As we all know, cryptocurrencies are having a rapid rate of growth and are attracting a huge mass all over the world. Speaking of cryptocurrency exchanges, it has become a trend now. To be rightly said this growth is just the tip of the iceberg and there is a lot more it is going to revolutionize. A few of the crypto exchange platforms gained over a million traders, which clearly signals the digital asset’s popularity.
If you are looking for developing a fully functional and versatile cryptocurrency exchange platform, then Uberdoo can help you with it. Our Cryptocurrency Exchange Development Company aims at offering best-in-class services to make your platform the industry-best and qualitative. Our skilled developers develop and deploy crypto exchange platforms with all advanced trading features and functionalities.
Now, let us dive into the types of cryptocurrency exchanges and how the platform works.
Types of Cryptocurrency Exchanges
Three types of crypto exchanges are spinning around the crypto business space. Let’s get a sharp-witted view of each of them in detail.
1. Centralized Cryptocurrency Exchange
Centralized cryptocurrency exchanges are highly reliable and act as an intermediary between the buyer and seller. Most of the crypto transactions are liable to centralized exchanges. The traders can buy their intended crypto assets with real money. They incorporate advanced security mechanisms in order to ensure your transactions and digital assets are safe and secure. The centralized exchanges are commonly used and support a wide variety of cryptocurrencies for exchange.
Examples of centralized crypto exchanges:
- GDAX
- Kraken
- Gemini
- Coinbase
Advantages of centralized crypto exchanges:
- Reliable
- Stabilized fee
- Good liquidity
- Trader-friendly
- Faster transactions
- Rapid technical development
Disadvantages of centralized crypto exchanges:
- Hacking risks
- High transaction costs
2. Decentralized Cryptocurrency Exchange
Decentralized cryptocurrency exchanges operate independently with no intermediaries. They allow the traders to execute peer-to-peer transactions. They are open-source and come in line with blockchain technology. Some of the issues in CEX are taken care of in the decentralized crypto exchange. There is no central authority and also it is a secure platform since the trading happens peer-to-peer and the trade information is shared among a wide range of users/traders.
Examples of decentralized crypto exchanges:
- io
- Blocknet
- Barterdex
- AirSwap
Advantages of decentralized crypto exchanges:
- Sovereignty
- No wash trading
- Enhanced security
- Low transaction fee
- Risk mitigation protocols
- Privacy through anonymity
Disadvantages of decentralized crypto exchanges:
- Transaction speed
- Liquidity issues
3. Hybrid Cryptocurrency Exchange
Hybrid cryptocurrency exchanges are the next-gen crypto trading platform. They bridge the cons of both CEX and DEX and combine the advantages of both platforms in one place. They combine the convenience of centralized exchanges and the advanced security mechanisms of decentralized exchanges. This exchange platform has made the traders and the crypto space enthusiasts happier since it outweighs almost all the demerits of the centralized and decentralized exchanges.
Examples of hybrid crypto exchanges:
- Poloniex
- BitFloor
- Mt. Gox
Advantages of hybrid crypto exchanges:
- Compliancy
- Tamper-proof
- Escrow control
- Real-time service access
- Complete privacy and anonymity
Disadvantages of hybrid crypto exchanges:
- Less well-tested
- Takes a lot of time to streamline
Cryptocurrency Exchange Platform Working
Now that you know the different types of cryptocurrency exchanges, let’s see how you should handle the crypto exchange working.
Step 1: Sign up with the platform with the necessary validations and document submissions.
Step 2: Check the exchange rate, reputation, and security factors of the exchange platform you are about to choose.
Step 3: Now it is time to get into the registration process where you will do the KYC/AML verifications and validations
Step 4: To initiate trading, transfer some amount of money to the account from your bank account or with card payment.
Step 5: Purchase the cryptocurrency of your choice.
Step 6: Move your purchased crypto assets to the wallet to avoid hacking and improve security.
Revenue Streams
Here are some of the most popular profit-gaining revenue streams that the exchanges leverage to earn huge returns.
Trading fee
It is necessary to have a trading fee but at the same time, a low trading fee will bring in high trading volume. So, charge low commissions for extended profit ventures.
Listing fee
Token listing and coin listing services help in the generation of high values. It is made possible by Initial Exchange Offerings (IEOs), Security Token Offerings (STOs), and Initial Coin Offerings (ICOs), which aid you in raising funds and thereby increase volume.
Market Creation
The creation of market/liquidity serves as a potential financial instrument. It lets the users trade at higher prices than a regular stock exchange. When a trade gets swapped, it offsets the previous trade exchange-made profits. This works well for automated and distant markets.
Fund Collection
By equipping the platform with a fund-collecting element as discussed before, with IEO, STO, or ICO. By charging a percentage of the total proceeds as a commission, it pertains to giving a large payout as a whole of all obtained commissions.
Takeaway
The global financial system is now having a hot topic which is the cryptocurrency exchange. With the available crypto exchange types and the advanced features it incorporates for trading purposes, it is a good choice to go for cryptocurrency exchange development to venture into the booming crypto business. If you are looking to get started with building a cryptocurrency trading platform for your business, then choosing the best exchange that best fits your business goals is important.
At Uberdoo, we make it simple for you. We are an experienced Cryptocurrency Exchange Development Company offering industry-best services that make you stand unique among your crypto business competitors. Our expert team has expertise not just in the development of the cryptocurrency exchange platform but also in ideating the right set of tech stack and approach that aligns with both your business requirements and the current crypto market trends. Whether you want multiple currency support, lowest fee, or easy-to-use UI, we can help you develop the one that’s in your mind. Open up the same to our expert team and kick-start your project today!
