How Long Does it Take to Develop a Cryptocurrency Exchange

As cryptocurrencies have experienced drastic fluctuations in the past year due to the rapid growth of this industry, the crypto exchange market plays a pivotal role within the crypto ecosystem by allowing for the fast, secure and transparent trading of cryptocurrencies by retail and institutional investors.

This blog post illustrates how to create your own crypto exchange step-by-step, with estimated timeframes for finishing each development phase and things that will affect the time it will take to finish each phase.

Stages in Developing a Cryptocurrency Exchange

There are a number of critical factors to keep in mind when developing a successful cryptocurrency exchange, including functionality, security, performance, compliance with regulations and so on. A brief explanation of each area will be discussed in this blog as well.

Requirement Analysis & Planning

The first phase is where we establish the base upon which we will build the exchange. Within this phase, we will clearly set forth the business goals, determine who our target audience will be, and how we want to position the exchange within the marketplace. 

Within this phase, we make decisions as to what type of exchange we will create (centralized/decentralized/hybrid), what types of cryptocurrencies we will support, what trading pairs we will offer, and how we will generate revenue from the exchange.

UI/UX Design

UI/UX design is geared towards developing an automated trading process that is both simple and appealing for users. For this reason, traders expect to be able to quickly view real-time prices, have clear access to placing orders, and see information about their accounts on each device.

The designers also create several wireframes and interactive prototypes of user-based panels, trade screens, wallets, and administrator dashboards. A well-executed design will provide traders with a seamless experience that minimizes the potential for errors when placing trades, increases a customer's willingness to trust the exchange, and creates a better experience for those unused to using the platform.

Backend Development

The backend of a crypto exchange is the most important part. This component provides the framework for managing the matching engine, order book, wallet, liquidity, and database. The backend must also be capable of processing a high volume of transactions with fast response times, and execute orders accurately, while allowing for scalability and optimization for peak periods of market volatility. 

Frontend Development

Frontend development brings UI/UX designs to life. Developers will use modern development platforms and frameworks to create functionality for trading charts, order placement, wallet, and email notifications in real-time.

This component is responsible for constantly communicating between the backend and frontend to deliver to each user the real-time market data and current activity accounts. A well-optimized frontend creates quick response times, has optimized performance when the user is navigating through it, and provides for a seamless experience whether viewed from a web browser or mobile device.

Security Implementation

The importance of security in the development of cryptocurrency exchanges cannot be overstated. In this phase of development, an exchange's security measures include multiple-factor authentication, encryption, distributed denial-of-service (DDoS) protection, and a separate operational cold and hot wallet. The use of role-based access control will be implemented to improve the security of the exchange as it pertains to both customers and the Exchange itself.

Additionally, it is expected that a number of advanced security measures (e.g., withdrawal whitelisting, transaction monitoring, anomaly detection) will be beneficial in minimizing the risks associated with hacking and/or fraudulent activities. Users' assets will be protected, and the cryptocurrency exchange's credibility and reputation will be upheld through the establishment of a full security framework.

Testing & Quality Assurance

Rigorous testing is essential for identifying and addressing issues related to bugs, security, and performance. There are several different types of tests to be performed. Examples of these types of tests are Functional Testing, Load Testing, Security Audits, and Penetration Tests.

The purpose of testing is to ensure that an exchange can handle the volume and levels of activity found during trading on the platform, as well as to manage the extreme markets that may occur during these same times without any problems. Therefore, implementation of quality assurance leads to a substantial decrease in risk and disruption after launch.

Deployment & Launch

When testing is finished, a new crypto exchange will go live in production. The launch plan should include both a phased rollout and beta testing in order to maximize the reliability of the final product after it has been launched.

In addition to post-launch activities, the launch plan should also include a phased rollout and beta testing of the exchange to provide a more reliable production environment.

Because of the many options for customization, the different types of features available for inclusion, and the number of regulatory requirements that affect them, while all exchanges may follow a similar path for creating an exchange, the development timeframe varies greatly for each exchange.

How Long Does It Take to Build a Crypto Exchange?

The complexity of the customizations, different options available, and local regulation barriers unique to each exchange mean that the overall development timeline will be unique to each exchange.

Typically, it will take between 3 and 9 months to build a cryptocurrency exchange based upon the average lead time to create a cryptocurrency.

