Launch Crypto Currency Exchange – Business Model
What’s the best business to get started and to earn millions of revenue. There are many like e-commerce , cloud based software like DropBox and many more. But the hottest topic and best business with least competition is the Crypto Currency Exchange. Exchange like Binnance , Poloniex have shown the potential of Crypto Currency Exchange and there is still a lot of space for growth for different players.
What is Crypto Currency Exchange.
Crypto currency exchange is a platform where user can exchange different crypto currency. It’s just like any other stock exchange like Bombay Stock Exchange or New York Stock Exchange. Difference is instead of companies share , crypto exchange are used to trade the Crytpo Currency.
Basically there are 3 Broad categories of crypto Exchange
- Crytpo Currency Exchange against Crypto Currency – (Don’t Require much of Government Norms)
- Crypto Currency Exchange with Fiat Currency – (Need to Follow every Government Norms and Compliance’s)
- Peer to Peer Crypto Currency Exchange
1st and 2nd exchange are almost same , we will discuss them here. While Peer to Peer Exchange is altogehter a different topic we will discuss that in our later blogs.
Which Currency Exchange to Launch
We are considering first 2 type of exchange for comparison.
- Crytpo Currency Exchange against Crypto Currency. –
- Crypto to Crypto exchange don’t require any type of banks or payment processing unit.All the deals are done in crypto currency.
- Since Crypto Currency don’t come under any law , this type of exchanges are bit of relaxed.
- If you have a good user base or you can acquire them only on the basis of your Crypto Model , crypto to crypto is good for you. In Crypto to Crypto Exchange it’s very difficult to establish trust and it take much more to time get popular among crypto users.
- Crypto Currency Exchange with Fiat Currency .
- – Crypto to Fiat has to obey all the compliance since Bank Payment processing is involved.
- Any fault in accomplices may lead to blocking of bank account.
- But positive thing is that users even the new users trust this type of exchange since it gives them an because of an security from Government which is always welcome by every one.
You can decide the type of you exchange you want depending upon the norms in your country or country of majority of your exchange user base or targeted user base.
Features for Crypto Currency Exchange (Must Have)
- User Login and Registration
- Coin Info Page of All Coin Listed
- Place Buy and Sell Orders
- Chart Candles Stick and Custom Graphs
- One or More Market like Bitcoin or ETH
- Transaction History of Individual Users
- Market History
- Net Volumes , Price and Percentage Change
- Wallets and Address of Each Currency
- 2FA Security
- Profit Analysis
- Referral System
- User KYC
- Most Important Support Tickets
- Notices and Notifications
- Deposit and withdraw of Currencies.
- Profile and Password Update
How Many Currencies to Be Listed in Crypto Exchange
Many crypto currency have 100’s of currency in the market. But they have come over there over a period of time. It’s not a good idea to list 100’s of currencies on the day 1 of launch.
Reason is pretty simple
- Cost to run full node of each currency on our VPS is very high.
- Bandwidth require to maintain the code is very high , it may go upto trillion GB for 100 currency.
- Integration cost of all the currencies may go up to few thousand dollars.
Best thing would to launch an crypto currency exchange with 20-30 Currency and increase the number as exchange grows.
What Currencies to Be Listed in Crypto Exchange
Just like number matters , what currencies also matters. Listing all the high value currencies or low value currencies will create a problem. While deciding the currencies to be listed we need to consider the value and its acceptance and popularity.
Listing all high value and popular currencies will drive away small investor. Their volume is blow but since the number of small investor are high , over all impact is much bigger.
Consider both type of currency while making a list. Like Bitcoin Ethereum are high value and DOGE , SIA COIn are low value. Keeping such a mix will attract more users.
Business Model for Crypto Currency Exchange
Few assumptions are mentioned at the last of blog. Business model is based on those assumptions.
Profit is very important , so is the investment. Lets understand how much investment is required for every year.
Investment in Crypto currency Exchange.
Here we have assumed , we are investing 2000 a month
|Sr.NO||Description||Amount||Quantity||Unit||Year 1||Year 2||Year 3||Year 4|
Here we are assuming we are acquiring 1000 Users Per Month and Each user on an average will trade with 1000$ Per Month. This figure is very low and can be achieved easily.
Another assumption is trading fees is very low 0.1% for Buy and 0.2% for Sale
|Sr.No||Users||Months||Trading Volume($ USD)||Trading Fees||Year 1||Year 2||Year 3||Year 4|
Profit in Crypto Currency Exchange
Here are the profit. One thing is to be noted that maintenance cost may increase with time to handle large user base. But still with the profit figures you are well covers.
If you still want to go through the excel sheet click on the link over here.
|Sr.No||Description||Year 1||Year 2||Year 3||Year 4|
Assumptions Made while Considering the Business Model for Crypto Currency Exchange
- No Mobile App. Only Web Applications
- Considering 15 Currency to be Listed
- Assuming Fees for Buy and Sale
- Assuming Adding New Coin Every Month
- All Figures are in Dollar
- Assuming No Further Development other than Adding Coin
- Assuming Maintenance Cost Fixed Per Month only as Developer Salary
- Server Charges of AWS. Amazon are considered
- Application will be deployed in Fire-base environment for million users handling
- Marketing Cost is assume at Monthly Basis
- Compliance and Auditing Cost are not considered if Required.
For Detail understanding of the business model you can view the excel link over here: https://docs.google.com/spreadsheets/d/1pI1ZyOZb-5rHqUYib5zCftx0wVPnoMJFOnXVab-6s88/edit?usp=sharing
Founder at Techaroha Solutions Private Limited. 10 Years experience in Software Industry with a special focus on SugarCRM,Artificial Intelligence , Deep Learning , Block Chain Technology and Crypto Currencies and Decentralization of Power using Block Chain. Block Chain Trainer and HyperLedger Trainer