Over the past decade, blockchain technology has captured global attention. The disruptive technology allows people to transact millions of dollars worth of cryptocurrencies online within minutes and in a few clicks. Blockchain revolutionized the financial systems — who could imagine that people can borrow US dollars and use cryptocurrency as collateral.
Now, considering that trading in the crypto market can be volatile and risky, to get a chunk of this lucrative market easily, most companies create a crypto exchange platform instead. The exchange platform allows users to buy, sell, send, receive, or convert tokens from one form to another. Users can also convert their fiats to cryptocurrency. and throughout all these processes the exchange platform generates significant profits.
Whether you want to learn how to build a cryptocurrency exchange like Binance or create crypto exchange platform on a smaller scale, you are at the right place. Appvales is a software development company that has vast experience designing, building, testing, and deploying web and mobile applications for various industries, the cryptocurrency landscape included. You can let us handle end-to-end product development or introduce your product team to our dedicated engineers.
Regardless of the model you choose, you can rest assured our industry experts will help you build cryptocurrency exchange website that not only meets but exceed your expectations. This article further expands on how to create a cryptocurrency exchange website without breaking the bank or too much effort.
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How does Binance work?
Binance is an online exchange that allows its users to trade cryptocurrencies. The crypto giant also provides custodial wallets that will enable its traders to store their digital funds. Users also get lesser transaction fees by transaction with the exchange’s own token Binance Coin (BNB), which was initially built on ERC20 protocol but is now integrated into its own Blockchain- Binance Chain.
Binance is among the top-ranked websites in the global cryptocurrency exchange. The platform was founded in Hong Kong by Changpeng Zhao in 2017 and would later have to move its headquarters from China to Malta because of regulatory issues. Nevertheless, the Malta-based exchange is one of the best examples we can use in showing you how to make your own cryptocurrency exchange.
Binance has over 1,338 markets and a multi-tier architecture that enables high security and can process about 1.4 million orders in a second. In addition, the platform has multiple features that give its users a wholesome trading experience.
Let’s take a brief look at some of the features of the Binance exchange that you can replicate as you build your own crypto exchange.
Basic Exchange Features
Users need to register with Binance exchange to create an account. Binance adheres to KYC requirements for regulatory purposes. Upon completion of registration, users can add funds to their Binance custodial wallets or buy cryptocurrency from the peer-to-peer exchange features. Users can also utilize their credit and debit cards to buy cryptocurrency or use third-party services to buy and sell.
Some other trading features that users can explore include:
- Spot Trading: This feature supports limit orders where traders buy at a specific or better price, market orders that allow buyers to buy at market price, and stop limits orders that enable users to buy and sell at specified price levels.
- Crypto Derivatives: Users can access over five order types, especially for future trades. They include limit, market, stop limit, stop market, trailing stop, post only, and limit TP/SL orders.
- Binance Earn: This feature explores, staking, and yields earnings for users. Users can deposit stable coins or any stipulated coin, lock it in for a specified tenure and earn interest rates for these coins.
- Binance smart pool: The Binance interface caters to all, including miners, who can earn by mining multiple cryptocurrencies and increasing their yield.
- Binance Visa Card: Users can convert their cryptocurrency to fiat and spend it with ease.
- Finance Launchpad: New crypto project looking to raise funds and get their tokens out to the general public. The launchpad is an incubator for businesses looking to raise funds.
- Binance Smart Chain (BSC): Binance launched its own Network with the BSC that allows smart contracts to be built on its blockchain, allowing developers to build decentralized applications (DApps) and solutions and solve some of the cross-chain issues plaguing the DeFi world.
- The Binance API: You can learn how to develop cryptocurrency exchange simply by using Python and other programming languages to connect Binance API. The API allows you to automate your trading. It is a single-purpose API employing the HTTP Basic API key authentication model in addition to RESTful architecture. Users can utilise the API to access the platform via third-party apps.
- Binance Dex Clone Script: This feature allows people to build a clone-like exchange while retaining certain features of the original exchange. With the clone script, users can trade with one another and also have control over their funds. However, trading is limited to certain coins, including Bitcoin, Ethereum, BNB, Chainlink, Cardano, Polkadot, Tron, EOS, Litecoin, Bitcoin Cash, Ripple, Ethereum Classic, and Filecoin.
