Things to Consider When Setting Up a Bitcoin Exchange
If your deep desire to start your own bitcoin exchange has brought you here, smile wide, as arriving at the right place for advice hints your good luck. Finding out the steps leading to the launch of your own bitcoin exchange is important before you begin walking towards your goal. You need to find the precise answer of — how to setup a bitcoin exchange.
Here are the six steps that make the pathway to the exchange:
- Operational area
Depending on the operational area of your exchange, you will need to get the necessary licenses and approvals. Laws differ in various countries as well as the states within them, so you have to consult a legal advisor regarding the governmental permissions.
- Compliance requirements
Most governments across the world require currency exchanges to conform to the Know Your Customer (KYC) norms. The process involves verification of the customers’ identity through the ID cards issued by the state authorities. The prime objective of this exercise is to prevent money laundering. You will need to integrate an adequate customer verification procedure into your bitcoin exchange software.
- Collaboration with a payment processor
Your exchange will need to process payments via fiat currency. Partnering with a trustworthy payment service provider is integral to the success of your exchange. This will become even more important in a situation when banks lack the facility to execute an instant bank transaction online. You are likely to face this issue more when working in developing and under-developed economies. Inquire with your payment gateway if they can facilitate the addition and withdrawal of fiat funds in various geographic locations.
- Liquidity
Users will come to your Bitcoin exchange software only when they find it full of activity. As a new exchange, expect to encounter liquidity issues. Here are a few ways to demonstrate activity on your exchange:
- Set up two artificial accounts within your exchange. Buy and sell between these accounts to simulate trading activity.
- Implement an API interface that links your exchange with other bitcoin exchanges.
- Hop on to a network of cryptocurrency exchanges. This will pool the liquidity of all exchanges with the network.
- Security
Your prospective customers need to be fully sure about the security of their funds, else they will not touch your exchange by a pole. The security parameters also apply to private data that includes their bank account information as well as KYC details. A Reuters report suggests that as many as one-third of all bitcoin exchanges operating between 2009 and 2015 were hacked. This underlines the role of security in the success of your exchange.
- Customer support
When dealing with an exchange, customers reasonably expect quick disposal of their KYC approval requests, processing of deposits, withdrawal of fiat currency, answering customer complaints, etc. You need to put in place a robust customer support mechanism that would assist customers wherever they may require.
Summing up
We believe this brief explanation about — how to setup a bitcoin exchange — will be really helpful for you in fructifying your dream. Staying close to the rails will ensure you don’t wander off and gain success with your exchange.
Antier Solutions boasts a strong track record in bitcoin exchange development. With extensive experience in the field, we are a company you can trust with your project. We specialize in both white label exchange development and building a crypto exchange from scratch.
Schedule a free demo of our white label crypto exchange or connect with our subject matter experts to share your business needs.
