Home > News > How to Start a Crypto Exchange: Buy and Sell Bitcoins and More

How to Start a Crypto Exchange: Buy and Sell Bitcoins and More

Benson Toti

There are plenty of ways to trade cryptocurrencies online. Indeed, you only have to scroll through our selection of recommended crypto exchanges to see that you can deposit, withdraw, buy and sell in a way that suits you. However, if you’re the entrepreneurial type, it’s also possible to set up your own cryptocurrency exchange. Although you might find it difficult to build a platform with the same trading volume or liquidity as site like Coinbase Exchange, there are ways to provide buying and selling options.

Build an Independent Cryptocurrency Exchange

The official way to start a crypto exchange is to register a company in a region where cryptocurrency trading is legal, and build a business. Even before you start hiring developers to build your site, you’ll need to obtain the appropriate legal advice and generate some funds. With initial coin offerings (ICOs) being a common way to raise capital, you could go down this route. However, you’d need a digital token to sell. The other option would be to use angel investors or partner with an existing company that’s looking to enter the crypto space.

Once you’ve got some money, you can build the site and then link it to the crypto world. Doing this will give you the necessary assets and liquidity to offer trading options. However, it’s also important to note that you’ll need some funds set aside to cover any shortfalls. These could be the result of a security breach or a lack of liquidity. Once that’s set, you can embark on a PR campaign, go live for beta testing and ensure you have a support service in place.

Link Up with an Exchange Network

A slightly easier way to launch your own crypto trading platform is to use an out-of-the-box solution such as cXchange. Essentially a white label, these platforms provide a prebuilt architecture as well as matching engine that allows you to support any crypto asset. For example, cXchange provides contracts for difference (CFDs) in a similar way to the eToro Exchange. Put simply, the software taps into an international exchange pool. This offers instant liquidity and stability. From here, you can add your own branding and add/remove features such as trading tools and analytics at your leisure.

Become a Bitcoin Sole Trader

become a bitcoin trader

Sole trading is  a powerful way to become your own cryptocurrency exchange.

Image source: Blue Planet Studio/Shutterstock.com

The final way to start a crypto exchange is to become a sole trader that not only buys crypto but sells it too. If you read our LocalBitcoins review, you’ll see that this is a true peer-to-peer platform that connects people looking to buy and sell Bitcoin (BTC). In simple terms, LocalBitcoins is nothing more than a meeting place for traders.

By registering an account, you then have the ability to buy BTC and sell it. Doing that, you’re basically able to act as a one-person exchange. Of course, you have to have the funds to meet any requests. What’s more, you’ll need to specify the payment methods you accept. Finally, you’ll need to review each buy/seller because any problems will be on you.

Points to Consider When Starting Your Own Crypto Exchange

If you are planning to build your own crypto exchange, there are some things you need to consider. Three of the main points to bear in mind are:

Safety: If the assets you’re offering aren’t safe, then your customers’ funds aren’t safe. Make sure that all the money you handle is safe at all times.

Security: Attacks are always possible, which why any site you control needs to feature the latest encryption methods. Any security breaches will not only cost you money, but your reputation.

Liquidity: Traders want the ability to buy and sell a variety of digital tokens in seconds. The longer it takes to execute a trade, the more value someone can lose out on. Therefore, without suitable liquidity, your crypto exchange will struggle to gain any traction.

Featured image source: Yevhen Vitte/Shutterstock.com


Additional resources:

We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.