Today, there are hundreds of cryptocurrencies and millions of cryptocurrency holders.
The number of users in the cryptocurrency market is projected to reach 107.30 million by 2025, with a user penetration rate of 7.41% in 2024, which is anticipated to rise to 7.35% by 2025. This market’s average revenue per user is expected to be $61.5 in 2024.
In this article, we’re looking into how to start a cryptocurrency exchange, why to start it, and how to turn it into a successful business.
You’ll learn a lot of useful information to build a crypto exchange:
What is cryptocurrency exchange & how does it work?
Why build a crypto exchange?
Most popular types of cryptocurrency exchange platforms
Key options for cryptocurrency exchange development
How to start a cryptocurrency exchange
How much does it cost to build a crypto exchange?
Dive right in if you want to know how to create a cryptocurrency exchange and how to get into the top 4 exchange locations where 63% of daily crypto tradings happen.
What is Cryptocurrency Exchange & How does it work?
A cryptocurrency exchange is a platform that allows cryptocurrency holders to exchange virtual currency for other assets. A crypto exchange acts as an intermediary between people looking to sell or buy cryptocurrencies.
After users set up an account with a cryptocurrency exchange, they can buy and sell different cryptocurrencies, such as Bitcoin (BTC), Dogecoin (DOGE), Ether (ETH), and so on.
Fiat-to-crypto exchanges allow users to trade traditional money for cryptocurrencies and vice versa. Crypto-to-crypto exchanges allow users to trade different cryptocurrencies and exchange one cryptocurrency for another.
Binance, Coinbase, FTX, Kraken, and KuCoin are examples of the most popular crypto exchanges in the world.
All exchanges differ in the number of supported cryptocurrencies and their services. For example, some platforms don’t allow their users to move cryptocurrency from the platform to their crypto wallets, while others allow it.
Below you can see an image showing how a cryptocurrency exchange works.
Cryptocurrency is a multi-billion dollar, rapidly growing industry. Right now might be a great time to tap into the industry and capitalize on it. Since numbers speak louder than words, let’s take a look at some interesting industry statistics.
Crypto holders worldwide
The global cryptocurrency market cap today is $2.28 Trillion, a 0.94% change in the last 24 hours and 105.19% change one year ago. As of today, the market cap of Bitcoin (BTC) is at $1.25 Trillion, representing a Bitcoin dominance of 54.92%.
Binance ranked among the largest cryptocurrency exchangers in the world in 2024, with a daily trading volume of $19.38 billion. The second most popular exchange is Binance, with a $11.05 daily trading volume, and FutureX Pro is the third, with a trading volume of $4.33 billion.
In 2024, Binance reported $2.27 Trillion billion in revenue, representing a 37.3% growth year-to-date.
In 2024, there were over over 560 million around the world who owned or used cryptocurrency.
The global blockchain technology market size was valued USD 27.84 billion in 2024 to USD 825.93 billion by 2032, exhibiting a CAGR of 52.8% during the forecast period.
The cryptocurrency market continues to grow, and there is no indication it will stop anytime soon. That’s why many businesses explore the idea of cryptocurrency exchange development in the hopes of becoming the next Binance or Coinbase.
Types of Cryptocurrency Exchanges
There are four types of cryptocurrency exchanges:
Centralized exchanges (CEX)
Decentralized exchanges (DEX)
Peer-to-peer exchanges
Instant exchanges
Each of the types has its pros and cons. Let’s review each type for a more in-depth understanding of how to start a cryptocurrency.
Centralized Exchanges (CEX)
Centralized exchanges act as intermediaries between sellers and buyers. This is the most popular type of cryptocurrency exchange. Centralized exchanges are also called custodian exchanges since they store the digital assets of customers. Users can purchase or exchange cryptocurrencies for other digital assets or fiat currencies.
As centralized exchanges act like brokers, they charge a trading fee from 0.1% to 8%. In return, they provide customers with a secure environment for storing and selling cryptocurrencies.
Coinbase, Binance, and Kraken are the most popular examples of centralized exchanges.
Advantages:
User-friendliness
Feature-rich
Millions of operations per second
Disadvantages:
Weaker protection against hackers
Users have to keep their assets on the crypto exchange
Fees up to 8% (bad for users, good for exchange’s owners)
Decentralized Exchanges (DEX)
Decentralized exchanges are non-custodial. It means the exchange doesn’t store the digital assets of customers. The funds are sent from one wallet to another directly on the blockchain. There is no third-party organization or server controlling cryptocurrency operations.
Decentralized cryptocurrency exchanges are less popular and don’t have high trading volumes and liquidity.
Examples of DEXs include Pancake Swap, Binance DEX, and Uniswap.
Advantages:
New users registration and verification
Low fees up to 0.25% (good for users, bad for crypto exchange’s owners)
Users don’t have to store assets on exchange accounts, which reduces the probability of losses
Disadvantages:
No third-party moderation
Traders can revoke payments by PayPal or bank cards
Users have to wait until other traders are ready to make operations
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Peer-to-Peer Crypto Exchanges
A Peer-to-Peer (P2P) exchange is similar to a decentralized exchange. The platform provides the hardware and software infrastructure for direct transactions between two users with no intermediary.
Unlike DEXs, P2P crypto exchanges connect buyers and sellers using an escrow service. The service ensures every transaction is completed at an agreed price and payment method.
If you decide to build a crypto exchange of this type, you’ll be able to make money by charging a percentage of each completed transaction. P2P exchanges are popular in Africa and other countries where Bitcoin exchanges are banned.
LocalBitcoins and Paxful are examples of P2P crypto exchanges.
Advantages:
Suitable for beginners as only two options are available – buying and selling
The buyer doesn’t pay fees for the deposit, exchange, and withdrawal
Seller ratings ensure user protection
Disadvantages:
Exchanges may take some time
Sending money to the wrong user may happen
Difficult to dispute charges after transactions
Instant Exchanges
Instant crypto exchange is a swap service that acts as a middleman. It allows users to instantly exchange one cryptocurrency for another. Instant exchanges receive and deposit funds directly to the users’ accounts. Platforms of this type don’t store the cryptocurrency of customers.
Advantages:
Highest transaction speed
Support for large orders
No responsibility for stored assets
Disadvantages:
Difficulties to get refunds
More difficult to use
Examples of instant cryptocurrency exchanges include such services as Letsexchange, Changelly, FixedFloat, and SwapZone.
As you can see, there are different types of cryptocurrency exchanges. You can create any of them or even try and come up with a unique idea to beat the competition.
