How to Build Your Own Bitcoin Exchange
Bitcoin exchanges play a vital role in promoting the cryptocurrency by facilitating its use. Most bitcoin users perform their transactions through an exchange. However, bitcoin is not yet mainstream. So far, only a narrow segment of the population, mainly innovators, technology enthusiasts, and visionaries, have adopted bitcoin. Expanding the number of exchanges would help overcome resistance to the cryptocurrency’s adoption by increasing its visibility.
Also read: Insurance Coverage For Bitcoin Exchanges Against Cyber Attacks
Overcome Resistance to Change with More Bitcoin Exchanges
Several factors slow the spreading of a new idea or product. One of them is resistance to change. By nature, most people are resistant to change.
Bitcoin and its blockchain technology bring change — dramatic change. Indeed, these novel technologies are bringing our civilization to the outset of a far-reaching technological revolution. Consequently, the resulting changes will be pervasive, all encompassing, and irreversible.
In addition to other strategies, communicating more effectively about the virtues of bitcoin and creating more user-friendly exchanges, would help overcome resistance to change and increase the rate of adoption.
As an example, take one of the problems impeding electric vehicle adoption: Lack of infrastructure.
“If you want people to run electric cars in the city and suburbs, there will have to be many more charging stations,” says Eric Schaal.
Likewise, if you want more bitcoin users, there will have to be many more exchanges.
What is a Bitcoin Exchange?
A bitcoin exchange is a site that facilitates trading bitcoins for fiat currencies or other digital currencies, and vice versa. Bitcoin exchanges also provide you with the service of storing your bitcoins.
When selecting an exchange, consider security as one of the primary attributes. You should also verify how user-friendly the exchange is and what payment options it offers you (cards, Paypal, cash, and bank transfer).
Moreover, you must make sure the exchange is available in your country. The level of regulation pertaining to bitcoin exchanges varies from country to country. In Japan, for example, exchanges have to register with Japan’s financial regulator. In Argentina bitcoins are unregulated, but “transactions with bitcoins may be governed by the rules of the sale of goods under the Civil Code,” according to the Library of Congress.
Another point to consider is the degree of decentralization of the exchange.
In the U.S., a court recently forced Coinbase to hand over user data to the Internal Revenue Service (IRS). In effect, Coinbase informed its users that the “U.S. government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase U.S. customers’ records over a three year period. The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.”
On the other hand, Bitsquare claims to be a decentralized exchange. “Bitsquare is an open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies or alternative cryptocurrencies.” Bitsquare also claims, “The system is peer-to-peer, and trading cannot be stopped or censored.”
A useful resource for checking and comparing various Bitcoin exchanges available in the market is BestBitcoinExchange.
Building Your Local Bitcoin Exchange
If you have an entrepreneurial mindset and wish to join a massive technological revolution, you can build your own local Bitcoin exchange. You can build one even if you are not too technically savvy and have limited capital to invest in software and infrastructure.
Software packages are entering the market to help you set up your Bitcoin trading platform. For example, BTCTrader offers a fully branded, customized, and managed white-label service that offers you the ability to “start your local bitcoin exchange in 45 days.”
“This software solution is for entrepreneurs looking to own and run a Bitcoin exchange in their market without having to invest in software and infrastructure. The platform comes equipped with liquidity ‘in-hand’ meaning that partners’ exchanges have access to a full order book from the moment their site goes live. BTCTrader is responsible for the regular deployment of new platform features, updates and also the safety of all bitcoin balances,” says Alphan Gogus, CFO at BTCTrader.
Alphapoint is another company offering “blockchain-enabled solutions to store, track, and trade digital assets. Its secure, scalable, and customizable platform enables customers to deploy blockchain technology to innovate, differentiate, and transform their businesses.”
“Customize and launch your own digital asset exchange in less than 20 days with AlphaPoint,” promises Alphapoint’s website.
Resistance to adopting bitcoin is diminishing. Indeed, bitcoin is achieving momentum, as shown by its price increases and the higher daily volumes that it has achieved in the last few months. More exchanges would certainly add to its momentum by increasing the mainstream adoption of bitcoin and its underlying blockchain technology.
Do you think having more exchanges will help accelerate bitcoin’s rate of adoption? Let us know in the comments below.
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