Mining, the process of creating a cryptocurrency is undergoing difficulties day by day due to supply issues. Hence, more investors are moving towards trading in crypto exchanges.
A cryptocurrency exchange is a platform that provides facilities to buy, sell and exchange the leading digital currencies. Before selecting an exchange for trading, the user will analyze factors such as the fees charged, reputation, services offered, security measures, verification process, and geographical location.
While revenue generation is necessary, the provision of features according to the needs of customers is more important.
How investors can profiteer from Cryptocurrency exchanges
Trading fees - Whenever traders execute a transaction on the exchange, a certain percentage of fees is charged as commission. It is an important source of revenue for a Cryptocurrency exchange.
Listing fees - This is levied whenever new coins are added to the exchange. A certain percentage of fees would be charged as reimbursement by the investors. More revenue can be earned depending on the frequency of coin listing.
Dark pool trading - It is a form of trading that takes place among a few members and is not transparent. It is not available for the public to invest. Dark pool trading is mostly used by investors and venture capitalists for conducting trades at reasonable prices. Exchange owners will reap profits by charging transaction fees from the traders.
Features to incorporate while building your crypto exchange for getting a high number of users
Order book and matching engine - The order book will store the list of upcoming and executed orders. The matching engine needs to be fast and accurate for fulfilling the orders raised by buyers and sellers. It has to execute transactions quickly.
Ease of usage - A high user base can be generated only if the basic functions can be easily handled. Hence, it requires a simple outlay. The user interface of the crypto exchange should be clean and intuitive.
Security - Adequate security measures need to be incorporated into the platform for gaining the trust of traders. Hence, techniques like ended-to-end encryption, two-factor authentication, IP whitelisting and multi-signature enabled wallets should be used to prevent attacks by hackers.
High liquidity - It is important to include popular coins and handle the huge trading volumes effectively to ensure sufficient liquidity. Then, investors would see potential lying in your exchange and prefer using it over your competitors.
Follow all the above guidelines for creating a robust user base and generating handsome revenue by building crypto exchange.
