The cryptocurrency exchange business is at a high peak in recent years. It is due to the many startups and investors are interested to begin a crypto exchange platform. First, you need to know about the cryptocurrency exchange. Currently, crypto exchange is the trend for online business. So some of the business people started to analyze what is cryptocurrency and cryptocurrency exchange through the internet. If you are a beginner to this platform then you will have this same question.
Cryptocurrency is a digital currency and it is first discovered using blockchain technology. The people who invented the first cryptocurrency named that as Bitcoin. Bitcoin is one of the most prominent digital currencies in the world. This coin made a terrific boom in the crypto trading market. Also, its value is very high when compared to other cryptocurrencies in the marketplace.
Most of the startups and entrepreneurs prefer to start a cryptocurrency exchange platform. But already there are more business opportunities in the crypto industry. Like ICO, STO, Bitcoin mining, and more. In this blog, let us elaborate on a cryptocurrency exchange, ICO, and mining and its benefits. Also, you can understand why people prefer to start a cryptocurrency exchange business rather than ICO or mining.
What is Bitcoin Mining?
Bitcoin mining is said to be a backbone of a Bitcoin network. Here, miners will provide the security and they will confirm the transactions. If there are no miners, then the whole Bitcoin network would be attacked by hackers. Else, it will be dysfunctional. All the Bitcoin mining process is performed by specialized computers. Here the miners will play a vital role. Because they secure the Bitcoin network by enabling high-end security systems.
For these services, miners will be rewarded with the newly developed Bitcoins and transaction fees. If you want to mine Bitcoins, you can also do it. But Bitcoin mining is not more profitable for startups and entrepreneurs. Because Bitcoin mining is a specialized industry in the crypto world. So it is so expensive for mining the Bitcoins and you can not earn more profit.
Also, the electricity cost will be very high for the Bitcoin mining process.
You can also mine Bitcoins by using the mining hardware. But hardware mining should be located where there is cheap electricity. But to be frank, if you are a startup then don’t try to mine Bitcoins. It might lead you to the loss of your funds. Even if you are interested in Bitcoin mining there are some benefits. They are
- You can earn bitcoin as a reward.
- You can avoid fees, so you can get the crypto coins quickly.
- You can either join in the pool and try your luck.
- Strengthen the security of the Bitcoin network.
- Earn other digital currencies from your mining hardware.
Now let us have a look at what is Initial Coin Offering (ICO).
What is Initial Coin Offering?
In recent years, crowdfunding became more prominent among the people in this digital world. Every startup and entrepreneur used the crowdfunding platform to raise their funds quickly. Likewise, the initial coin offering is also one of the crowdfunding platforms. Here, crypto startups will raise their funds by selling their newly raised tokens to the various users.
Some experts in the crypto community say that ICO is similar to IPO(Initial Public Offering). The major and biggest problem in Initial Coin Offering is they are not monitored properly by the ICO website owner. Also, anyone can create a project with white paper on the ICO website and attract the crypto investors to their company.
Due to improper optimization and monitoring, there are many fraudulent activities happening on the ICO website. Most of the investors identified there are lots of fake projects. Also, many business people and investors lost their money. Here, the risk factor is high compared to other crowdfunding platforms.
There are more possibilities for scammed tokens and hacking. So most people don’t prefer for Initial Coin Offering. Also, it is not a good option for long term investment. But there are some advantages when you use ICO’s. They are:
- Here, anyone can raise their funds with the proper white paper project.
- The entire installation process is easy compared to other crowdfunding models.
- High liquidity in a short period.
- Anyone can easily participate.
- Investors have full control over their funds.
- No government intervention.
If you want to know why business people prefer the cryptocurrency exchange business, then read further. You will definitely get all your answers.
What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a website or a platform where you can buy, sell, and trade the cryptocurrencies and other digital assets. There will be no government intervention or banks. There will be a crypto wallet to store your Bitcoins and other altcoins. It also monitors your balance and crypto transactions. This crypto wallet will have a private key as a passcode. Only after entering the private key one can access the crypto wallet for the transaction.
In other words, Cryptocurrency exchange is the place where all the cryptocurrencies will get listed for trading. Cryptocurrency Exchanges are believed to be one authentic way of trading and listing Bitcoins and altcoins. You might think, what could be the profit for the crypto exchange owners?.
Yes, the exchange founders will yield vast amounts of profit in many possible ways. For say, if you are the exchange owner let us see the profitable ways of owning an exchange:
Profitable Earnings through starting a Cryptocurrency Exchange Business
- Coin issuers will seek help to list their coins in the exchange. They will reach you (exchange owner) to make the coin get listed in the exchange.
- You can collect a fee amount from the coin issuers as a participation fee for participating in an IEO in your exchange.
- Once the coin sale reaches the margin sales amount, the coin is eligible for listing in your crypto exchange.
- You can collect some amount as Listing Fee, to make the altcoin list in your exchange.
- You can earn a brokerage or commission amount for every transaction done by the user through your crypto exchange.
So by using these methods one can earn more money by launching a cryptocurrency exchange business. So many startups, entrepreneurs, and business people started to build their own exchange platform using the Bitcoin exchange software.
In other considerable ways, bitcoin exchange software can be customized based on your exchange policies by imparting some features. Also, there are some primary instructions to look, before stepping in for launching.
Look Before You Step
There are some primary instructions to be cross-checked before deploying your cryptocurrency exchange platform.
- Know the complete requirement of your crypto exchange before choosing the cryptocurrency solution provider.
- Check for the jurisdiction and the political status of the country where your crypto exchange is about to be deployed.
- Check for the guidelines and the norms provided by the country where your crypto exchange is about to set up.
- Check for the 24x7 customer support provided by the bitcoin exchange software provider.
Features Required to Start a Crypto Exchange
There are some desirable features required to be the best crypto-exchange. Why is it required? Coin issuers and users will be very skeptical about the exchange before they invest. The skeptic is all about the common fear of security. If security features are top-notch, the number of users will rise automatically in your crypto exchange platform. Here are the common security features that a good crypto exchange should offer:
- Two-factor authentication
- HTTPs authentication
- Data encryption
- Biometric authentication
- Jail login
- End to end encrypted transactions
- SQL injection prevention
- Anti-Denial of Service(DoS)
- Anti-Distributed Denial of Service(DDoS)
You can also integrate some outstanding features in your crypto exchange. It might grab more crypto user base for your exchange. Here, I mentioned some of the specialized features that you can enable in your crypto trading platform.
- Trading bot
- Blockchain wallet integration
- IEO module integration
- Liquidity API
- Multi-currency pairing
- Margin trading
- Rest API
- Order book
- Payment gateway integration
- Atomic swap
- Referral programs
These are the reasons why business people prefer the cryptocurrency exchange business rather than mining or ICO. Mining is cost-effective and many ICO can be fake or hacked sometimes. Also, it can not be the best option for long term investment. But starting a crypto exchange business is the finest way to reap more profits in a short time. So only many business people showed their interest in start a crypto exchange business.