If you come to know that cryptocurrency exchange development is one of the riskiest things one can do, it is likely to be untrue. Every business that you may desire to launch has some degree of unpredictability.
In addition to it, if you have spared enough time to understand how the business works, plan out the details of your operations and purchase bitcoin exchange scripts in sync with your objectives, there are fairly good chances of making it successful.
First of all, you need to decide which type to choose from two broad categories of exchange platforms – centralized and decentralized.
Centralized Exchange Platforms
Centralized exchanges act as intermediaries between buyers and sellers of crypto assets. They are easier to develop and offer high liquidity and rapid transactions. However, security issues arise due to traders having to enter their private keys, and accounts are not anonymous under the KYC process.
Decentralized Exchange Platforms
Decentralized exchanges enable peer-to-peer trading through smart contracts without any third-party involvement. However, they have a higher entry barrier, leading to lower volumes and liquidity. Users are responsible for managing their assets and private keys, and transactions can be slower due to the blockchain’s time to create blocks.
To Learn More: P2P Cryptocurrency Exchanges
Categorizing Cryptocurrency Exchange Platforms
Trading platforms act as a bridge between buyers and sellers, with earnings coming from transaction fees. Direct trading platforms enable person-to-person trading without fixed market prices. Brokerage platforms offer a deal to traders to buy their cryptocurrency at a price that the broker determines.
Trading platforms act as a bridge between buyers and sellers in cryptocurrency trading. Their primary source of income comes from fees charged for every transaction.
Direct Trading Platforms:
Direct trading platforms facilitate person-to-person trading without fixed market prices. Sellers can set their own rates, thanks to the underlying mechanism present in these platforms.
Brokerage platforms offer deals to traders to buy their cryptocurrency at a price that the broker determines. In developing a cryptocurrency exchange software, the type of software architecture is also essential.
Choosing Software Architecture for Exchange Platform
There are three main types of software architecture: synchronous, asynchronous, and distributed. Synchronous is best for small and local exchanges, asynchronous is perfect for medium exchanges, and distributed is used for large exchanges.
Synchronous architecture is suitable for small and local exchanges, with a simple structure that operates easily. Requests can be completed in a single transaction. However, this architecture has limitations when it comes to scalability.
Asynchronous architecture is perfect for medium exchanges. It processes requests in distinct modules, where interfaces register user requests and form a queue. The user request status is then forwarded to the interface.
Distributed architecture is used for large exchanges. It is similar to the asynchronous type but operates on a much larger scale. The architecture distributes user requests into pieces called shards, which act independently, making scalability easier.
Choosing the right exchange platform and architecture is crucial for the success of cryptocurrency exchange development. OptimusFox is a trusted crypto exchange development company that provides customized solutions according to your business needs.