Common Mistakes to Avoid in Cryptocurrency Exchange Development

Crypto exchange market is booming and a lot of investors are attracted towards the crypto investments for a passive income. Capitalizing this opportunity many entrepreneurs are launching crypto exchange startups to generate huge revenue. All the crypto exchanges that are launching now are not becoming successful. 

Did you know around 80% of crypto exchange startups fail due to various reasons. As an entrepreneur if you are building a crypto exchange  you will be putting a lot of effort into it such as time, money, everything. Making a simple mistake will cost you a big drawback in your success. So In this blog we will explain to you the common mistakes to avoid in Crypto exchange development. 

By avoiding these mistakes while crypto exchange software development you can position yourselves in the list of top players like Binance, Coinbase etc. 

Importance of Robust Software Development in Crypto Exchanges

As the need for a robust crypto exchanges are increasing to ensure the security of the platform’s data and provide a seamless trading experience to the users both entrepreneurs and developers need to implement the best software development practices by avoiding these mistakes.

Common Mistakes to Avoid in Cryptocurrency Exchange Development

Failing to Understand What Users Want

Neglecting to research the customer's needs? This is one of the main reasons most startups fail. If you are planning to succeed in your journey then don't do this. 

Many thought that crypto exchanges are a great service to provide. They are not wrong but thinking only of that and launching without researching the market of what the user needs or not. 

Entrepreneurs who are planning to build a crypto exchange must research the users needs and build a platform based on that. Many crypto exchanges don't care about the needs of users and focus more on revenue generating models. This is why most of them fail.  

Entrepreneurs should analyze their competitors to understand the current market and analyze the existing crypto exchanges to identify the drawback and overcome them by giving the perfect solutions. 

Not Hiring the Right Ones

Having a good idea doesn’t guarantee success but executing it in the right way is the key. 

Venture capitalists, founders, developers all of them will play a huge role in the success of a Crypto exchange. Hiring the right one to do the job is half the job done. Due to lack of talented resources many crypto exchanges find it difficult to satisfy the needs of the traders. Not hiring the expertise in the field eventually results in more cryptocurrency exchange development cost and time.

Lack of Scalable Architecture to Handle Increasing User Traffic

Crypto markets are highly volatile and traffic will be high at specific points of time based on the markets. To handle this crypto exchanges need a scalable architecture that handles huge amounts of traffic without any hassles.  Lack of scalable architecture results in more consequences to the platform such as delays in order processing, System outages, Limited trading options, Negative impact on token prices. 

Did you know? In 2021 the world's largest crypto exchange Binance experienced a great outage due to huge user traffic as the result of market surge causing Order processing delays and missed trades for users.

This can be avoided by implementing these strategies in Crypto exchange development,

1. Microservices Architecture 

2. Cloud-based Infrastructure

3. Load Balancing and Caching

4. Database Optimization

Insufficient Market Makers and Liquidity Providers

Liquidity is the important factor for any crypto exchange out there. This is what attracts users to your exchange. As there is high liquidity there will be high trading volume. Market makers help in high volume of trade in the platform by continuously asking and bidding prices to ensure liquidity. 

High liquidity also helps in smooth execution of trades, minimizing price swings in a crypto exchange. Without liquidity providers and market makers the trading volume in the exchange will be very low, high price volatility due to small buy and sell orders etc. 

Implement these effective strategies to avoid this mistake,

1. Incentivize market makers.

2. Partner with existing market makers and liquidity providers.

3. Automated Market Makers (AMMs) as used in DEX.

Confusing User Interface (UI) Design

42% of users shift to other trading apps when they experience a poor User interface in their already using trading app.

Create a crypto exchange website with a user friendly that will attract huge traders and also keep the users engaged. Ensure that your exchange platform reacts faster to user interactions with fast loading times. 

Concentrating more on a single device such as focusing more on website UI and leaving behind the Mobile UI.  This will make mobile app users leave your website and app due to poor User interface. 

Design an intuitive user interface that can be used by even a beginner who is new to crypto trading. Provide a clear information hierarchy by showing what is most important for the users first. 

Focus more on simple design without complicating things and making user navigation very complex. Offer flexible interfaces so that users can customize their dashboard based on their needs. Concentrate on all devices and make your platform accessible in all devices such as desktop, tablets, mobile etc. 

Lack of Proper Legal Compliance

One of the common mistakes entrepreneurs make while developing a crypto exchange is not knowing about the legal regulations and compliance requirements. Each country has its own regulations when it comes to cryptocurrency. To operate a crypto exchange business one should follow those regulations. Failing will provide severe consequences such as legal penalties, fines, shutdowns etc. 

It is essential for crypto exchange business owners to stay updated on the latest regulations on the country they plan to operate and ensure compliance to avoid legal liabilities. 

Implementing robust Know-Your-Customer (KYC) and Anti-Money Laundering (AML)

procedures to ensure compliance. 

Legal compliance is an important aspect for crypto exchange development. By understanding the cryptocurrency regulations and how to get a crypto license will ensure your success.    

Poor Security Measures

Cryptocurrency exchanges are the primary targets for hackers as they deal with large crypto funds. This all comes because of the poor security measures implemented by the crypto exchanges. This all results in loss of user trust, theft of funds and irreparable damage to the exchange's reputation.

Security is the most crucial factor every crypto exchange must take into account. Maintaining robust security measures is a paramount in crypto exchange development. While building a crypto exchange make sure you have implemented all the security features that ensure top notch security to your platform which brings trust among the trades. 

To ensure the security of your crypto exchange implement these key security features,

1. Data Encryption

2. Two-Factor Authentication (2FA)

3. Cold Storage Solutions

4. Regular Security Audits

In Conclusion

Building a successful crypto exchange requires a long lasting commitment, best development practices and enough knowledge in the crypto industry. By learning from these common crypto exchange development mistakes and building a platform with clear objectives will provide the success you always dreamed of. 

Appticz can help you in the crypto exchange software development journey with a clear planning without any mistakes. We have all the expertise to build a crypto exchange platform tailored to your business needs that provides your users with a seamless trading experience.