If you have learned something from ever since the times the word ‘economy’ was coined, it is the fact that it constantly changes! We have seen economy and commerce move from simple barter systems to gold bullions to coins made of precious metals to currency notes, and today, we stand at a time when paperless currency and digital economy is the order of the day.
This, however, cannot be considered the end as the world economy is preparing for another revolution – cryptocurrency. When the first cryptocurrency came out in 2009 – the Bitcoin, people did not expect this small flicker of innovation to create a paradigm shift in the world of the global economy. Today, there are more than 1600 types of cryptocurrencies active in the market.
Coins and tokens
Both these terms are often interchangeably used much to the dismay of investors. If you plan to invest in the crypto market, it is mandatory for you to understand the difference between crypto coins and tokens period while both represent units of values represented in the blockchain, there are Stark differences that draw a clear line of demarcation between them.
Cryptocurrency or a crypto coin is an encrypted digital currency that can be used to make payments. It has its own blockchain and can be used to store value. In short, it is quite similar to how we generally use Fiat currency.
Crypto tokens, on the other hand, are referred to as digital assets. They are both fungible and tradable. However, unlike crypto coins, they are not hosted on their standalone blockchain but on existing blockchains like Ethereum. A token can be considered as an asset purchased using currency – it might have value, but it cannot be used instead of cash for transactions.
The relevance of a crypto exchange
As we have already discussed, there are more than 1600 different crypto coins present in the market today! A direct consequence of this growth in number is the need to exchange one coin for another. We have seen this happen in the Fiat world, and it is only logical that the same pattern gets extended to the crypto realm. A platform that facilitates exchange between multiple cryptocurrencies and sometimes between crypto and Fiat currency is called cryptocurrency exchange.
There are different ways to gain profits in the crypto world, including but not limited to mining of bitcoins, launching of tokens, investing in digital assets… and a lot more! One of them is launching your own cryptocurrency exchange trading platform.
A crypto exchange is considered highly dependable and considerably less volatile compared to other platforms of profit, and it continues to slowly gain limelight with every passing day. The growing acceptance of cryptocurrency by multiple countries and legal systems has served as a fillip for the growth of companies offering cryptocurrency exchange development services.
Different types of Cryptocurrency exchanges
A regular exchange is quite similar to a traditional exchange board in its method of trading and in its functionality. The design is quite simple, and anyone can sign up to buy and sell coins.
Peer to peer exchanges, commonly abbreviated as P2P exchange, use an escrow and services marketplace for buyers and sellers to interface with each other. Although this option seems lucrative, there have been instances of scams.
Brokerage firms are similar to mutual funds. They take fiat money from investors and fund either a bitcoin or to the current account to trade on behalf of investors and give them profit.
Creating a Cryptocurrency exchange
Now that it is established that the crypto exchanges one of the most promising and profitable methods to make money in the crypto world, most investors and entrepreneurs would be bent on creating their own crypto exchange platform. There are different ways to build your own exchange software.
Custom software solutions are preferred by users who would like to develop their products from scratch. It involves quite a lot of effort from all vertices – development, testing, and establishing compliance. In all of this, it cannot also be denied that there are possibilities of inadvertent lapses in quality and compliance.
Open source solutions can be used freely. All that the business needs to do is download the code from a repository like GitHub. It can help you deploy exchange in the shortest possible time. However, they are not entirely reliable – there are possibilities of security lapses, and support might not always be available for the user.
White label cryptocurrency exchange platform give the flexibility of an open-source solution and the control of a custom crypto exchange software solution. It also ensures that the possibilities of bugs remain as minimum as possible. All that the entrepreneur needs to do is get in touch with a company that provides crypto-exchange software development services. They will take care to gather the requirements and customize the platform according to the needs of the entrepreneur.
In addition to the reliability and customizability, you can also be assured of support that is available to you and your exchange users at all times.
Before you embark on creating a business of crypto exchanges, it needs to be determined whether or not your business has the essential legal space to accommodate your business. Once you have concluded that it is legally viable to go ahead, it is mandatory to obtain proper licensing and also generate funds. Even when going with an open-source crypto exchange platform, putting the code together can be an arduous and cost-consuming process. Therefore, you will need to ensure that you have enough funds for your venture.
One of the most important factors that determine the success of your exchange is liquidity. You can either choose to connect your exchange with other exchanges or simulate trades within your exchange to enhance the magnitude of liquidity. For you to be able to accommodate the deposit and withdrawal of money, and especially Fiat funds, you will need to partner with a bank payment processor.
After all this is done, it is important to start marketing your trip to exchange. In addition, you will also need to provide support for your users.
If all that is done, there is no question that you can reap a considerable profit with this foolproof method of making a group to work for you. Because just like casinos, even when it comes to crypto, “the house always wins!”