The Importance of Choosing the Right Architecture for your Crypto Exchange
If people have cautioned you about launching a bitcoin crypto exchange saying it is very risky, take their word with salt. Every business that you may think about launching has some degree of unpredictability. That said, if you have spared enough time to understand how the business works, plan the details of your operations and buy bitcoin exchange script in sync with your objectives, there are considerably good chances of you clocking success.
First of all, you need to choose between two broad types of exchange platforms — centralized and decentralized.
These exchanges work as an intermediary between buyers and sellers of crypto assets. Their revenues come from the trading fees from transactions made on the exchange. Centralized exchanges are not only easier to develop but also simpler to work on for your customers. Thanks to crypto/crypto and fiat/crypto pairings, high liquidity, and rapid transactions, investors have plenty of reasons to visit the exchange. Account recovery is also much quicker in case of a lost private key. The exchanges take care of their customers’ assets.
You should also be aware of the inherent disadvantages of centralized exchanges. Security issues arise in centralized exchanges as traders have to enter their private key to move crypto coins from wallets to exchanges. This may make them a target of keylogging attacks. Accounts are also not anonymous in real terms as the traders are legally mandated to provide their data to exchanges under KYC (know your customer) procedure. However, the integration of the right security features can help overcome all of these challenges.
In decentralized exchanges, deals are made through smart contracts. When you buy crypto exchange software with decentralized architecture, all trades occur peer-to-peer without any involvement of an intermediary. The onus of managing assets and private keys lies with the users. However, as blockchain takes its own time in creating blocks, transactions are slower. These platforms have a higher entry barrier as well, leading to lower volumes as well as liquidity.
We can also segregate cryptocurrency exchange platforms as:
- Trading platforms
These platforms act like a bridge connecting buyers and sellers. Their earning comes from fees raised for all transactions.
- Direct trading platforms
Direct trading platforms facilitate person-to-person trading without fixed market prices. Sellers can set their rates, thanks to the underlying mechanism.
- Brokerage platforms
You may buy crypto exchange script that offers a deal to traders to buy their digital coins at a price determined by brokers.
You also have to decide on the type of software architecture for your exchange.
To build an exchange, it’s necessary to choose the architecture based on its planned transaction volumes scaling. There are three main types:
Ideal for small and local exchanges, synchronous exchanges have a simple architecture. These are easier to operate on as requests can be completed in a single transaction. However, this architecture has serious limitations when it comes to scalability.
Perfect for medium exchanges, they deal with requests in separate modules (layers). Interfaces register user requests and add them to a queue, which is then processed through various layers. The status of the user request is then intimated to the interface.
Meant for large exchanges, distributed exchanges resemble the asynchronous type, but at a much larger scale. The architecture distributes user requests into fragments termed shards, which act independently. When it comes to scalability, this model has no limitations.
It is important to buy crypto exchange software that is perfectly in line with your business goals. The kind of exchange platform and architecture you choose has a bearing on your business later.
Antier Solutions is a trusted company if you want to buy crypto exchange script. We provide a crypto exchange script in line with your business needs.
Schedule a free demo of our white label crypto exchange or connect with our subject matter experts to share your business needs.