You might be surprised to learn that creating your own Bitcoin exchange isn’t as complicated as it sounds. In fact, the cryptocurrency industry has grown immensely in the last couple of years and there are now a plethora of new tools to help. To begin with, we’ll look at coding a white-label Bitcoin exchange which may be a great option for any cryptocurrency enthusiast who wants to start the exchange business. Paxful exchange is a prime example of a marketplace built for traders to buy bitcoin with gift card.
Coding a White-Label Exchange
With a white-label exchange, an existing crypto trading bot licenses you their technology so that you can create your own exchange without having to code it from the ground up. Also, since it’s a white-label product you can brand the exchange however you see fit. A majority of users will never know that they’re trading on a platform created by another company.
The great thing about a white-label Bitcoin exchange is that it’s possible to build one with limited capital and a relatively small amount of technical expertise. Although some white-label exchange providers have higher requirements.
Some companies claim that with their white-label products a new exchange can be set up in less than two months. Not only that, but such companies also come with a whole host of features like access to an existing liquidity network and a white-label mobile app.
While a white-label exchange offers a number of benefits, there are also a few drawbacks. The largest disadvantage is customization. White-label exchanges can be customized but only to a certain degree and the customization options are significantly reduced as compared to a platform built from scratch. If you’ve ever noticed two cryptocurrency exchanges that look strikingly similar, there is a good chance that they’re both using the same white-label technology.
Also, white-label exchanges can be expensive as they require not only a one-time upfront fee but also a monthly licensing fee. These fees can be expensive, especially if you’re having a low-volume month and have to keep paying expensive dues.
Building Your Own Exchange
If you have the time and money, you might want to consider creating your own exchange as opposed to licensing technology from a third-party service. The cheapest way to get your own exchange will be to make it open-source. Creating an open-source exchange can be similar to using a white-label service but without the fees.
The downside of open-source technology is that there is no customer service, product guarantee, or update schedule. Also, open-source technology is less secure and more vulnerable to hacks. This is an unfortunate fact that cannot be overlooked.
The second option available to someone who would like to build their own Bitcoin exchange is to code it from the ground up. This will be a fully customized Bitcoin exchange that’s built to your exact specifications. The most obvious advantage of a custom platform is that you can outline all of the features that you’d like included, or excluded. Once the exchange is built there is a cost-benefit as you don’t have to keep paying a “franchise fee” to the white-label exchange provider.
Naturally, the largest disadvantage of creating your own cryptocurrency exchange is the time and money required. It can take anywhere from six months to a year to code an exchange. The process is made slower and more expensive by the fact that there are a limited number of blockchain developers in the world and they’re currently in high demand. Those developers with the best skills and most expertise can name an extremely high price when it comes to development work. Those costs and the time commitment are why it’s important to carefully consider whether coding your own exchange is really the best option.
Abide by Regulations
Besides thinking about how you’ll code the exchange it’s also important to consider which cryptocurrency regulations you’ll need to comply with. In the past, cryptocurrency was a somewhat underground fad largely overlooked by regulators. That’s quickly changing however and national authorities all over the world are cracking down on unlicensed Bitcoin exchanges, especially in the United States. Take the example of Jacob Campos. Jacob is a twenty-two-year-old American who was sentenced to two years in prison for running a Bitcoin exchange that he hadn’t registered with FinCEN (Financial Crimes Enforcement Network).
Whether you’re thinking about coding and opening a Bitcoin exchange in the USA or elsewhere, it’s critical that you understand and comply with all applicable cryptocurrency regulations.