How to Build a Cryptocurrency Exchange like Binance?

26 May 2022 updated
11 min

Crypto exchanges are the engine of the crypto industry. They allow users to buy and sell crypto assets, earn a passive income from their belongings, participate in promising startup launches, and stay tuned to the latest crypto news. 

The indisputable giant in the CEX market is Binance; this China-born (and now Malta-based) company has quickly gained global adoption and popularity thanks to its diverse service offering, low commissions, and user-friendly interface. The current market cap of Binance has exceeded $12 billion, and the exchange enjoys over 22 million weekly visits in 2022. All crypto project owners dream of Binance listing, as it’s a great market entry point for them – Binance has a huge number of loyal users, traders, and large-scale investors. 

But the truth is that Binance is not the only centralized exchange (CEX) people love. New exchanges emerge daily and offer tons of perks and innovative features to users, attracting a loyal client base to their platforms. 

The good news is that you can also build a CEX like Binance and monetize your blockchain expertise and crypto business ideas. Here I offer a detailed guide about how to develop a crypto currency exchange, what factors to consider before starting out, and how to grow your project for sustainable success. 

How Does Binance Work?

Binance is a CEX that allows users to conduct various operations with over 1,000 cryptocurrencies. Registered users have custodial wallets for every crypto asset they buy or transfer to Binance from non-custodial wallets where funds can be stored. The transaction fees are lower for traders using the internal Binance Coin (BNB) for commission coverage.

Basic Exchange Features

Basic Exchange Features

Binance is regarded as a CEX because it complies with the KYC requirement for registering new users. Previously, users had the right to conduct small-scale operations without KYC, but in August 2021, the KYC requirement became valid for everyone. 

Joining Binance is pretty simple: you need to register an account and complete verification and KYC check. After that, you can deposit funds to your wallet and start trading on the exchange or in a peer-to-peer (P2P) section. Here is a brief review of Binance’s main features. 

  • Spot Trading

This exchange section enables buying and selling crypto assets with market, limit, and stop-limit order types. Spot trade involves real assets, meaning that you will have those assets in your wallet after purchase. You can store, invest those coins, and trade them for a better price later – anything you want, as these are your belongings. 

  • Crypto Derivatives

Things get different with derivative trading, as here, you don’t get any physical assets in your belonging. With futures and options, you rather trade obligations. These derivative instruments are like contracts for the price rise or decline, and your loss or profit depends on the right guess. 

  • Binance Earn

This section enables users to lock their coins for a chosen period (typically 30, 60, 90, or 120 days) for a predetermined interest rate. You can’t get those funds out of the pool before the period ends; earnings are added to your account every day. 

  • Binance smart pool

This feature will be exceptionally useful for miners who can engage in safe mining with guaranteed rewards on the Binance platform. 

  • Binance Visa Card

A special brand offering from Binance, its Visa card, enables easy conversion of crypto assets into fiat currency and vice versa. The holders of Binance Visa Cards always have better commission rates. 

  • Finance Launchpad

Other CEXs quickly adopted this unique feature of Binance. It is an incubator for promising startups that try to get broader outreach to target customers via the Binance platform. Typically, users are welcomed to buy the new startup’s coin and hold it for some time in return for generous rewards. 

  • Binance Smart Chain (BSC)

BSC is a feature-rich, functional toolkit for building your own blockchain projects. BSC-powered projects are smoothly integrated into the BSC ecosystem and enjoy many benefits of interoperability and advanced security.  

  • The Binance API

Binance has many features, but it is not enough for many advanced-level traders. They can automate their trading by connecting to Binance from third-party apps via the Binance API with RESTful architecture. Thus, you can pick a third-party trading platform with a rich set of automated trading settings, algotrading, and AL-powered functions to link it to your Binance account. 

  • Binance Dex Clone Script

With this feature, you can easily set up a clone of Binance and add some custom features to your liking. Still, this option has limited application, supporting only a handful of cryptocurrencies. 

  • Security

Security is critical in the digital space, and Binance has employed a variety of features to guarantee it to users. First, it is the SAFU insurance of user funds for emergency cases. Second, it is address whitelisting, allowing withdrawals only to user-verified addresses.

