How do you gain revenue from cryptocurrency exchanges?
With the advent of many new cryptocurrencies and thanks to the steady emergence of a much more sustainable crypto marketplace, exchanges have been able to build their profits year upon the year.
How does a crypto exchange make money?
Let’s get down to brass tax. There are 4 ways that the common crypto exchange makes money from traders:
- Deposit fees
- Withdrawal fees
- Selling cryptocurrencies
- Buying cryptocurrencies
How much money do crypto exchanges make?
To answer this question let’s check the most recent data, in which Binance was the top-earning crypto exchange, making $3.48m per day. The top 20 cryptocurrency exchanges averaged about $1m per day in profits. However, only the top 6 of them could actually claim to make more than a million a day. These six were: Binance, Upbit, Coinbase, Bittrex, Bithumb, and Localbitcoins.
What we do know is that since 2018, Binance has over $1bn in cumulative profits, Upbit and Bithumb have plummeted 70% and 63% respectively, and Chinese-founded Huobi processes over $1bn in trades per day and continues to grow (their profits are unknown but some argue that they are more profitable than Binance).
In 2020, the biggest earners so far are of course bitcoin, ethereum, HCoin , Coinsbit , BitForex, and LBank.
Where are the world’s top exchanges located?
China, South Korea, Japan, and Singapore are dominating the crypto exchange scene right now, with more than half of the world’s cryptocurrency trades going through Asia-based exchanges.
Can you start your own crypto exchange?
To start a bitcoin exchange can be of 2 ways. One is to create a bitcoin exchange from the scratch with the complete development process. It may take up a lot of time and technical process but still can be complete built as per your needs. The other one is getting ready-made cryptocurrency exchange software that allows you to launch your own platform in no time. The scripts can be completely customized as per your business requirements.
It can be achieved in just 10 steps:
Get a team of lawyers
- Get funding from investors
- Find a white label bitcoin exchange platform development company to build your exchange
- Make partnerships and connections with other exchanges
- Find a payment processor to handle your transactions
- Ensure your exchange is secure
- The beta test for bugs
- Start promoting your platform
- Build a customer service team
- Work with your lawyers for ongoing issues
What’s essential to consider when doing all of this is that there are many legal implications on the way, and international jurisdictions will come into play based on where your exchange platform is based, where the users are, what the digital currencies are being traded, and more. However, these legal hurdles can easily be overcome judging by the sheer number of crypto exchanges in there, so don’t let it put you off!
In the past and the beginning of the year, the world was stunned when BNB, the native coin of Binance announced higher profits and a peak rate even during the pandemic. That makes running a successful virtual currency exchange one of the most profitable businesses on the planet. How do these cryptocurrency exchanges make so much money?
Like any market, the main value the digital exchanges provide is a long line of crypto coin buyers and sellers. In short, cryptocurrency exchange platforms are market makers by bringing the buyers and sellers together. To do this successfully, a crypto exchange platform needs to have a lot of users and that usually requires:
Development of a beginner-friendly exchange platform.
Millions of dollars spent on marketing.
Running promotions to attract new users.
Develop easy-to-use mobile apps.
Provision of good customer support.
Establish a trustworthy reputation.
Needless to say, all this consumes a lot of money to do efficiently. When you pay fees to a platform, this is essentially what you are paying for.
What Do You Pay Fees For?
Every time you buy or sell digital coins on an exchange, you pay a fee. For every trade made, the customer will pay the exchange a fee of around 0.1% or greater. That may not sound like a lot, but remember the time of processing over $13.5 billion is traded on exchanges every day. 0.1% of that $13.5 billion amounts to $13.5 million in exchange fees paid every day.
For cryptocurrency exchanges, 0.1% is a low fee and it doesn’t take into account over-the-counter trades or contract for different brokers either. Your plain cryptocurrency exchanges are probably collectively pulling in approximately half a billion dollars in trading fees every month.
However, there are other fees as well. Every time you make a transaction or a withdrawal, you need to pay the exchange fee. This changes according to the platform, but it can reach a couple of dollars per withdrawal. The common wisdom in digital money is that you should store your coins or tokens in your own wallet and this means paying the exchange withdrawal fees.
Those are not the only fees that the platforms take. When depositing fiat currency onto the likes of Coinbase, your deposit method will have a significant impact on fees. If you’re using a credit or debit card to buy Bitcoin on Coinbase, you will be charged a 3.99% fee.
Business To Business Revenue
When you develop cryptocurrency exchanges do not publicly advertise their exchange listing fees. However, it is said that cryptocurrency projects commonly pay in excess of $100,000 to get their crypto coin listed on a good exchange. Some ICO founders have reported being quoted prices as high at $1 million for an exchange listing.
Now consider that many exchanges have over a hundred cryptocurrencies listed. Imagine if just half of those listings were paid for at a rate of $100,000. That would net an exchange a cool $5 million dollars in additional revenue.
The truth is that the leading platforms probably charge a lot more than a million for an exchange listing. However, this just goes to show how rewarding exchanges can be.
Right now, there are many people doubting whether crypto exchange fees are excessive. It is important for all investors to understand the fees, for what they are paying, and to be given the facts. It’s on you to decide which cryptocurrency exchange software you wish to give your business to. However, if you need a bit of help deciding, then just check out this detailed guide to finding the Best cryptocurrency exchange consultants for your white label bitcoin exchange platform to develop a cryptocurrency exchange of your own.
What impact does Coronavirus make on the cryptocurrency market?
The coronavirus epidemic has grown globally. With hundreds of countries reporting their cases since the beginning of the year, the World health organization (WHO) announced its raising global spread and impact alert to be very high.
The rapid spread of the unexpected virus, which started in China a year earlier, has stoked a great impact in the global markets. The 3 major U.S. stock indexes on track have experienced their worst period since the financial crisis in 2008.
But, expert analysts and speculators have supposed that if the Coronavirus threat continues, the price of Bitcoin will maintain to grow. Economists have stated that in this condition the economy often acts oppositely or differently. As the investors and buyers usually try to secure their assets and invest in secured assets and crypto coin like BTC leading to the fee of Bitcoin rise and reduces hazard factors.
Cryptocurrency exchange consultants
Before the Impact of Coronavirus, many factors like hacks, scams, regulations, and bans, economic downfalls threatened the crypto industry, but nothing could modify the enlargement of the crypto world.
If you wish to use the opportunity, a leading cryptocurrency exchange development company like Shamla tech provides well-desirable cryptocurrency exchange software and white label bitcoin exchange platform development services for all your business needs. We employ a customized solution Cryptocurrency Wallet Development that secures your coins or tokens. Our cryptocurrency exchange consultants provide advanced services to deal with the logistical demanding situations and health dangers posed within the sector.
Our team of professional developers and cryptocurrency exchange consultants assures cutting-edge services online and offline that will help you excel even at the time of pandemics seamlessly.
Therefore, relying on structured development services may gift a serious advantage, both at the usual trade day and during disease outbreaks.