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Building-a-Digital-Asset-Exchange-Platform

BUILDING A DIGITAL ASSET EXCHANGE PLATFORM – BEST PRACTICES 

As Bitcoin celebrates its 10th anniversary this year, the number of cryptocurrencies around the world accounts to over 2300. The number is growing at a steady pace and the decentralized cryptocurrency is changing the finance world forever. Nevertheless, this also means that the demand for tools and services by digital trading platforms is also on high demand these days.  

DIGITAL ASSET EXCHANGE PLATFORM 

According to Investopedia, a trading platform or a digital asset exchange platform “is used for trading and managing market positions through a financial intermediary such as an online broker”. The digital asset exchange platforms can be accessed from almost any location and it offers a wide array of benefits such as being accessible from any location.  

Before moving further, let’s take a look at the few benefits that digital asset exchanges offer. 

  • Low Entry Costs + Minimal Fees: 

All digital asset exchange platforms are automated. This helps them feature minimal per-trade commissions and monthly-fees. There are even some online brokers who allow traders to buy and sell digital assets free or for almost nothing.  

  • Minimum Initial Investment: 

Novices have to set up an account with a specific sum of money in it to start trading. Usually, the minimum deposit depends on the interactive broker of your choice and can range from $1 to $10,000 or even more. Nevertheless, some digital asset exchange platforms ask for no minimum deposit and you get to open a brokerage account for almost no money.  

  • Stimulated Trading: 

We understand, not every user wishes to risk their asset right in the beginning. There, some digital asset exchange platforms offer virtual trading option where beginners are given fake currencies to practice their skills. 

  • Automated Trading Systems: 

For professional traders, automated trading technologies offer a solution to execute the strategies they have curated without having to constantly keep an eye on the charts and quotes on the screen. Users can simply place their buy or sell order and let the automated technology implement it under previously specified conditions.  

DEVELOPING A DIGITAL ASSET EXCHANGE PLATFORM: FIRST STEPS 

We will tell you without doubt that preparation and planning are the 2 most important digital asset exchange platform development stages before launching a project. Therefore, you must go in all details from step one if you wish to create an immaculate platform. 

Below listed are the few features your digital asset exchange platform should have: 

  • Flexibility in customization, scaling, and development 
  • Safety 
  • Controllability 
  • Quick response to all actions 

TYPES OF DIGITAL ASSET EXCHANGE PLATFORMS 

Nowadays, though plenty of miscellaneous cryptocurrency exchange types can be mentioned, at heart, they mainly fall into two categories.  

  • For Traditional Assets 

Traditional trading platforms work by helping clients invest money into assets such as stocks, ETFs, mutual funds, currencies, futures, options, bonds, and precious metals. Additionally, there are even multi-asset platforms which are dedicated solely to particular financial sectors like future markets, bond markets, etc.  

  • For Cryptocurrencies 

Cryptocurrency trading platforms enable buying and selling of digital assets such as Bitcoin, Ethereum, Litecoin, NEM, and you name it. Digital asset exchange platforms like these help users with analytical tools to make well-informed decisions alongside making cryptocurrency exchange transactions possible.  

MODELS OF DIGITAL ASSET EXCHANGE PLATFORM 

  • Centralized Crypto Exchange (CEX) 

Presently, centralized transactions rule the majority of the trade volume in the global industry. In the centralized model, there is often a middleman or an interactive broker who carry out the transactions on your behalf for a specific fee. It should be kept in mind that all trading platforms that operated in the financial sectors like stocks, futures, and other traditional assets use a centralized asset exchange model.  

  • Decentralized Crypto Exchange (DEX) 

DEX holds just a mere 19% of the global exchange ecosystem and 1% of trade volume through the benefits they offer are many. DEX doesn’t require intermediaries and allows peer-to-peer transactions. This, in turn, results in zero trading fees. Furthermore, DEX platforms don’t require you to provide any documents or personal information.  

All transactions processed through a DEX model remain transparent, anonymous, and secure. However, when it comes to speed and liquidity they lag behind centralized crypto exchanges.  

GETTING STARTED WITH BUILDING A DIGITAL ASSET EXCHANGE PLATFORM 

If you wish to successfully launch your digital asset exchange platform, the following tools are a musthave.  

  • Charts reflecting the digital currencies volatility indexes – This help users compare different trading pairs before making transactions. 
  • Orders – A table featuring transactions made by market players.  
  • A detailed history of the most profitable transactions for qualitative analysis. 

Before you begin with building your digital asset exchange platform, you need to first determine the time and budget you can set apart for your project. Typically, the time required to develop the platform mainly depends on the professionalism of your development team. You will require an experienced team of developers and lot of resources.  

Furthermore, your digital asset exchange platform should have a user-friendly interface. This means, your platform should be easy to navigate through and it should attract more customers. Also, as we are inching closer towards a mobilefriendly era, your exchange platform should be compatible with smartphones, tablets, and all other devices. Personalised mobile applications will help make your platform even more attractive.  

Make sure your platform’s interface showcases the following features: 

  • Face registration 
  • Access to trading accounts 
  • Option to deposit and withdraw crypto as well as fiat currencies 
  • Ability to review the order book as well as past transactions 
  • Balance and statistics monitoring 
  • Analytical infographics and charts 
  • 24/7 customer support 

Another thing you should keep in mind building your digital asset exchange platform is to create wallets to help your users store the cryptocurrencies they own. Build both hot and cold wallets to ensure maximum security and divide them into groups to ensure security with comfortable usage. 

GETTING THE SOFTWARE FOR YOUR EXCHANGE 

Normally, you can get the software for your digital asset exchange through 3 options:  

  • Your own software  
  • Using free or opensource scripts  
  • Special, customised software  

When you plan to go with the first option, you will need to gather together a group of specialists who can help you create, launch, and support your software requirements. Building your own software consumes both time and money.  

On the other hand, you can extract files with codes for open source platforms for your digital asset exchange platform by visiting different websites and forums for IT specialists. Though this requires half the amount of work, you will still have to hire a specialist who can understand and implement the code successfully. Also, codes taken from such platforms may or may not work properly.  

By opting for proprietary software, you can modify the program based on your requirements and also make sure that everything is checked and tested in advance. For this reason, getting a specially customised software is thought to be the best among the three options given above.  

SECURITY: THINGS YOU SHOULD CONSIDER 

One thing you should keep in mind when building your digital asset exchange program is that all exchange platforms are vulnerable to cyberattacks and cryptocurrency can be easily stolen than fiat currencies.  

Often, human errors are what leads to any system getting hacked. There is nothing like a completely protected system in this world, and there are always some risks associated. So, in order to protect your system, the first step you take should be configuring your security architecture making it difficult for the hackers to get to your assets.  

Furthermore, the security of a digital asset exchange platform mainly depends on the quality of the code you use. So, when the code is written by professionals who are knowledgeable about cryptocurrency, you can be sure that your platform is less likely to get hacked.  

HOW DIGIXHUB CAN HELP YOU 

At DigiXHub, we use the best solutions to build a great digital asset exchange platform that meets the standards of the modern industry. We help you convert your ideas into reality and tailor the platform based on your requirements. Want to know more about how we can help you build your digital asset exchange platform, drop us a line at the earliest.  

 

 

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