Choose an Option to Create a Cryptocurrency Exchange App

Now, how to create a crypto exchange from the technical viewpoint? When starting out on this project, you first need to choose the custom development versus a white-label solution.

 White-label solutionCustom CEX development
Prosquicker development and launch
Simple setup with no advanced-level development work
The iterative, flexible development process
Full access to technical support professionals
Control of the development process and project vision
100% ownership rights
Ability to rework specific features and functions with minimal effort
Cons Limited upgradability of features
Significant time is needed for the team to master the code
High cost (one-time payment)
High development costs
Lengthy development (min. 6 months)

Cryptocurrency Exchange Architecture

It’s impossible to come to grips with how to start a cryptocurrency exchange without a clear idea of its architecture. Let’s take a closer look at the generic CEX architecture to see how to set up a crypto exchange of your own. 

In a nutshell, the architecture of your resource is the structure determining the position and relationship of each system component to each other. It should give a visual and functional representation of how every element works, what other actions it triggers, and the algorithm or hierarchy of elements. 

A typical architecture should include all pages’ UI elements, the trading mechanics, APIs, security measures, and the platform’s databases. To create a workable architecture for your project, you need to determine its technology stack – the technologies, blockchain, and front-end/back-end tools needed to make your CEX work. 

The security layer deserves a separate mention, as it is a vital component of every CEX’s architecture. Users are expected to store financial assets on the platform, so they need to be confident their funds are intact. It is thus vital to include multiple security layers for user operations, such as multi-step user verification and authentication, SAFU insurance for the users’ funds, KYC/AML regulations, and the like.

When working on a CEX project, you need to consider all architectural aspects we’ve just discussed and adjust its architecture to the high-load specifics of such platforms. To save time and money on the development, you can incorporate the needed architectural elements at the Discovery phase together with experienced 4IRE Labs engineers.  

Key Crypto Exchange Platform Features

The next point in the discussion, “how to create cryptocurrency exchange?” is the review of features you will need for the successful operation of your project. Here is the bare minimum to start with. 

Sign in/Sign up

Your CEX should enable users to set up new accounts and log in to the existing ones. This feature should be secure and well-designed, preventing unauthorized access to user wallets, data manipulation, and breaches. The bare minimum is a password and login, but it’s also recommended to include two-factor authentication or biometric login.

User Verification

To get a reputation as a trustworthy, legit platform, your CEX needs to employ robust KYC policies. Check the new users’ identities to activate their membership; this is the mandatory requirement for regulatory compliance.

Deposit/Withdrawal

How to start cryptocurrency exchange without enabling the users to deposit/withdraw/move funds? The answer is – no way. So, you need to take care of the ability to move funds in and out of the exchange without friction and with minimal fees.

Transactions creation

The function of creating transactions is the core of any CEX business activity. You need to double-check that users can initiate different kinds of buy and sell orders without technical glitches. This functionality is platform-specific, but in most cases, it covers limit, market, and stop-limit orders for transactions on the exchange and P2P orders between different platform users.

Internal API

APIs enable on-platform data exchanges between users and simplify automated trading with the use of third-party platforms with additional functionality.

Analytics

Every platform user has access to their activity tracking and additional analytical tools for evaluating the propriety of a trade. The industry standard is to connect your platform to TradingView for real-time trading statistics and indicators. However, you can complement the TV functionality with interesting in-house features.

Admin Panel

You need to keep the user activity under control, and this is what an admin panel allows. It is a specialized panel available to users with admin rights only.

Still have questions or concerns?

Contact us to schedule a meeting with our CTO to discuss project milestones, budget, and technical requirements. Let’s make your project more manageable and understandable together.

Things to Pay Attention to When Creating Crypto Exchange Platform

Even a brilliant business idea doesn’t guarantee success for your CEX project. So, which issues should you factor in when you create your own crypto exchange

Location

The country of your jurisdiction plays a vital role in the initial CEX setup, as regulatory changes forced many successful platforms to close or leave the market in China and India. Research the crypto regulatory landscape thoroughly to find a jurisdiction with low risks before launching the CEX. 

