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Cryptocurrency exchanges are no longer solely a technical concern. They are now an immense (and ever-increasing) business strategy. However, the actual building of these exchanges requires a different approach than what is traditionally associated with technology-centric innovation.
The success of a crypto exchange is directly affected by the quality of the skill sets and philosophies of the individuals who build it.
This guide offers a simple checklist for startups, enterprise organizations and crypto business owners, so that they can more easily find the best cryptocurrency exchange development company for their needs without making serious/very expensive errors.
Building a cryptocurrency exchange is fundamentally different from creating a standard Fintech / SaaS type of product because of the higher degree of risk, stricter expectations, and much smaller margin of error.
An inexperienced crypto exchange developer may overlook fundamental aspects of the development of your exchange, such as security of connected digital wallets and depository accounts, compliance with existing regulations, and ability to handle large volume of trades, most of these types of problems will only become apparent after your exchange has launched, at which point the costs to fix these problems will exponentially increase.
An inexperienced crypto exchange developer may overlook fundamental aspects of the development of your exchange, such as security of connected digital wallets and depository accounts, compliance with existing regulations, and ability to handle large volume of trades, most of these types of problems will only become apparent after your exchange has launched, at which point the costs to fix these problems will exponentially increase.
Crypto exchanges need to fully upgrade, secure, and enhance platform features on an ongoing basis. Partnering with the wrong vendor can result in poor or unreliable customer service as well as high costs related to rebuilding your platform.
The "cost savings" that you think will be achieved by selecting a less-than-reputable vendor may ultimately cost you much more by way of delayed product launches, security breaches, failed audits, and loss of user trust.
The number of exchanges delivered, their knowledge of trading systems, and the ability to provide a live demonstration of the exchange and/or a real-life example.
KYC/AML compliance, experience in developing and implementing KYC/AML solutions, success in developing secure wallets, performing penetration testing, and global regulatory compliance are all hallmarks of developer experience.
The crypto exchange utilizes a technology stack that is scalable and can handle significant amounts of trading volume, while also utilizing a microservices architecture, and can be integrated easily with third-party APIs.
The developer should offer a white-label, custom, or hybrid solution depending on the business goals of the customer and provide full ownership of the source code.
All pricing and engagement terms and conditions, including the costs included, payment schedule, and any post-launch or additional costs associated with the product, should be provided.
The vendor will provide realistic timelines for the delivery of products along with a staged approach to development to ensure adequate time for testing, auditing, and deployment.
Support will include fixing bugs, updating security features, monitoring performance, and providing enhancements if requested.
Verified testimonials that provide a company with evidence of its long-term business relationship with its clients
Assess how many crypto exchanges the vendor has developed, the vendor's understanding of trading systems, and if the vendor can offer references or examples of successful, live crypto exchange solutions.
The vendor of interest must have a documented history of successfully providing KYC/AML services, developing secure wallets, penetration testing for vulnerabilities, and being compliant with applicable international regulations.
Ensure that the vendor's technology can effectively manage high levels of trading volume and that the development process uses a microservices architecture allowing for easy integration with third-party APIs.
The vendor should offer you options to custom-develop or use a white-label solution to meet your unique business model. The vendor must also allow full ownership of all source code provided.
You should clarify the pricing structure, what the price includes, including any milestones for payments or expected costs post-launch/additional costs.
A reputable vendor will provide a realistic timeline for bringing the product to market and will have staged development plans in place.
A typical low-cost mobile app development firm will usually reduce the security, scalability, or compliance of its solution. Therefore, there's typically an increased risk of problems occurring post-launch.
An application that claims to deliver a full-featured exchange in an unrealistically short amount of time usually relies on using some unproven or untested and potentially unstable or insecure processes, protocols, or technologies.
A lack of established expertise in the regulatory landscape can expose your exchange to legal as well as operational risk.
The faster you get a response from a vendor with insufficient documentation and vague product timelines, the better chance you will encounter miscommunication.
If a service provider does not provide any long-term support after launch, your exchange may be left vulnerable to more risks than if the service provider did provide such support.
Working with a service provider with extensive experience in working with regulatory compliance and licensing for exchanges, as well as aligning technical architecture to regulatory compliance, will greatly simplify the process of obtaining regulatory approval for an exchange.
Using an established development framework along with developing in a method that adheres to security first is a proven method of reducing risks associated with the technical operations of a mobile application.
A professionally-built, secure, and scalable exchange will provide increased confidence to both investors and stakeholders regarding the reliability of the marketplace platform.
A good service provider will provide you with a flexible architecture that allows for introducing new features, products, and markets over time.
White-label app solutions enable quick launches and are built on established frameworks that have been thoroughly tested, making them the ideal solution for start-up companies and those seeking to enter the market rapidly.
Developing custom mobile applications will allow you to have full control over your exchange platform and will allow you to develop the marketplace according to your requirements and needs.
Most start-ups start with white-label products, then, as they mature and become larger companies, they consider creating custom products instead.
Confirm that your development company can develop the type of exchange (centralized exchange - CEX, decentralized exchange - DEX or peer-to-peer exchange - P2P) that matches your company's vision for development.
Each type of exchange has specific technical, securities, and legal requirements, and experience working with that particular type will help mitigate the risks of being unable to provide a solution for your project.
Confirm that the development firm has integrated security and regulatory compliance into the exchange platform design from the very beginning. This means that KYC/AML workflows, wallet security, access controls, audit-ready capabilities, and compliance with local regulatory laws relevant to the exchange's target market have all been taken into consideration in the development of the exchange platform.
Carefully review the exchange development contract to confirm that the pricing, payment schedule, and included services are clearly defined, and any additional services provided by the development company will be identified.
Most importantly, verify that you will have complete ownership of the source code and intellectual property rights, and after the exchange has been created, you will have the ability to make your own modifications to the source code, as well as scale the exchange independently from the development company.
The exchange system should be able to accommodate growth in the number of users, an increase in the volume of trades conducted daily and the incorporation of additional functionality into the system without degrading system performance.
Inquire about your potential use of a scalable system, what type of architecture the system incorporates, the scalability of the matching engine, and what is the architecture design (modular versus monolithic) of the system, and how easily the exchange system can grow as your exchange business expands.
Your selection of the best crypto exchange developer does not merely reflect on the company's technical capabilities; rather, it reflects your entire strategy as a business. The right provider will help you launch quickly, provide security, implement compliance, and create an environment for long-term growth.
Following this checklist will prevent you from making costly errors by safeguarding your investment and establishing your exchange as a viable contender in a very competitive marketplace.
FAQs:
How may I assess a crypto exchange developer's ability?
You should consider their past experience, security practices, compliance knowledge, scalability processes, and the level of support they will provide after the launch.
Is it possible to build a stable, secure, and reliable white-label crypto exchange?
If a provider has extensive experience and customizes the platform specifically for you, this can be a successful business model.
How much should I anticipate spending when hiring a crypto exchange developer?
Costs should be determined based on the type of exchange, its features, the amount of customization needed, and what it takes to meet the relevant compliance standards.
What important questions should I request prior to entering into a contract with the crypto exchange developer?
Your questions should be focused on the security architecture of the development, ownership of source code, limitations of scalability, level of compliance support, and level of support after development is complete.
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