What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a site that allows users to trade bitcoin for digital currencies or fiat currencies and vice versa. These exchanges allow you to store your cryptocurrency in a safe and encrypted location.
Also, you have to make sure that the exchange is legal in your country. The amount of regulation regarding crypto exchanges depends on your country. For instance, in Japan, exchanges must register the country’s financial regulator before getting established.
In Argentina, cryptocurrency is unregulated, but the “transactions are governed based on the rules of the sales of goods in the Civil Code” which is explained by the Library of Congress. Thus, you need to make sure that when you make an exchange, it’s accepted by your country in order to avoid any legal action against it.
Obtain Funding for the Venture
Before beginning the project, you have to plan out your budget and how much it will cost to complete. In order to create and launch an exchange, you’ll need a minimum of $135,000. This includes the cost of hosting, technology, legal counsel, initial advertising, and government registration.
While these funds aren’t required when you start, you have to make sure that your venture has enough capital in order to create a proper runway. One mistake that’s made by beginning startups is that they are unable to plan for the future. They will land small raises which can cover the initial development cost, but it won’t help the venture survive without the operational cash needed to make it profitable.
Also, startups make mistakes by licensing odd crypto exchange providers that charge high fees and forget to explain the legal costs and obligations needed to maintain and create an operational exchange.
Provide High-Quality Customer Support
While customer support is the last step when you build a cryptocurrency exchange, doing well in this area will determine the project’s long-term success. Those who deal with consumers must be able to resolve technical issues and customer complaints.
Customers need to be responded and assisted promptly, so try to add a ticketing system like ZenDesk and allow knowledgeable representatives who can support your customer’s concerns 24/7 because cryptocurrencies are constantly traded.
Find a Technology Solution
Some technology solution providers are great at helping establish your own crypto exchange. For example, Modulus gives development resources and components for custom crypto exchanges. And they charge a one-time fee and don’t charge for commission structures of royalties. This means that users don’t have to pay ongoing fees and you can receive the entire source code. This is great for auditing purposes because regulators want to inspect your source code before legally registering the exchange.
Why do you want a white label source code for your exchange? White label software allows you to customize the exchange while reducing the time and cost of the exchange.
If you are trying to build a cryptocurrency exchange, understand that you’ll have to treat it like a long-term investment. You have to be dedicated and ready to receive funding to pay for the completion of the exchange while also paying for a legal team to help get the exchange get approved by government regulators. Once you do so, you’ll be able to help others obtain their own cryptocurrency while also making some long-term profits on your own!
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