Funds

Next, it’s important to have a detailed fundraising plan. How do you want to raise funds for your project’s investment? Will you turn to venture capitalists, crowdfunding platforms, or pursue an IEO/ICO

Exchange Type

This point was covered above in detail; you need to weigh the pros and cons of custom CEX development versus a white-label solution and pick one option before starting the project. 

Security

Before developing the platform, you need to know the security standards for CEXs inside out. Top-tier security may guarantee user fund security and your safety from penalties and fines. 

Regulatory compliance

How to set up a cryptocurrency exchange that will work without hassle and friction for years to come? The answer is – in line with your location’s existing regulatory framework and laws. Think about the users you’ll want to cater to. What are the crypto laws in their location? What is the legal basis for CEX operation in your jurisdiction? Factor all these issues into the CEX design to avoid huge fines or complete delisting of your project. 

Liquidity Management

Liquidity is vital for CEX’s success, as it guarantees low slippage. You need to set up liquidity pools or borrow liquidity from other channels to ensure that your users don’t face huge slippage in their transactions.

Marketing

There’s no sense in launching a project that nobody knows about. So, you need to plan an attention-grabbing, viral social campaign for your CEX, making people wait for its launch. Use referrals and ambassador programs to engage as many people as possible; this investment in people will pay off with quick user adoption and use base increase. 

How to Build Your Own Cryptocurrency Exchange like Binance?

Now, let’s proceed to the technical part of how to create crypto exchange like Binance. Here are the vital steps your dev team will take.

Blockchain

You need to choose the blockchain that will power your entire system. It’s key to consider the pros and cons of existing blockchains (e.g., Ethereum, BSC, Polygon, Solana) to choose the one responding to your long-term goals and scalability ambitions. 

Design

Next comes the prototyping stage. It’s a vital visualization tool for idea validation. Use wireframes and prototypes to negotiate the key features and design of your project. After all points are confirmed, you can proceed to the actual development phase. 

Front-end development

Front-end of the CEX is the client-side part, which should look sleek, functional, and intuitive. To complete this part of coding, you need to hire experts knowledgeable about HTML, CSS, and JavaScript tools like Angular.js, Vue.js, and React.js. 

Backend development

The back-end part is what actually relates to the blockchain logic behind your CEX. You will need a professional blockchain development company who will develop robust smart contracts and make the whole server-side architecture of your exchange work. 

API

APIs are hidden from the regular user’s eye. Yet, they provide for the essential functionality of your platform by performing server-side operations and connecting it to third-party providers of related services. You can use APIs for the following functions: 

  1. Authentication/authorization of new account holders 
  2. Admin panel operations 
  3. News releases and email marketing 
  4. Extra operations with crypto assets (betting, dual currency deals, etc.)
  5. Third-party service integration

Testing

How to start crypto exchange with confidence and sustainability in mind? Sure, with a detailed QA review and smart contract audit before the official launch. Check the code and smart contract logic for bugs and errors; you will avoid large-scale problems in the future. 

Security

Security measures are vital for CEXs holding private data and financial assets of users. So, you should incorporate a secure architecture in the project by protecting its back-end. Use different servers to hold parts of the system’s core data; keep encryption keys on the secured servers; apply two-factor authentication to prevent unauthorized access. 

How Much Does It Cost to Build Crypto Exchange Like Binance?

Those inquiring how to start a crypto exchange are often misled by unrealistic cost estimates from dubious sources. You may come across the information that it’s possible to build cryptocurrency exchange with the needed set of features for as low as $30,000-$50,000, but that’s pretty far from the truth. 

In reality, this estimate is true only for front-end or back-end development (these two components at best). But a good, functional CEX is much more than that. How to start a cryptocurrency exchange without a thorough security audit and QA testing? Will it survive and attract users without a minimal set of helpful APIs? 

The answer is clear – building a CEX is much more than coding. It should be well-integrated with the blockchain powering it, possessing a nice set of APIs, and giving ultimate security that all crypto users value. Here is a detailed breakdown of the budget you need to set for the crypto exchange project. 