- Security: To protect its users from hacks and phishing attacks, Binance employs address whitelisting. This helps users keep their funds safe simply by turning this feature on. Withdrawals will only be allowed to specific wallets, locking hackers out. In addition, Binance utilizes SAFU an ‘insurance’ that protects users in the event that the exchange gets attacked.
Cryptocurrency Exchange Architecture
Bitbox Cryptocurrency Exchange Architecture (source)
One of the biggest challenges facing cryptocurrency exchanges is designing infrastructure with risk-proof layers. In learning how to create a trading platform for cryptocurrency, carrying out in-depth research is imperative.
First, you need to understand the desire of the client. Also, you need to know if the project will be built replicating patterns from specific industries. The exchange architecture, which is the platform’s structure, helps visually and systematically define how each component on the exchange relates and interacts; all elements on the platform from the login page, the user interface, the trading engine, API, security functions, and databases.
Also essential to the Architecture is the technology stack – a set of development tools for creating the frontend and backend of the exchange. The technology stack contains programming languages, frameworks, libraries, APIs, compilers, and database management systems.
Equally, some exchange architecture also integrates wallet security which involves having a cold wallet or multi-Signature into the wallet. An architecture that infuses both cold and hot wallets aids in protecting the users’ funds. The exchange admin can lock funds and prevent hackers from accessing them.
Binance employs an architecture such as this. For example, an emergency insurance fund called the SAFU, the Secure Asset Fund for Users. Equally, having the multi-sig feature infused into the architecture of an exchange adds more security. For instance, instead of having just a single key to log into your wallet, Multi-sig adds a layer of protection requiring signatures from multiple keys.
Additionally, an exchange requires AML (Anti Money Laundry) policies. This policy depends on the regulation of the country where the exchange is established. This layer of security can restrict certain transactions on the wallet, such as multiple withdrawals in a specific time frame or restricting the amount that can be withdrawn per transaction. In other words, the security architecture of the exchange is built to ensure that there are different layers of protection from siphoning off funds, internal and external cyber-attacks.
Key Crypto Exchange Platform Features
There are different aspects a cryptocurrency platform may focus on. However, with the increase in the number of exchange platforms, we have witnessed a decline in the quality of many exchanges. As such, it is essential that you build an exchange that offers better solutions.
So, as we look at how to create a crypto exchange site, we will see that creating a high-quality trading platform will require utilizing certain features, including:
Sign in/Sign up
One of the first things we look at as we build cryptocurrency exchange website is the login page. This is because, aside from standing as a point to allow people to register, it also protects the system. The sign-up page prevents unauthorized logins, manipulation, and hacking attacks. Hence, this feature must be created with utmost care and developed to its highest functionality. The page should consist of a login and password tab and added security functionality of 2FA for the users.
Know-Your-Customer (KYC) policies are essential to crypto exchanges as regulatory measures demand them. Before a user can log in, the platform must verify they are the account’s rightful owners. As such, the verification feature improves the platform’s transparency and credibility.
The deposit and withdrawal feature allows traders to send and receive coins with ease. However, different exchanges have limits and fees attached to this activity, which depend on the company’s goal.
This feature varies as set by individual platforms. For most platforms, users can set trade orders amongst themselves while not transacting directly with each other. For some other platforms, users have to create a transaction order with the company itself. But whichever method an exchange uses, what matters is that users can place transaction orders without system errors. A simple glitch in the system can cost a user thousands of dollars, affecting the reputation of the exchange. Therefore, it is important that while you would want to start your own cryptocurrency exchange, you allow a user to undertake several transactions simultaneously without affecting the entire system.
Users need to exchange data amongst themselves, and this feature helps them achieve this. Also, the internal API allows the users to create automated trades using the exchange script designed for the platform.
The importance of a graph and status system for an exchange cannot be over-emphasized. It aids the users in getting better visibility before trading.
This feature enables the company to monitor the activities of its users, such as trades, verification processes, and the likes.
Things to Pay Attention to When Creating Crypto Exchange Platform
There are many factors you need to consider when creating a cryptocurrency exchange. Asides from making a brilliant technology, think about funding, staffing, getting directors and advisors on board, marketing, etc. Without proper guidance, it can be such a tedious and challenging process.
Here are some of the factors to consider before thinking about how to build your own crypto exchange.
