has to enter the one-time pass-code received on their registered email or mobile device.
How can Blockchain Firm Help You?
If you are looking to start your own cryptocurrency exchange software like Binance, then we have a fantastic offer for you. We have a ready-made Binance clone script, crafted with perfection, customizable according to your requirements.