Front-end development and designFrom $5,000 to $50,000
Back-end $40,000 - $50,000
Blockchain Integration $5,000 - $10,000
APIsAround $50,000 (without auto-testing)
Testing and Security Audit $20,000-$25,000

How to actively grow your CEX?

When you build a cryptocurrency exchange, your strategy should go much far beyond creating the infrastructure and launching it to the digital market. You should always ask the question, “what’s next?” Too many crypto exchanges close within the first year of their functioning today for lack of liquidity, low user adoption, lack of net revenue, etc. 

So, launching a project is only the beginning of a lifelong active growth and expansion process. To nail the market and stay for long on it, you need to think of how to make a cryptocurrency exchange appealing to users, established businesses, investors, and startups in the crypto world. 

Think about your CEX as a startup. To grow the project actively, you need to develop its marketing strategy, expand service offerings, be active on social media, and cover a broad range of crypto innovations emerging in the market every day. 

Let’s look at Binance: the company added DeFi, NFT sections, token staking, and farming options. There is a new NFT marketplace on Binance, a BNB Vault with double earnings for users on liquidity provision, the auto-invest function, a Binance Pool for miners, and a dual investment section for advanced investors. 

The Binance Launchpad deserves a separate mention here. It’s a brand-new token launch platform that helps crypto startups begin their journey in the market. The Binance team audits all applications and approves only credible projects with high potential for launch via its Launchpad. Thus, Binance users always get a chance to partake in the rise of trustworthy projects on favorable terms. 

All in all, as you can see, your exchange’s capitalization should grow steadily to survive in the crypto exchange industry. You can achieve stable growth results if you invest time and effort in its development, add new functions regularly, and conduct user research to remain attractive to a large user population. Keeping pace with the trends and surpassing them is a secret to success, giving you a real chance to stay in the top 3 or even top 2 of the CEXs available on Google.

Conclusion

Now you’re better informed about cryptocurrency exchange platform development and can proceed with the project without further do. The core task is to develop a detailed plan and roadmap for your CEX project so that your software provider follows it and creates a project meeting your expectations. A concise plan also simplifies budgeting so that you don’t get stuck in the middle of building crypto exchange because you run out of money. 

The market of cryptocurrencies is still booming, and you can take a deserved place in it with an innovative, secure, and feature-rich CEX project. Don’t be afraid to begin this journey; if you use the qualified and professional blockchain development services of the 4IRE team, your project is doomed to success. 

FAQ

How much does it cost to build a crypto exchange?

When you start thinking of how to set up a cryptocurrency exchange, the first factor to take seriously is the cost of such a project. An exchange platform should have a minimum of important features, so you can’t miss them out to save money. Experts name the minimal price for cryptocurrency exchange development at $100,000-$135,000. Depending on the country where you develop the project, the cost will vary from $100,000 to $150,000 and upward. 

How do I start my own exchange?

You can start your own crypto exchange by following the outlined steps. It’s pretty simple to go on with such a project if you have a clear roadmap, sufficient funds, and a reliable team of experts with blockchain programming skills by your side to conduct all development work. Choose the underlying blockchain technology, determine a set of features your exchange should have, and make an outstanding UI to attract users. Take proper care about cybersecurity and cross-chain interoperability. Here you go with a winning CEX product. 

What was it about Binance that attracted so many people to start working with them?

Binance was an ambitious project headed by a team that knew for sure how to open a cryptocurrency exchange fueled for success. The Binance team started with a strong whitepaper for its internal token, BNB, and created a diverse platform offering support for crypto startups (LaunchPad). To date, Binance is much more than an exchange, as it offers numerous passive income opportunities like staking and liquidity farming and enables crypto exchanges with the lowest commissions in the industry. 

Why should I outsource development to 4IRE?

When you start thinking about building a crypto exchange, the key determinant of success is the right software developer. Partnering with 4IRE guarantees that you will launch a secure, functional product without bugs or security flaws within the deadline. Our team knows everything about how to create a crypto currency exchange, which technology should power it, and how to support its flawless functioning for years to come.

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