How to create a crypto-exchange from scratch

The CryptoRadio team-telegram channel with audio posts about cryptocurrencies, learned from the founder and CEO of crypto-exchange www.btc-alpha.com Vitaly Bodnar, how to create a crypto-exchange from scratch.

How did you know about cryptocurrencies?

My specialization in education-physics, computer science, computer technology, I was constantly engaged in the development. I happened to read on the forum about bitcoin and started for days to figure out to read everything about how it works.

What caught you? Decentralization?

Not only decentralization, but the whole principle, all genius is always simple. In bitcoin, very complex things add up in a very simple system.

How did you get into the crypto industry?

It all started with the fact that I was wondering how mining is. Once I understood the process, there was another problem — what to do with the coins that I nominal. I brought the money to the stock exchanges, which, by the way, then terribly worked. So I smoothly switched trading.

How many years did you trade, how much did you earn in a year?

Since 2013, I have earned about $ 100,000.

Why did you decide to create an exchange?

This is due to my first failure. I, like any good trader, have a set of rules that I do not violate: I plan in advance the point of exit from the position, I do not work when I am under stress, I try not to fix the disadvantages, it is easier for me to wait, I do not take it out on the day when I go into the minus, I just close the laptop and do not work. My failure was due to stress, and at that moment I broke all the other rules. I went into a negative deal, closed it in the negative, decided to take it out. During the day I had 10 operations in such scenarios. I lost tens of thousands of dollars, which I earned for a very long time.

How did this affect the creation of the exchange?

I started to analyze the situation and realized that the trader can earn and can lose money. But the stock exchange always wins. I realized that it was all quite interesting and that I wanted to create my own crypto-exchange.

Let's make 5 steps to create your own stock exchange. First step?

For me, the first is to "burn with product". To all my friends, acquaintances, strangers, every party I said that I was developing a crypto-exchange and I needed a team, people, money, and everyone said that it would not work, but I had a crazy faith. It was all about in the 2014-2015 year.

Since I had a positive reputation for developing projects, then immediately there were people who did not believe in cryptocurrency, not in the exchange, namely in me as a developer who can create a product.

Originally I had the idea that it is possible to take a complete basis CRYPTOPSY, a little rasp, and it will work. As with platforms for online stores. But such a product did not exist. Going deeper into the topic, I realized that I want to write everything from scratch and understand everything in detail.

Second step?

The calculation of the entire business model. At that time, we used bitcoinwisdom — one of the first resources, where you can see how the market is moving, and analyze everything in a day, a month, to see the volume. For example, the exchange conducted transactions for 5000 bitcoins at a conventional rate of $500 per day. The Commission exchanges — 0.4%. We multiply 500 by 5000 and 0.4 and get a possible profit per day.

It turns out, the business model for exchanges is quite simple?

Yes, I believe if some thing is very complicated, it will not work, only simple things work.

Third step?

Preparation of technical specifications. I must say that the initial terms of reference, which I created, and the result is radically different things for the reason that I do not understand a very large number of details, some points that I thought were extremely important, were not important at all, and Vice versa. This is the standard story.

Tell us more detail, as you did TK? Where did you get information from?

At that time, I traded on many exchanges and saw how DDoS attacks occur, saw how exchanges go bankrupt, saw when users are loyal to the exchange, and when-no, and why it happens. The terms of reference I built from my experience, I made a product in which I as a trader will be convenient. I wanted all operations to be clear. I used the program to create an interface, where I drew 25 pages of the future site and built its logic. Moreover, the crypto-exchange is all basically the same.

How often did you resort to ready-made solutions in the technical part?

I wanted to use for receiving and sending bitcoin blockchain.info Oh. At that time, they provided a public API. At the initial stage, I thought it was enough — with minimal cost to get the most good product, and then just to improve and improve each item. But they turned us down, without explaining the reasons. I believe that this is one of the most successful failures that has happened. We decided to figure out how Bitcoin works, and completely from scratch wrote his client, which is now constantly improving. That is, we have our own bitcoin wallet.

