Cryptocurrency exchanges are the banks in the crypto space. They have underlined their importance to the movement and trading of cryptocurrencies amidst regulatory challenges. Due to the myriad of issues that have surfaced because of the growing importance of crypto exchanges, crypto startups have to deal with the lack of visibility on their projects.
The big question on the minds of business owners is if they could build a crypto exchange for their project.
Whether for projects or to position them properly in the cryptocurrency market, the sheer cost of resources to build a crypto exchange is a significant discouragement. The cost of listing on premium exchanges prices small startups out— it could be as high as $500,000 on some well-known businesses. Eventually, it freezes them out of top-ranking data sites like CoinMarketCap and CoinGecko, which require a minimum of two exchange listings to approve a coin.
To float a standard cryptocurrency exchange, whether centralized or decentralized, many things come into play. Getting reliable hands, developers, designers, and tech people to work full-time on a project can be expensive, especially when you need to hire them for the long term. To add, interacting with many blockchains simultaneously and maintaining the balance of data and order flows can be tasking. Also, storing vast amounts of data will add up to the total cost.
Additionally, a lot of specialized knowledge goes into blockchain interaction. Then the question of security is unavoidable. Exchanges have long been game to hackers seeking to siphon people’s cryptocurrencies, and they have exploited crypto trading platforms repeatedly. Striking a balance between security and efficiency can be challenging and too expensive for a startup.
Resources aside, building an exchange can take as much as one year, multiple developers, and a lot of paperwork. Thus, many turn to software tools that streamline the process such that it takes days or even hours to build a cryptocurrency exchange.
Akin to web builder tools, but for blockchain and cryptocurrency markets, the software may or may not follow a DIY model, which affords the builder the advantage to imprint their ideas and preferences on the eventual product. Usually called white-label exchange software, they are either cloud-based or DIY, meaning that they are hosted on the servers of their providers or hosted on the project’s resources. The cloud-based options incur setup and subscription fees moving forward, while the DIY options may only incur a one-time price or none at all. Interestingly, these tools have been pre-built, and some even have the potential to get a crypto exchange up and running in minutes.
The user’s preference determines which particular software is best and overall the most cost-effective. Centralized exchange software options come with KYC/AML integrations, among other features typical for a centralized exchange, and can cost between $5,000 to $1,000,000 for enterprise-level preferences. Decentralized exchange software tools could even be free of cost due to their open-source nature. Uniswap’s code is one that countless developers have forked to create DEXs on different blockchains.
Some DIY options are popular today because they are free and open-source software. A popular solution for anyone who wants to build a cryptocurrency exchange is the HollaEx Kit.
HollaEx is an open crypto exchange that launched at the beginning of 2020. The platform was launched by bitHolla and will be governed by the XHT token. The HollaEx exchange was built with the HollaEx Kit, one of the popular open-source white-label software tools for building crypto exchanges. Project owners can quickly develop exchange platforms based on their preferences using the HollaEx Kit.
With open-source software like HollaEx Kit, projects can build top-notch exchange platforms with high performance and few technical issues. If you experience larger trading volumes, you might experience increased technical challenges, but for starters, these free codebases come in handy, especially for startups.
Before deciding on a particular software tool like HollaEx, ensure you do the necessary research. Essentially, it is important to test these products before making long-term commitments as it helps you improve the quality of the exchange’s performance. Crypto exchanges are taking the place of traditional banking institutions, and if crypto adoption persists, they will play a vital role in bringing cryptocurrencies to everyone everywhere.
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