Is it difficult to build a successful crypto exchange? Cryptonomos asks exchange executives
There are several hundred crypto exchanges in the world, a lot more than stock and commodity exchanges taken together. And new crypto exchanges open almost every day even on the bear market. Cryptonomos has asked several executives of crypto exchanges about how to develop a profitable business and attract customers. Technology, reputation, fees, customer support and trust are cornerstones of successful business The success of the crypto exchange starts from its website, it shows whether the exchange is reliable, or not, says Kriptomat CEO Srdjan Mahmutovich. “We noticed our new clients first put and withdraw some small amount of money, that they are testing us, whether our solution works. Once we pass the test, they could start trusting us,” he says. Changelly.com has designed a simple interface for a broad audience, says its CEO Ilya Bere: “Even though regular customers and professional traders often use our product, the service is more focused on a mass audience. I'm talking about those who come to the crypto industry as a beginner and independently study all the market aspects aiming to diversify their portfolios”. “To make a successful exchange is not easy at all,” says CHAOEX CEO Jason Wang, “this business is related with people, so the community is the most important to help us growing during this crypto winter. We design new operation activities to build community. Recently one of our users noticed that he never saw so many activities on other platform besides CHAOEX. Even when the market is dump, our users can earn. And we entertain them too.” According to Jason Wang, CHAOEX team should understand at least three aspects: trading system, blockchain knowledge and community. Technology Technology is of crucial importance, say all executives who participated in our survey. “Technology is crucial to advancing this mission; our technologists collaborate with researchers and managers to design, engineer, and run exchange platforms which enable systemization and scale in everything we do,” says Andrei Popescu, Co-Founder of COSS.IO. “The basic IT knowledge helps us build high concurrency system, this is the basement of exchange, then we can list all individual (custom) blockchains besides ERC20 tokens, then understanding the trading system to improve user experience”, says CHAOEX CEO Jason Wang. According to him, CHAOEX can upgrade the platform 3 times a week as the whole intellectual property is owned by it co-founders, which is a big advantage, because they can change the platform as users wish. Customer Support: time-consuming and expensive One of our biggest problems is customer support, says Alex Strześniewski, Business Development Director at CoinDeal. “Since day 1 we've customer support chat, which is currently available in 6 languages and as we grow there's going to be more. Sometimes one of the founders of Coindeal, is on Telegram, answering questions or me. Our customers really enjoy being able to see someone on another side who cares about the customers and their money,” he adds. Kriptomat offers online support in 20 languages, says its CEO Srdjan Mahmutovich: most people who register at Kriptomat have to pass KYC, and it is important that they should understand the exchange’s employees. “We have very fast and helpful customer service,” says Jason Wang, “we always consider each user's request personally and there were not a single problem that we couldn't solve. We gathered 100K+ new users from Nov to now, that's a strong number that inspires us to move forward." Trust “Building trust is the most important thing and other criteria are also important but they can be managed more easily,” says Max Grain, Product Management Executive at Bitlish, “people value trust, if customers have a positive experience with an exchange then any problem which may arise can be solved." According to Johnny LYU, VP at KuCoin, “trust is a must feature for an exchange to grow bigger”. Trust is based on two pillars – exchange security and its relations with customers. For example, Stellarport chose a decentralized model to protect customers’ funds. “Trust is a big factor. At centralised exchange there can be hacks. Stellarport doesn`t control the funds, so the risk of hacks is minimum,” says its Co-Founder Ishai Strauss. Customers’ trust is the result of the exchange’s operational history, openness, and customer relations, says Max Grain from Bitlish. “To build trust will never be easy,” says CHAOEX CEO Jason Wang, “we try to keep users updated with the problems we have and take their advice and comments. Besides, our customer service talk to our users as they are friends. Users really like it and step by step trust us.” Coindeal chose creative approach to transfuse trust in their customers, tells Alex Strześniewski: “One of the founders had a genius idea. Now we are an official global sponsor of Wolferhampton (football team in English Premier league). No company sponsors a Premier League team, if they want to make a scam exit in 6 months, right? I think that was a brilliant move not only in terms of acquiring new customers, but building trust.” Since more and more newcomers begin to trade at crypto exchanges, we asked Alex Strześniewski (Coindeal) for a list of things one should check before making the first trade. Reputation The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. Fees Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees. Payment Methods What payment methods are available on the exchange? Credit & debit card? Wire Transfer? PayPal? If an exchange has limited payment options, then it may not be convenient for you to use it. Verification Requirements Although verification, which can take up to a few days, might seem like a pain, it protects the exchange against all kinds of scams and money laundering. Geographical Restrictions Make sure the exchange you want to join allows full access to all platform tools and functions in the country you currently live in. Exchange Rate Different exchanges have different rates. It’s not uncommon for rates to fluctuate up to 10% and even higher in some instances. 24/7 User support Effective user support services are a critical element for the development of any online service. Most crypto exchanges do not provide support in real time. In some cases, users even have to wait for a few days for an exchange to reply, sometimes even weeks. This article is based on the exclusive interviews with top-managers of several crypto exchanges. Cryptonomos is most grateful to Andrei Popescu, Co-Founder of COSS.IO; Johnny Lyu, KuCoin VP; Srdjan Mahmutovich, Kriptomat CEO; Jason Wang, CHAOEX CEO; Max Grain, Product Management Executive of Bitlish, changelly.com CEO Ilya Bere, Alex Strześniewski, Business Development Director at CoinDeal, and Stellarport Co-Founder Ishai Strauss for their time and expertize.