How long did it take to create the first lines of code?

Over a year.

We pass to the fourth step.

Team. I already had a well-coordinated team with which we worked on two projects. But I understood that we did not have enough experience to create a quality product in the cryptosphere. Therefore, we decided to pump our knowledge with additional tasks, for example, participated in the development of protection against DDos attacks, services for receiving money and so on. For three years we have been working on the terms of reference and parallel — on third-party projects to understand how everything works. Thanks to this, we also got acquainted with the specialists who helped to make our project in the future.

Fifth step.

The most banal — money. In the beginning, I managed to raise about $300,000. This is the year of work of the team of programmers, minimal costs, but without legal services. But it was in 2013. Now, I think, required a minimum of $1 million. We started in a different competitive environment and in different conditions, then there were only 5 exchanges, and now there are hundreds of them.

How did you get the money? Was it easy?

Friends, acquaintances, some personal contacts — in the beginning it was extremely easy, as I had very good recommendations, and people were ready to give large sums.

At what stage is the progress of the site today?

Periodically we advertise, sometimes I speak publicly. I don't see the point in a big PR campaign at the moment. While we are doing a redesign, improvements.

You don't have a million users yet, but when do you think you'll have them?

With the right marketing for the year, we will gain a million.

How much profit does 1 user bring you?

On average, I think a few dozen dollars.

What is the geolocation of your users?

The whole world, but we do not allow registration from America due to legal issues.

Do you plan to move to a jurisdiction that is more loyal to the cryptocurrency?

For me, where I am is not important. My main goal is to complete the legality of the actions. If somewhere the activities of crypto-exchange will be banned, we will not work with these countries. The problem is, in most States, you don't know if your activities are legal.

Name the TOP 3 exchanges that you like, except BTC-alpha.com.

At the moment, I do not trust any exchange. Even a number of exchanges, which now have a good reputation, work only to withdraw money at one time.

Then why did you create the stock exchange?

I wanted a cool product.

You think big exchanges are crooks and small ones aren't?

No. Let's say tomorrow "cocamide" USDT. What will happen to Bitfinex, which has 50% of the funds are in USDT? They're bankrupt. If they are honest, the amount of user cryptocurrency that will remain, they will either give back to them or share in some percentage. Or just keep it. Poloniex also has 30% in USDT. In theory, they can survive, but the question is again to guide how they will act.

And if there are no USDT tokens on the stock exchange, are you ready to trade there?

This is a question of safety and reliability. Now, there are no rules of compensation, people still keep money on the exchanges, despite the lesson of VTS. But then as with the banks, I with them had a negative experience, but this does not mean that I will refuse their services.

What are the advantages of the exchange BTC-alpha.com, compared to other exchanges, why should the reader go exactly to you?

In the first place — it's easy, we all is logical: to buy, to sell here. Registration in two clicks, when the user enters the "Finance" section, he immediately sees his wallets, but I'm not saying that others do not have this, others all implemented a little more difficult, a little differently. These are the little things and create benefits. We have a regressive Commission. Before this no one had, only on Poloniex recently appeared. We have the ability to make dollars through Advanced Cash, Perfect Money. Also to the user who made the publication in social networks about us, we give some dollars for the exchange test.

What are the guarantees that your exchange will not be hacked?

This is a very delicate question. I can say unequivocally that none of the exchange are not immune from hacking. The question is how the exchange will react and what losses will be incurred when hacking. We do not store a large amount of funds on hot wallets, that is, we have special secure storage, not connected to the Internet. I have developed an entire scheme for storing these funds, there are purses that accept funds, there are purses that pay out funds, and there are purses that store funds. We have developed a system of Analytics. There are many solutions that allow you to monitor the server completely, absolutely everything, that is, we see the connection to the servers, see the load, see the processor time, RAM. We're not blind kittens. Now, if there is a DDoS attack, we initially see where it is happening, what request, where and what it affects, and we can make some lightning-fast decisions about it.

How many employees are involved in security?