With the introduction of numerous new cryptocurrencies and the gradual emergence of a much more sustainable crypto marketplace, exchanges have increased their profits year after year.
How Does a Crypto Exchange Profit?
Let’s get down to business. The common cryptocurrency exchange makes money from traders in four ways:
- Fees for deposits
- Fees for withdrawals
- Cryptocurrency sales
- Purchasing cryptocurrencies
How Much Do Crypto Exchanges Earn?
To answer this question, let’s look at the most recent data, which shows that Binance was the top-earning cryptocurrency exchange, earning $3.48 million per day. Profits on the top 20 cryptocurrency exchanges averaged around $1 million per day. However, only the top six could claim to earn more than a million dollars per day. Binance, Upbit, Coinbase, Bittrex, Bithumb, and Localbitcoins or Rapidz.
Binance has over $1 billion in cumulative profits since 2018, Upbit and Bithumb have dropped 70% and 63%, respectively, and Chinese-founded Huobi processes over $1 billion in trades per day and continues to grow (their profits are unknown, but some argue that they are more profitable than Binance).
So far in 2020, the top earners have been bitcoin, Ethereum, HCoin, Coinsbit, BitForex, and LBank.
Where Can You Find the World’s Best Exchanges?
China, South Korea, Japan, and Singapore dominate the crypto exchange scene, with Asia-based exchanges handling more than half of all cryptocurrency trades.
Can You Launch Your Own Cryptocurrency Exchange?
There are two ways to start a bitcoin exchange. One option is to build a bitcoin exchange from the ground up, including the entire development process. It may require a significant amount of time and technical expertise, but it can still be completely customizable to your specifications. The other option is to go for White Label Crypto Exchange Development, which allows you to launch your platform quickly. The scripts are completely customizable to meet your specific business needs.
It is possible to complete in ten simple steps:
- Assemble a legal team
- Solicit funding from investors
- Find a company that develops white-label crypto exchange platforms to help you build your exchange.
- Make alliances and connections with other exchanges.
- Look for a payment processor to handle your transactions.
- Make certain that your transaction is safe.
- Bug testing in beta
- Begin publicizing your platform
- Create a customer service team
- For ongoing issues, consult with your lawyers.
What’s important to remember is that there will be many legal implications along the way, and international jurisdictions will come into play depending on where your exchange platform is based. It is where the users are, what digital currencies are being traded, and more. However, with the sheer number of crypto exchanges in the area, these legal obstacles are easy to overcome. So, don’t delay!
Running a successful virtual currency exchange is thus one of the most profitable businesses on the planet. What makes these cryptocurrency exchanges so wealthy?
Fees for Exchange
The main value that digital exchanges provide, like any market, is a long line of crypto coin buyers and sellers. In short, cryptocurrency exchange platforms act as market makers by connecting buyers and sellers. To be successful, a crypto exchange platform must have a large number of users, which usually necessitates:
- The creation of a beginner-friendly exchange platform.
- Millions of dollars have been spent on marketing.
- Programs for referrals.
- Promotions are being run to attract new users.
- Create user-friendly mobile apps.
- Customer service is second to none.
- Create a trustworthy reputation.
- Doing all of this efficiently costs a lot of money. This is essentially what you are paying for when you pay fees to a platform.
What Is the Purpose of Fees?
You must pay a fee every time you buy or sell digital coins on an exchange. The customer will pay the exchange a fee of around 0.1 percent or higher for each trade made. That may not seem like much, but consider that over $13.5 billion is traded on exchanges every day. Every day, 0.1 percent of $13.5 billion is paid in exchange fees, totaling $13.5 million.
For cryptocurrency exchanges, 0.1 percent is a low fee that does not include over-the-counter trades or contracts with different brokers. Your standard cryptocurrency exchanges are likely to earn half a billion dollars in trading fees every month.
However, there are additional charges. You must pay the exchange fee each time you make a transaction or withdraw money. This varies by platform, but it can reach a couple of dollars per withdrawal. The conventional wisdom in digital money is that you should keep your coins or tokens in your wallet, which requires you to pay exchange withdrawal fees.
These are not the only fees by the platforms. When depositing fiat currency on sites like Coinbase, your method has a significant impact on fees. When you buy Bitcoin on Coinbase with a credit or debit card, you will be charged a 3.99 percent fee.
Revenue from Business to Business
When creating cryptocurrency exchanges, do not publicize the exchange listing fees. However, it is reported that cryptocurrency projects frequently pay more than $100,000 to have their crypto coin listed on a good exchange. Some ICO founders have reported receiving quotes for an exchange listing as high as $1 million.
Consider that many exchanges list more than a hundred cryptocurrencies. Consider if only half of those listings were paid for at a $100,000 rate. This would result in an additional $5 million in revenue for the exchange.
The truth is that the leading platforms will almost certainly charge much more than a million dollars for an exchange listing. This, however, demonstrates how rewarding exchanges can be.
Many people are currently questioning whether crypto exchange fees are excessive. It is critical for all investors to understand the fees they are paying and to be provided with the facts. It is up to you to decide which cryptocurrency exchange software you want to use. If you need some guidance, check out this detailed guide to finding the Best Customized Blockchain Solutions for your white label bitcoin exchange platform to develop your own cryptocurrency exchange.
Consultants in Cryptocurrency Exchange
Many factors, such as hacks, scams, regulations, bans, and economic downturns, threatened the crypto industry before the impact of Coronavirus. Still, nothing could stop the crypto world’s expansion.
As a result, relying on structured development services may provide a significant advantage.