What is Cryptocurrency?
“Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
This is the official definition of cryptocurrency but in very simple terms you can say a cryptocurrency is a form of virtual currency.
But this virtual currency does not have a physical currency as a counterpart to it. It is legal in a few countries like U.S.A, European Union, etc but it is illegal in some other countries like Bangladesh, Nepal, etc.
Now, we know that cryptocurrency is a virtual money and it has no value to any of the physical currencies, so what do traders do to exchange cryptocurrency into real physical cash?
Well, what they do is sell it online in exchange for other currencies, that is, on an exchanging or selling it directly for legal tender (physical currency) on exchange systems like GDAX, Bitfinex, etc.
Here they trade with cryptocurrency and fiat currency (legal tender currency) and you can exchange your cryptocurrency for real cash.
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How to start you bitcoin or cryptocurrency exchange business?
- So, now I will help you so that you can start a bitcoin or cryptocurrency exchange Business. But this is no easy task and you will have to spend a lot of work and time and a little bit of an investment to set up your bitcoin or cryptocurrency exchange. You will need a few steps and We all go through each one and then get the details for that one and then move on to the next step. Sounds Good? Let’s get started.
You will have to meet all legal requirements!
- The first thing is to get all your legal licenses and all the documents needed to start your exchange business. This may vary from country to country but you can get them done. It would be for the best if you consult a legal counsel or counselor. These guys are experts who give advice on issues related to legal matters. Some of the countries don’t have a proper judicial system in place for cryptocurrency as technology has advanced at a much quicker pace. So in such countries, cryptocurrency exchanges work without proper regulations set on them. So the best idea would be to first meet a lawyer or legal counsel and discuss the documents and licenses that you would need to set up your bitcoin exchange business.
- The approximate cost for setting up a bitcoin or cryptocurrency exchange business would be around $135,000 or 87,72,975 inr. This is an included cost of all the technology required and also all the government registration and also some initial advertising and all the needed cost to set it up. Some businesses have failed because of the fact that they don’t plan ahead. It is important to understand that you will have to wait and prepare some extra cash to help the business till it gets into profit.
- You must find a good technology solution provider so that all your technology issues and problems can be solved. A lot of providers will give you development components and resources for exchanges and the best part is it is a one-time payment license. This allows clients to host the exchange themselves and also receive the source code. The bitexchange.systems is one such provider that could be trusted all around the world by top stock exchange companies.
Visit there cryptocurrency exchange software/script
- You must connect your exchanges with other exchanges for added liquidity. Customers would never recommend your exchange if you don’t have activity in your exchange accounts. Well, you could create dummy accounts and waste a lot of time and money or you could just connect to a network of existing exchanges. If you have a large network of exchanges then you will not have to worry about the liquidity of a new exchange.
- You must join hands with a payment processor. But do so with the one that will allow you to have low transaction rates. This is because low transaction charges will allow you to have a better chance to compete with other exchanges. Also, some processors will have some hidden charges in the contract. So, make sure to read and understand the contract thoroughly before signing it.
- Cybercrime is a major issue in this line of business as one hack make a loss of millions to your business. You must be sure to have high-grade security measures or practices implemented. Check for technologies that give you secure databases, offline storage wallets, two-factor authentications and encrypted databases, etc. This is the minimum requirement to protect your data. The bitexchange.systems mentioned earlier has all this and is also considered one of the most secured in the world. So, that would be a good pick.
- Once you are done with all the above steps, all you have to do is launch your exchange and run beta tests first. This will allow you to see if there are any issues rising and correct it accordingly. So that when you launch it officially your exchange won’t have any problems.
- The success of a business is its marketing. Once you have started you exchange you must get your business name on cryptocurrency news outlets. If you are able to plan your market activities and the cost activities so that you won’t have to run around looking for additional expenses. You can also use social media to market your business, this is free and will let you secure a few traders to stabilize your exchange.
- The other thing that makes the business a success would be its customer service. So you must have an experienced support team to ensure that all your customers are satisfied with their issues and problems. Your team should be able to handle all the complaints and issues with utmost ease. A 24/7 support team will make you exchange support team better.
- These are the steps you will need to start your bitcoin or cryptocurrency exchange. Also, note that it would be for the best to have a lawyer well versed in the subject to help you out with any legal issues. I have these easy to understand it and reading it would probably take you 10-15 minutes but the process to start you bitcoin or cryptocurrency exchange business will require a lot of time, effort, and money in it. So, if you work hard and don’t give up you can be sure to achieve your goal without fail.