What is the ideal location for your crypto exchange? Imagine setting up a crypto exchange in India back in 2018 and having your exchange run into issues due to the unfavorable regulatory situations in the country. You need to find a location that offers a favorable climate for your business. Furthermore, Binance had to change its headquarters because of hostilities toward cryptocurrency from China to Malta.
If you want to create an exchange that can rival Binance, you need financial injections. How do you plan to carry out the fundraising? Venture capitalists, crowdfunding, ICOs, and IEOs are great funding options.
For most individuals, building an exchange from scratch can be challenging. Utilizing Clone Scripts is a less tedious process. Clone scripts are clones of exchanges such as Binance. They are built like a decentralized peer-to-peer exchange that you can buy easily. Other methods include integrating the exchange API, peer-to-peer exchange, or full exchange with trading features.
In addition, consider providing single or multiple fiat currencies if you build own crypto exchange. There are many regulatory red tapes to consider if you decide to go this route, and this may be one reason why a clone script may be an ideal choice.
When you determine the kind of exchange you want to build, find out the level of security infrastructure you need. You may want to consider getting a reputable software development team to design the security architecture.
Although more governments across the globe have begun to accept cryptocurrencies, there are still stringent and uncertain regulations surrounding virtual money. It is therefore vital to choose a competent legal team conversant with the global regulatory framework. Furthermore, cryptocurrency exchanges do not function the same way in different countries, which is why you need legal advisors.
Coingecko ensures that users can see the liquidity and fluidity of their preferred exchange platforms. It is important to ensure that you have strategies and processes that will help you manage your liquidity flow better.
Having the right marketing strategy and budget can mean a whole lot for a cryptocurrency project. You want your exchange marketed on the right platform, not on Facebook and Google platforms that still regulate crypto-related content. So, have a proper marketing strategy to advertise your products to your target audience.
When thinking about how to build your own bitcoin exchange, consider a referral feature as part of your marketing strategy. With this feature, existing users can refer new users to the platform for a bonus.
How to Build Your Own Cryptocurrency Exchange
There are various aspects that you need to incorporate into your cryptocurrency exchange platform to ensure success. They include:
The UI/UX design of any platform is the first thing a user sees before using the application. The design must be simple, aesthetically pleasing, and user-friendly. To create a harmonic design that combines elegant design and usability, including a Wireframe. This serves as the base of the design where its key features are integrated into the prototype.
Backend development + API
While the backend development is vital for a project, the user does not directly relate. It is responsible for handling server-side functions of the admin panel, user authorization, and authentication. The back end handles essential functions and is the internal logic of the app.
Different testings will be carried out on the application to ensure that most bugs are eliminated within the frontend and backend before it is launched. More tests are still carried out to ensure it is secured from cyber and system attacks before launching the application.
The first step of protecting users is complying with regulatory demands such as know your customer policies (KYC). Also, sensitive information such as user data and funds need to be protected to prevent hacks and data leaks. Strategies such as building a secure architecture with encrypted keys stored in dedicated secured servers, utilizing user authentication, and specifying their IP address can protect the system. In addition, the SHA-256 algorithm can be implemented in exchanging encrypted data, thereby providing a secured infrastructure.
How Much Does it Cost to Build Cryptocurrency Exchange Like Binance?
It has taken Binance a little over four years and millions of dollars to build the full-featured binance analog application. The basic version of the exchange can be built within 4-6 years and cost around $70 000 – $120 000, while the full-feature analog system can take years to execute and costs hundreds of thousands of dollars. If you are seeking to build cryptocurrency exchange website just like Binance, the cost can be broken down as:
- Front-end development: Cost: Approx. $50000
- Back-end development: Cost: Approx. $40,000-$50,000
- Blockchain Integration: Cost: Approx. $5000-$10,000
- Testing and Security: Cost Approx. $20,000-$25,000
How We Built PenguinFinance – Decentralized Exchange Platform
The Penguin project was completed within four months, and Appvales was tasked with its web development. The aim was to create a simple cryptocurrency solution that allows users to relate in a friendly community environment. The crypto exchange was created using React Js, Redux, and AWS. The platform combines DeFi and NFTs as it was designed to accommodate compounding solutions, buy and sell solutions, and collectibles.
The Penguin Finance project was delicately handled, and security on the platform is ensured as the platform is Certik audited. Would you like to start your own cryptocurrency exchange or create a crypto solution like Penguin Finance, designed just for you? Contact us now.