This caveat, right up front: It is possible to build your own cryptocurrency exchange, and potentially profitable. But it isn’t cheap. That should be understood, right out of the chute.
One estimate is that it will cost at least $135,000 to construct such a platform, and another expert broke it down even further, noting that it will cost $5,250 for design, $42,000 for development, $77,000 for the application programming interface, or API (though the cost is $49,000 without autotests), $10,500 for blockchain and $24,500 for testing.
That brings the total to $159,950, or $131,250 without autotesting. So if you’re going to take the plunge, you need to have deep pockets, and/or formidable backing.
That said, we have all seen the potential of cryptocurrency, and its upward trajectory. As noted in a December 2021 piece on Cointelegraph, the number of people involved in the space doubled over the two-year period beginning in January 2020, bringing the total to 80 million, or over one percent of the world’s population. That led the writer of the piece, Max Yakubowski, to ask several experts about whether crypto is in fact trending toward the mainstream.
Most of them agreed that it is. Typical of their responses was one by Tim Draper of Draper Associates and Draper Fisher Jurvetson, who said that young people are already on board with crypto, and that those in other age groups will almost certainly follow. He added that it is not unlike internet adoption in that sense.
Others in the field are of the same mindset, saying that crypto has “matured significantly,” and that the “spark of mass adoption” has been ignited. Joshua Tobkin, co-founder and CEO of the blockchain network developer SupraOracles, told Yakubowski that 2021 was a big year for cryptocurrency and added:
“To continue to see the market grow, we need to improve DeFi security and increase competition in the oracle space. Once these issues have been resolved, I think we will see even more traditional finance businesses moving to cryptocurrency. Also, I think that blockchain games and GameFi will likewise be a boon for our industry as we steadily march toward greater mass adoption.”
Finally, there was Sebastian Markowsky, chief strategy officer of the Bitcoin ATM provider Coinsource, who believes that many countries, particularly in Asia and Latin America, will “follow El Salvador’s lead and atop Bitcoin as legal tender.”
Certainly analysts were given pause in the first week of 2022, when cryptocurrency values slipped after the Federal Reserve gave indications that it was going to scale back supportive monetary policies. But the expectation is that cryptos’ uptick will continue.
That leads to the inevitable conclusion that this would be an ideal time to carve out a niche in this sector by building one’s own crypto platform – again, assuming one has the means. It is also important to have a firm understanding of the regulatory demands placed on such exchanges – if any; it varies from country to country.
The specific steps to making this happen are outlined on websites like Financefeeds.com:
- Understand What You Don’t Know: Gauge your technical expertise, or that of those around you, before proceeding. If it is substantial, you may be able to acquire the necessary software through a process known as white-labelling. If you want to go with a solution that gives you something of a head start, go with the solutions offered at GitHub.
- Get Under the Hood: A trade engine is essential, as it ascertains whether those involved have enough in their wallets, processes pricing and commissions, consummates transactions, etc.
- Put Up a Good Front: The user interface of your website enables customers to access your exchange. That being the case, it is vital to make it attractive and user friendly.
- Think Big Picture: In order to ensure the long-term success of your platform, make your API simple and direct. That enables software engineers to perform the necessary optimizations, if and when the need arises. Also, make sure your customers can reach you easily, so that they can apprise you of any issues. Such communication is invaluable.
FinanceFeeds also emphasizes the need for speed and security. Cryptocurrency transactions tend to go through at an average of seven per second, so it is essential for anyone running a platform to ensure speeds like that. As for security, the usual measures need to be enacted – strong passwords, two-factor authentication, etc.
Binance is one platform that became a near-immediate success. Launched in 2017, it is now valued at $2 billion. It benefited from having a skilled team in place, and its low trading fees.
In sum, it is possible to go the DIY route when it comes to a cryptocurrency platform – at least to a point. Anybody looking to do so needs to go in with eyes wide open. They need to have the financial wherewithal, legal support and technical savvy to lay the right foundation. Everything else springs from there.