How To Start A Cryptocurrency Exchange Business From Scratch

Owing to the decentralized nature of the blockchain, anybody can take part in just about every aspect of the process. Regular people are mining it, trading it and profiting off of it.

Now, there are even people creating their own platform for the exchange and trade Bitcoin to make money that way. It isn’t for everybody, of course, but if you are motivated and fit a certain set of criteria, then you can even do this yourself.

In this article, I will go over some basics you need to know before you can create your very own Bitcoin exchange platform.

Make sure your legal requirements are met

Though there is little oversight into many of these exchanges since it isn’t a stock exchange or backed by a financial institution, that doesn’t mean that there are no licensing requirements.

Different jurisdictions will require different licensing so it is necessary to consult a lawyer to find out. This is the first step and may be the last since this is not your typical online business.

In many countries, including the US, you will need to be set up as a licensed Money Transmitter business.

Get funding

If you have a solid background in currency trading or blockchain technology, then your path will be much smoother when it comes to getting financed. Unless you already have the reserves yourself, then you’ll have to reach out to investors to get the funds necessary to get started.

The costs need to cover the technology needed to set up the platform. Then comes the licensing fees and the legal fees that go along with that. There will also be ongoing legal fees. Lastly, you’ll need a sizable advertising budget to get people onto the exchange.

Pick the right technology

You can start from the ground up when it comes to building the platform. With the right team in place, you should be able to put it together. It will take time and may be the biggest expense for your startup costs.

There are also agencies that have turnkey exchange platforms that you can buy to bypass the whole process of putting it together. Your costs for doing so may be higher in the beginning but lower over the long term.

Payment processing

You’ll need to really take your time shopping around for the right payment processor. There are two main criteria to be looking into. First and foremost is security. Many times when you hear about a Bitcoin scam where people were robbed, it is almost always during the process of buying the coins. This is the weak link in the entire process since it happens off of the blockchain.

Secondly, you have to be aware of all the fees that each service charges to process the payments.

Beta testing

Before you bring your exchange to the masses, make sure to do live beta testing. This will show you the bugs and weak areas from the back end, but also users will let you know what they like and don’t like about the platform.

Don’t start your major PR campaign until all the bugs are worked out. Find users that are willing to test the platform first.