Opinion: Launching a Bitcoin exchange requires confidence in multi-fold market growth

In 2020, developers should refrain from launching cryptocurrency exchanges if driven by the desire for quick profits. This was stated by Pavel Shkitin, CEO of Nominex, during the ForkLog online conference “Centralised Exchanges and DEXs: Pros, Cons, Differences.”

According to the expert, this is not the best time for new trading platforms to emerge, as supply exceeds demand.

“You should have launched the exchange in 2017. In 2020 you will have to operate in a market that does not need your solution. You must be confident in multi-fold growth of the crypto market,” said Pavel Shkitin.

If opening an exchange is an end in itself, its founders must be prepared to spend two years carefully developing the product and accounting for the possibility of losing the invested funds.

“You will have to invest your own money, because ICO/IEO models are dead, and venture capital investors are not willing to take high risks,” explains the expert.

An important aspect will be having a strong technical team and experience in launching successful cryptocurrency projects.

There is a huge gap between centralized and decentralized platforms in terms of tooling and ease of trading, the expert notes:

“For daily trading and earning, a CEX is suitable. No DEX allows trading such a wide range of currencies, because cross-chain transactions are quite limited. Decentralized platforms offer an income farming strategy, but how long it will stay in fashion is hard to predict”.

Regulated and unregulated exchanges have their drawbacks. Most users do not want to reveal their digital assets and pay taxes under regulation, but on unregulated platforms there is a high risk of scams and loss of funds.

“Users will come to a cryptocurrency exchange if it has a convenient trading terminal, the ability to register without KYC, abundant liquidity, a strong affiliate program and a widely adopted exchange token,” said Pavel Shkitin.

An additional plus would be the platform’s presence in the top-50 CoinMarketCap, willingness to pay its users and educate them.

“In the first year a new exchange will not be able to earn – you will have to spend a lot and work for the long term. Even advertising won’t pay off in the short term,” added Shkitin.

Overall, developing a trading platform requires a year and $1 million, the expert concluded.

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