{"id":1057,"date":"2022-12-23T08:17:43","date_gmt":"2022-12-23T08:17:43","guid":{"rendered":"http:\/\/oqtacore-blog-473533498.us-east-1.elb.amazonaws.com\/?p=1057"},"modified":"2022-12-23T08:21:46","modified_gmt":"2022-12-23T08:21:46","slug":"9-steps-to-create-your-own-crypto-exchange","status":"publish","type":"post","link":"https:\/\/oqtacore.com\/blog\/9-steps-to-create-your-own-crypto-exchange\/","title":{"rendered":"9 steps to create your own crypto exchange"},"content":{"rendered":"

It seems that the crypto exchange market is already full, and the biggest players have been identified. <\/span>Forbes<\/span><\/a> estimates that there are currently 500+ cryptocurrency exchanges worldwide, with Binance, OKX, UPBit and Coinbase being the most popular by <\/span>sales volume<\/span><\/a>.\u00a0<\/span><\/p>\n

However, it’s not all good in the crypto market in 2022. <\/span>FTX<\/span><\/a> filed for bankruptcy and <\/span>Genesis<\/span><\/a> is already <\/span>\u00a0<\/span>warning of bankruptcy without funding. Major players are slowly falling off, thereby creating more room in the market. This could play to your advantage if you create your own crypto exchange in 2022-2023.\u00a0<\/span><\/p>\n

OQTACORE has put together this guide to get you started. We will tell you what cryptocurrency exchanges are, how to develop your own and how to launch it successfully.\u00a0<\/span><\/p>\n

What is a cryptocurrency exchange?<\/b><\/h1>\n

A cryptocurrency exchange is an online platform where you can buy and sell cryptocurrency. You can exchange from one cryptocurrency to another, like Ether to Dogecoin, or from cryptocurrency to fiat money, like the US dollar. Crypto exchanges store users’ assets and allow them to withdraw them to bank accounts and crypto\/electronic wallets. Exchanges also show the exchange rates of available currencies and analyze market statistics, cryptocurrency sales volume and so on.<\/span><\/p>\n

Because of the features described above, crypto exchanges must be transparent and very secure, fast and user-friendly, with understandable analytical tools.\u00a0<\/span><\/p>\n

So, we’ve provided you with the definition and explained the general principles of work. Now we’ll tell you how to create your own exchange step by step.<\/span><\/p>\n

<\/span>Step 1: Choose the crypto exchange type\u00a0<\/span><\/span><\/h2>\n

From here you will better understand how and with what tools to develop an exchange. There are 3 types of exchanges in total.<\/span><\/p>\n

Centralized exchange (CEX)<\/span><\/h3>\n

CEX act as direct intermediaries between buyers and sellers of digital assets (hence “centralized”). Such exchanges are essentially similar to banks: users trust them with their assets and trust that transactions will be conducted safely.<\/span><\/p>\n

Convenience is the <\/span>main advantage<\/span><\/a> of<\/span> CEX, which makes it more popular among users. Top centralized exchanges usually have a user-friendly interface that allows fast trading and investing.<\/span><\/p>\n

But this type of exchange has two problems. The first is security. Since users store cryptocurrency in the exchanges’ built-in wallets, hackers can get into them. Hackers took home <\/span>$14 billion<\/span><\/a> in cryptocurrency in 2021, and most of the attacks were in CEX. Unfortunately, there is no way to get rid of hacker attacks completely. Exchanges are constantly upgrading their security, but more often than not they just have to compensate for losses (most exchanges have folded up because they failed to do so).<\/span><\/p>\n

The second problem of centralized exchanges is the inconsistency in the ethics of cryptocurrency decentralization. Most exchanges require the user to pass the Know Your Customer procedure, asking users for personal data when creating accounts. This contradicts the principles of anonymity in the cryptocurrency world.<\/span><\/p>\n

Examples:<\/b> Binance, Coinbase, Kraken, and others.<\/span><\/p>\n

Decentralized exchange (DEX)<\/span><\/h3>\n

Unlike centralized ones, these exchanges provide direct trading between users’ crypto wallets, without being an intermediary. Technically, the intermediary is a program on a blockchain \u2013 a smart contract \u2013 which works automatically (check <\/span>our previous article<\/span><\/a> to find out where else smart contracts are used).<\/span><\/p>\n

This type of exchange is popular for the fact that it doesn’t collect personal data and doesn’t require the user to pass the Know Your Customer process. Besides, since there are no intermediaries, the user almost does not risk anything, all transactions are transparent.\u00a0<\/span><\/p>\n

However, these exchanges also have shortcomings. In contrast to centralized exchanges, DEX are designed more for experienced investors than for newbies. The point is the complex interfaces and currency conversion methods. Decentralized exchanges don\u2019t allow you to deposit fiat currency and exchange it for cryptocurrency. Users need to either already own it or buy it on DEX.<\/span><\/p>\n

Another inconvenience is that users are involved in direct peer-to-peer transactions, meaning they have to find buyers themselves, which takes time.<\/span><\/p>\n

Examples: <\/b>Uniswap, PancakeSwap, Sushiswap and others<\/span><\/p>\n

Hybrid exchange<\/span><\/h3>\n

The least common type so far. They combine DEX and CEX principles. Such exchanges store transactions and encrypt them on a blockchain but process them on a third-party centralized node.<\/span><\/p>\n

Examples:<\/b> Qurrex, Eidoo, Legolas.<\/span><\/p>\n

<\/span>Step 2.\u00a0 Get an understanding of your jurisdiction<\/span><\/span><\/h2>\n

Below is a small checklist of which legal aspects you should focus on in your country<\/span>
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