Estimated Timeline to Develop a Crypto Exchange

• Requirement Analysis & Planning: 2-4 weeks
• UI/UX Design: 3-5 weeks
• Backend Development: 8-16 weeks
• Frontend Development: 6-12 weeks
• Security Implementation: 4-8 weeks
• Testing & Quality Assurance: 3-6 weeks
• Deployment & Launch: 2-3 weeks

The length of each phase of development can vary depending on which development methodology is implemented.

Factors Impacting the Crypto Exchange Development Timeline

Type of Crypto Exchange

Generally, centralized exchanges tend to take more time to develop due to the complexity of their back-end systems and requirements to provide custodial services, while decentralized exchanges may require a greater amount of time for smart contract auditing and integration with blockchains.

Feature Complexity

While many basic spot trading exchanges exist, building an advanced feature set that includes margin trading, futures trading, staking, bot trading and liquidity aggregation greatly increases the time involved in developing them.

Security Requirements

Additionally, building a trusted exchange requires compliance with much higher security standards than other types of exchanges. Insufficient security measures may expose users' funds and data to malpractice, thereby limiting the potential revenue for the exchange operator. Furthermore, audits conducted by third parties and advanced fraud detection systems add valuable and necessary time to the timeline.

Regulatory & Compliance Needs

Development timelines are likely to be extended if there are delays in meeting KYC and AML compliance, or regional regulations due to the documentation, approvals, and changes to the exchange and/or the back-end systems required to meet the legal requirements.

Development Team Expertise

There are ways to reduce the timelines for the development of a cryptocurrency exchange, such as having a dedicated team of developers who have experience building exchanges. By overlapping certain phases of development, the Exchange may effectively utilize the available technology and avoid making the same or similar technical mistakes made by other Exchange developers.

Technology Stack

By utilizing the latest scalable frameworks and blockchain technologies, the developer will benefit. Therefore, it is important to choose and utilize a current technology stack. Choosing to utilize an outdated technology stack will increase the overall development timeframe when developing a crypto exchange.

How to Reduce Crypto Exchange Development Time?

Utilizing white-label or off-the-shelf exchange solutions is a highly efficient way to shorten the overall time required for building out your product. Most exchange platforms will have all the necessary components for operating an exchange, along with an easy way to customize them.

Choosing a qualified vendor to build your exchange, developing a complete specification document before the start of the project, and building using the Agile methodology will assist you in launching your cryptocurrency more quickly while preserving the quality of your offerings.

Conclusion

There are many steps to the development of a cryptocurrency exchange. Some of the things that need to be done include deciding on a business strategy, putting together a good team with experience, and implementing proven security practices. Taking a structured approach when creating your cryptocurrency exchange should shorten your time to market while providing long-term compliance and security.

You can choose to either build your own cryptocurrency exchange or use someone else's platform as a starting point. Working with a well-established and experienced cryptocurrency exchange development company can help you achieve maximum efficiencies within your organization and lower the risk associated with a successful launch of your business.

At Fourcrypt, we develop highly scalable crypto exchanges that are built with advanced tech stacks. We customize it based on your needs. Get in touch with us today to start your own crypto exchange platform.

FAQs

How long does it take to develop a crypto exchange?

To build a cryptocurrency exchange, it usually takes about 3 - 9 months from start to finish, depending on how complex the project is, what type of security you want and how many laws you will have to follow.

How much does it cost to build a crypto exchange?

When developing your own cryptocurrency exchange, things to consider in addition to how much it will cost are customization, complexity, and regulations. The average cost to create an exchange will range from $25,000 up to $100,000 or more, depending on the exchange's regulations.

How difficult is it to develop a crypto exchange platform?

Multiple technologies can be used to develop a cryptocurrency exchange. Ultimately, the choice of technology will depend on your own technical skills and ability to implement the technologies you choose to use (blockchain-based technologies, security protocols, financial architecture, scalability, etc.).

What is the fastest way to launch a crypto exchange?

While the easiest approach to launch an exchange remains to use a white-label solution, the time needed for the development of a cryptocurrency exchange has increased due to the regulatory approval process, KYC/AML requirements and compliance requirements.

Does regulatory compliance affect the crypto exchange development timeline?

Timeline for the development of a cryptocurrency exchange is often extended due to the added requirements such as the legal process of regulatory approvals, KYC/AML documentation, and compliance requirements.