Create your own cryptocurrency exchange: Centralized exchange decoded

Everything you need to know about a centralized cryptocurrency exchange

A centralized exchange in an online platform to trade cryptocurrencies. It includes buying or selling cryptocurrencies in exchange for fiat money and even for other cryptocurrencies. Simply put, it is an online marketplace for the cryptocurrency network.

If an exchange is centralized, it has a trusted middleman to handle the entire trading process. Users can store their currencies on the exchange. The exchange is responsible for ensuring security of their users’ funds and has full access to their users’ accounts. This allows the middleman to recover a lost password or 2FA for their customers.

If you are looking to create your own cryptocurrency exchange, it is better to develop a centralized exchange to provide a safer platform to your users for trading.

How is a centralized exchange different from a decentralized exchange

A decentralized exchange cuts out the middleman by building an intelligent trust-less environment. The deals are processed through smart contracts, which means that the currency does not pass through an escrow service, it is peer-to-peer instead. A decentralized exchange is not as popular as a centralized exchange, however its popularity is expected to increase in 2018.

Do all centralized exchanges offer fiat/crypto pairing?

Although every centralized exchange provides crypto/crypto pairing, not all offer fiat/crypto pairing. Some popular exchanges providing fiat/crypto pairing include:

• Coinbase
• Gemini
• Kraken
• Robinhood

Is verification required to create an account on an exchange?

Some exchanges allow users to create their accounts without any verification, but the deposit or withdrawal limits for such accounts is very small. Basic verification requires a user to provide a verified ID proof and complete 2 factor authentication, where a one-time-password is shared with a user via a text message or a voice call, and is required every time a user logs in to his trading account.

While planning to create your own cryptocurrency exchange, make sure to integrate advanced security features to provide the most secure exchange platform for trading.

A large number of people worldwide are making money by creating their own crypto exchanges. However, it is also important to know that there are a plethora of exchanges on the market and many fail to attract people. To make your exchange stand apart, create the one that is the most secure, scalable, user-friendly and reliable.