How can I build a bitcoin exchange website?

According to a study done by Research and Markets, “The market size is expected to grow from USD 386 million in 2020 to USD 1,123 million by 2025, at a Compound Annual Growth Rate (CAGR) of 23.8% during the forecast period (2020 – 2025).”

Other than the huge sums of money to be made, innovating in cryptocurrencies is a way to further their adoption.

Here’re a few amazing case studies of companies who hired DevTeam.Space to build their cryptocurrency and blockchain products.

INTRODUCTION

Bitcoin is the beginning of something great: a currency without a government, something necessary and imperative”. – Nassim Taleb (Statistician and Risk Analyst)

It‘s clear that bitcoin and other cryptocurrencies are the future, but let‘s discuss in more detail why you should build a bitcoin exchange

 website and how to do that.

In 2017, bitcoin took the world by storm resulting in a huge surge in its value. In just 1 year, bitcoin saw its price rise around 1,800%. Despite China, until recently the world’s largest bitcoin market, cracking down on bitcoin exchanges in an attempt to curb capital outflows from the country, bitcoin’s price rose and rose as it found new markets in South Korea, Japan, and right here in the USA.

CRYPTOCURRENCY EXCHANGES: WHY DO WE NEED THEM?

Are you wondering why cryptocurrency exchanges are needed at all? Well, you aren’t the only one to have this question!

You see, a cryptocurrency like Bitcoin (BTC) has its own blockchain network. Bitcoin uses this “peer-to-peer” (P2P) network, a protocol, encryption software, digital signatures, consensus algorithms, etc.

If you look at Ethereum or Ether (ETH), you will see a completely different blockchain network. While the Ethereum network has conceptual similarities with the Bitcoin network, these networks use different flavors of technologies.

WHAT IS A BITCOIN EXCHANGE?

Bitcoin is a blockchain based peer-to-peer currency system. Since it is decentralized, it cannot be controlled by any outside party such as banks or governments.

This is undoubtedly the main hurdle that cryptocurrencies must overcome in order to go mainstream. How long this will take is anyone’s guess, because let’s face it, governments don’t like it when they can’t control something.

Before you get down to work, you need to understand the cryptocurrency exchange architecture, that is how to set up the internal structure of your bitcoin exchange website.

WHY BUILD YOUR OWN BITCOIN EXCHANGE WEBSITE?

Well, after all, why does anyone want to start a business? While setting up a bitcoin exchange can be a daunting task, there are potentially huge financial rewards as well as the gratification of having been a central player in a technology that is going to completely change the world.

It is a considerable possibility that one day there might be no banks left to control how we live our lives. We will be able to directly pay for goods and services via our cryptocurrencies while through blockchain-based projects such as Ethereum, we will be able to access loans and mortgages.

Imagine going on holiday and not having to pay massive currency conversion fees or getting a loan without massive interest fees added each month. Wouldn’t that be great? Well, these things are entirely within our reach thanks to cryptocurrencies and other blockchain technologies.

HOW TO CREATE A CRYPTOCURRENCY EXCHANGE WEBSITE?

As with any new software, there is a lot of work to be done before you get anywhere near the programming part. When it comes to creating your own bitcoin exchange you will need to get a clear understanding of your target market before you begin.

Another extremely important part of the planning stage is to research the laws in your particular country that may or may not exist governing cryptocurrencies. Finally, you will also need to define exactly what kind of exchange you plan to set up and decide how it will function.

The question “How to make a cryptocurrency exchange website” can be best answered through a series of steps that you need to take.

1: Brush up on the competition

A really great place to start is to do some research on existing bitcoin exchanges. For a list of the most popular exchanges that handle the vast majority of the entire world’s bitcoin transactions click this link.

It is advisable to do plenty of research to find out exactly how these exchanges came to be as successful as they are today. Not only is this an extremely interesting bit of cryptocurrency history but it will also give you plenty of great ideas on how to create your own bitcoin exchange website and how to market it so it becomes a success.

An important bit of advice is not to let any of this information water down your own new and innovative ideas. Right now the entire cryptocurrency industry is being fueled by innovation. Fortunately, this new technology is proving just how much innovation and new ideas there are out there.

2: Decide on where your business will operate

Do you want your exchange to do business globally or will it just be for a few select countries?

This is an extremely important part of planning a new bitcoin exchange. Why? Well, the reason is that while a large global exchange is more likely to earn you lots of money, it also means that your exchange has to conform to the laws in every country in which it operates.

Falling foul of the law in any country could mean that you end up with massive court fees or worse, end up in jail. You only need to take a look at another peer-to-peer technology, file sharing, to see the dangers of operating a website that falls foul of the law. The creators of the file-sharing site The Pirate Bay, found themselves in jail for their actions while Kim Dot Com is currently fighting extradition to the United States for similar charges.

3: Access your target market

This is the part of pre-planning that will ultimately determine how successful your site will be. Knowing your target market will allow you to create both a product and marketing strategy that will allow your site to florish.

While in the case of a bitcoin exchange the answer might seem obvious, believe us it is a lot more complicated than it might at first appear. People of all ages from all types of backgrounds are now investing in bitcoin.

4: Define your site

The final step before you get programming is to work out exactly how you want your bitcoin exchange to look and function. While any site should look professionally done and secure, these two features are particularly important for any bitcoin exchange. If people think that the site looks insecure or find themselves frustrated by slow page loading times or other functionality issues, they simply won’t use it.

Key to your site’s success will be its security. There have been several high profile hacks of cryptocurrency exchanges over the last few years, including Mt. Gox which resulted in nearly 1% of all the entire Bitcoin in circulation being stolen. A more recent example was the South Korean exchange Youbit, which was reportedly hacked by the North Korean government in 2017.

5: Synchronous, Asynchronous or Distributed?

Most cryptocurrency exchanges currently operate the asynchronous model. While synchronous exchanges are the most simple to set up and operate, they don’t allow for much in the way of scalability. Asynchronous, on the other hand, allows for large increases in trading volumes as it works by passing requests between the UI and dedicated machines that queue and update the request with the UI after it has been executed.