Bitcoin is a cryptocurrency that is attracting a lot of traders, investors under its umbrella. It uses cryptography for its security which is very efficient and has gained trust from many users all over the world. Those who invested in Bitcoin early on are sitting on good fortunes. If you are looking to serve the herd by starting your own Bitcoin Exchange then this article will point you in the right direction.
How to start a Bitcoin Exchange?
Reach out to Legal Counsellors
Before setting your plan in action you must consult with legal counselors. They will inform you about the rules and regulations that you must follow in a particular region.
Some people believe spending money on lawyers to be a waste of money. Well, starting a business is a lot easier when you don’t have to worry about legal battles every now and then. And in a Bitcoin Exchange Business which is B2C, also the quantum of money involved is huge. There “will be” constant legal troubles, so it is better to arm yourself with the right products in advance.
Start looking for Investors to fund your Bitcoin Exchange
Starting a Bitcoin Exchange requires a lot of time and resources like a Software service provider, Customer-Support team, Trades Management team, Legal team, Licence acquiring charges, Marketing, etc.
Don’t get all worked up looking at those names, if you have prepared the right plan and execution strategy then you could gather funding from a lot of investors. So, all you need to do is find out the scale of each of those aspects I mentioned above and draft the right plan.
Find a Software Solution Providers
The better part of your business is on the Internet. Your customer will have access to your product online. The trades will be made online and the customer information will be entered and stored online. This is the part where you need to work the most. This is the part where you get the opportunity to do better than your competitors. Your User Interface (UI) needs to be hassle-free and user-friendly.
Your Trading Platform should be easy to understand and not a complex one. It is upon you, how you choose to make your platform. Friends, freelancers or you can directly contact a Software Solution Provider too. Another important thing for a crypto exchange is its top-notch security of the Coins, “Wallets”. This is where the customer’s assets will be stored. You can’t compromise with the security of your client’s money, so you need to provide maximum security to this arena.
Liquidity requirements for a Bitcoin Exchange
Liquidity in an Exchange business is extremely important. In case you are wondering, liquidity here means the trading activity that your customers can see, before placing their order through your platform. A trader or investor may hesitate to put their money in a business with negligible or low trading activity. Any new exchange business is accustomed to facing liquidity issues at the start.
You have multiple options to tackle this problem, you can even form an API Interface connecting your Bitcoin Exchange with another pre-established Bitcoin Exchange. Forming connections with pre-established exchanges is important, as it will help in showing the required liquidity. Larger the network, the better.
Collaborate with a Payment Provider
A Bitcoin Exchange involves transactions and charges of all sorts. You will need a payment provider who can handle all of that through their payment portals. You need to find a cost-friendly and trustworthy payment provider to collaborate with. Some of the trustworthy companies are PayPal, Stripe, Due, etc.
Implement the best security practices
In a Bitcoin Exchange Business you are responsible for your customers’ money, their assets(Bitcoins), and all their private information.
So, I hope you understand what you are dealing with because tapering with any of the data mentioned above wouldn’t bode well for your business. Trust is the pillar for working of any Business, but in an Exchange Business, Trust or security isn’t an option. You will have to get a trustworthy security provider to keep all that data and money of your clients safe and secure in your system. You can go to any of the many established security providers like AWS, IBM, Mark Logic, McAfee, etc.
You wouldn’t want to launch your products in the market with basic loopholes and errors. Beta Testing is a method to test your platform beforehand and avoid negative comments by genuine customers.
Once all the work is done, you can run a beta-testing program and examine its performance. Test its full range of capabilities in beta especially the security system to ensure customer safety. After examining the results you can do the necessary changes.
Marketing your Bitcoin Exchange
As mentioned earlier, making networking and connections with other exchanges helps with the liquidity problem.
But in the end, you need to form your own client base who uses your platform and for that. You need to advertise your product and services. You should dig in your platform and figure out what makes your product better than the rest, and use that as your advantage in marketing your product.
It is important to adequately plan your marketing activities, along with its costs.
Providing customer support
Customer support is the most important step in starting your exchange, but this will determine your long-term success.
Responding effectively and timely is the key to maintaining long-term relationships with your clients. Make your customers feel important and listen to their grievances and your business will bloom in no time. A token system helps resolve the query easily and transparently. It creates unique tokens for every customer which helps in referring the issue to the customer support team in an easy manner.
Maintaining a legal team
Abiding by the law is crucial for the standing of your business, and laws change. You won’t be able to handle the changes on your own. You will have to hire a team of legal professionals to keep you updated. A team that will work on all the legalities requires by the regulatory body of your region.
Cryptocurrency laws are rapidly evolving globally, so it is very important to either hire a full-time, in-house legal compliance team or outsource to any reputable law firm in order to keep your Business legal in all geographies where you will conduct business.
Competition in the field of digital currency is increasing rapidly day by day, and soon the market will be saturated. The faster you plan, the quicker you will be able to reach your goal.