In this evolving virtual currency world, cryptocurrency exchange platforms play a vital role. A cryptocurrency exchange software acts as the primary means by which traders all around the world exchange their crypto and digital fiat currencies, and spin massive profits. Over the years, cryptocurrency exchanges have upgraded on a grand-scale, in terms of the regulatory framework, enhanced security practices to prevent hack threats, and many more. This ensures viability and profitability to both the exchange owners and the traders.
Owing to this, the crypto exchange markets have widely expanded, and the volume of crypto exchanges operating in the market is drastically increasing with every passing day. This constant increase in the number of exchanges makes it difficult for traders to decide which exchange to invest in. If you are an exchange owner or planning to set foot in the space with your own cryptocurrency exchange software, this blog will help you figure out ways to help your exchange stay ahead of the game, over your wide-spread competitors. Let’s dive in.
Ways to powerfully compete with your competitors
- Trading fee
If you take a look at the current popular exchanges, most of them charge a very nominal trading fee for their exchange as low as 0.01% to 0.5%. This attracts potential customers to choose the exchange, and with more customers choosing the exchange, more profit revenues for the exchange. You need to keep this in mind while you set commission for your exchange. You need to offer something on top of what the current exchanges are offering, to stand out from the crowd. Low commissions stimulate more trades, therefore win-win for exchange owners as well as the traders.
- Augmented liquidity
Liquidity is a key factor as it determines the exchange’s ability to help the traders exchange quickly and efficiently, or convert the asset value into cash. In simpler terms, the exchange platform that provides enhanced liquidity allows its traders to buy and sell larger cryptocurrency volumes almost instantly, and have their orders filled in a timely manner. Liquidity also provides other advantages to the traders, such as the profitable difference between the bid price and ask price, etc. Traders will prefer the exchange with improved liquidity volumes, therefore it is important that you stimulate liquidity for your cryptocurrency exchange software, through every possible means to drive the potential traders towards it and make it preferable over the competitors.
- Financial mechanism
If an exchange operates with an in-demand cryptocurrency or digital asset, that is only available for trade-in that particular platform, it is needless to say that the demand for the exchange among potential investors will go all the way up. You can enhance the trading experience of your exchange by providing local currency trading pairs to benefit the local users. Also, it is important to identify the partner with the right bank/payment processor for your exchange to allow users an efficient payment, withdrawal, and deposit process.
- Market Making
To ensure sustainability and long-term success for your exchange, you must enable market making for the platform. Market making is a process where trades get executed against the best limit orders on the market. Each time market makers buy and sell assets through limit orders, and their limit orders get filled, they make a profit by the difference between the asking price and bid price, otherwise known as “spread.” Encouraging market makers into your exchange will boost liquidity for the exchange and provides more value for the traders, thereby more valuable for your exchange over competitors.
- Security standards
The security of your exchange should be your utmost priority. It is a known fact that cryptocurrency exchange platforms have been prone to security/threat hacks earlier and that is what brings in an opinion that it is risky to invest in. Therefore, you need to concentrate on implementing the best security measures for your exchange to gain your investors’ trust. Multi-signature crypto wallets, multi-layered security protocols, Two- Factor Authentication, etc., are all necessary for the exchange to remain protected. Also, insurance policies are not very common among many exchanges. Therefore, if you provide insurance to your users as an added layer of security, they will most likely prefer your exchange over the other exchanges in the market.
- Enhanced user experience
Even though cryptocurrencies and cryptocurrency exchanges are widely prevailing in the market, in reality, the industry is still in its nascent stage. Many entrepreneurs still find the concept of crypto a bit complicated. Therefore, it is essential that your exchanges make them feel, that it makes it easier for them. Your cryptocurrency exchange software should be designed with advanced, but user-friendly UX/UI which will increase the chances of the exchange acquiring a larger user base. Your exchange must be relevant to both experienced as well as novice traders to expand your user base.
- Quality over quantity
It is unquestionably a good choice to offer multi-currency support for your exchange to help your traders with efficient trading experience. In fact, according to David Saper, COO of Blockbid, there are very few exchanges offering support for trading over 100 digital currencies. Therefore, users will definitely be attracted if you offer multiple currencies support, but what is to be kept in mind here is, you shouldn’t get carried away. You need to be careful about choosing which one to include and whether it is reliable to trade. Quality is always better than quantity.
- Trading Customization
Another important tool that could help you stand out from your competitors is the customization options that you offer to your traders. An example of trading customization is the price increment offered by the exchange. If your exchange offers a larger price increment for an exchange pair such as BTC/USD, compared to the price increment offered by another exchange for the same pair, traders will obviously prefer your platform more and thereby, leading your exchange to a broader audience. Make sure you analyze what the competitors are offering, to make better, informed decisions to drive the potential investors towards your exchange.
These are some of the crucial strategies that will help you compete and get ahead of your competitors in the crypto space. Apart from these, how quickly you enter the market with your exchange has a huge role to play in this extremely competitive scenario. With newcomers launching their exchanges every single day, and with new trends coming up, also most importantly, with the constant fluctuation of crypto prices, if you want to make use of a favorable situation, you need to act fast. And a solution that will help you get your ball rolling in the market, in less than no time is a white label cryptocurrency exchange. White label exchanges are ready-to-use, reliable, quick to deploy, cost-effective, highly scalable, and customizable. They help you enter the market within the twinkling of an eye and launch your exchange in your own desired brand. Get in touch with our experts to avail yourself of one such profitable exchange business opportunity!