This is a guide on how to a profitable start bitcoin business
There is almost no one who hasn’t heard of Bitcoin. It is usually mentioned in passing but most people are unaware of what it is.
Others wonder whether it is legal and what to do, while others wonder what Bitcoin can do for them.
Cryptocurrency, like Bitcoin, is trending and becoming mainstream.
Those who invested in or mined Bitcoin early are sitting on modest fortunes, and the concept is becoming mainstream.
“During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue-jeans made a nice profit.”As famed investor Peter Lynch said.
In the gold rush that is the cryptocurrency boom, one might compare the manufacturer of picks and shovels to the owners and operators of crypto exchanges.
This step-by-step guide will point you in the right direction if you see the potential reward of starting your own Bitcoin exchange business.
The purpose of this article is to examine how to start a Bitcoin business and earn money from it.
ALSO READ: How To Start A Business In USA From Nigeria (2022)
What Is Bitcoin?
Bitcoin is simply digital money, meaning that, unlike the Naira or the US Dollar which makes use of paper, Bitcoin is completely paperless.
It was created with the intention of making it easier to move money from country to country, some even call it borderless money.
Bitcoin, unlike regular currency (fiat), is not controlled by any single individual, organisation or government rather is controlled by Bitcoin users around the world.
How To Start A Profitable Bitcoin Business
1. Obtain Legal Counsel To Ensure Licensing Requirements Are Met
Before you set your plan into action, it is important to seek legal counsel to understand the regulatory demands of your new venture.
Proper licensing will need to be obtained in all jurisdictions in which the company plans to operate.
In many places, cryptocurrency exchanges operate without significant oversight, as government and regulation have not yet caught up with technology, while in other places including the US, Bitcoin operators must be licensed Monkey Transmitter businesses and must follow SEC and CFTC rules and regulations among others.
Proper legal counsel is a must. It is typical that exchanges that fall under the currency exchange umbrella, must adhere to Know-Your-Customer (KYC) regulations, which have become more and more prevalent to combat money laundering.
In the United States, for example, these rules have been in place since 2002 as a result of the Patriot Act.
Regulations vary by jurisdiction, so be sure to consult with an attorney familiar with the industry.
2. Attain Funding For Venture
Before starting on your project, you should know the approximate costs involved.
In order to develop and launch a cryptocurrency exchange, a bare minimum of $135,000 will be needed.
This includes the cost of technology, hosting, some initial legal counsel, government registration and initial advertising.
While not all funds are required upfront, it is important to ensure the venture has access to enough capital to allow a proper runway.
One major mistake made by startups is that they fail to plan for the future, landing small initial raises which may cover the costs of the development but will leave the venture without the critical operational cash necessary until it becomes profitable.
Startups also often make the mistake of licensing from unscrupulous crypto exchange providers that charge ongoing fees and fail to mention the legal obligations and costs required for setting up and maintaining an exchange.
3. Find A Technology Solution Provider
Modulus provides turnkey custom cryptocurrency exchanges, charging a one-time license fee without royalties or commission structures.
This means there are absolutely no ongoing fees, clients can host the exchange themselves and clients receive full source code, which is important for auditing purposes, as some regulators request to inspect the source code.
Always intent on providing clients with added value, Modulus has more than 20 years of experience developing stock exchanges, including backend technology used by some of the largest stock exchanges in the world.
Why white label with source code? White label exchange software with full source code allows all the customization of a custom-build exchange while decreasing time to market and overall cost significantly.
4. Connect Your Exchange With Others For Added Liquidity
The cornerstone of any successful exchange is liquidity. Without an order book and trading activity, potential customers will view your new venture with skepticism. In order to bypass these issues, without facing the need to simulate activity via dummy accounts within the new exchange, we can connect your exchange to a network of existing exchanges, enhancing its liquidity. Remember, the larger the network of exchanges, the less liquidity will be an issue for your new exchange.
5. Partner With A Payment Processor
Not all payment processors are equal. Fee structures, among other things, will vary widely between companies. You will need the lowest transaction rate in order to be competitive with other exchanges. Additionally, some processors build hidden fees into their contracts, so be sure you understand the contract you’re signing. Other differences between processors include settlement time and compliance with PCI DSS, a set of best practices to ensure cyber security.
Note that, in the United States, federal law does not require compliance, though many state laws do. Be sure your payment processor is PCI-compliant to safeguard your new enterprise against cyber threats. This is another example of the importance of understanding the intricacies of industry regulation.
6. Implement Best Security Practices
Exchanges built with Modulus technology are among the most secure in the world, utilizing offline cold storage wallets, two-factor authentication and encrypted databases.
Also, Modulus technology does not store passwords (only hashes). They have written extensively about the data breaches which have become infamous within the industry, including Mt. Gox and Bithumb.
The bottom line?
Cryptocurrencies have become a ripe target for cybercrime and hacking, leaving exchanges scrambling to differentiate based on security.
7. Go Live Via Beta Testing
You’ve built your exchange. You’ve set up a contract with a payment processing firm.
And, you’ve taken great pains to ensure your exchange is following all rules and regulations.
You have ensured that your venture is protected from cybercrime.
Now, it’s time it to launch your exchange and test its full range of capabilities in beta.
8. Start Marketing And PR Campaign
Once your exchange has launched, it is time to connect with crypto news outlets such as Coindesk for example.
It is important to adequately plan your marketing activities, along with their costs, to ensure your initial raise doesn’t leave you scrambling to cobble together additional funding.
Often, exchanges do not include a marketing budget, instead of focusing on free social media marketing until a critical mass of traders is reached.
9. Take Care In Providing Customer Support
While customer support is the last step in the making of a successful cryptocurrency exchange, your ability to shine in this area will determine your long-term success.
Those dealing with consumers must be attentive and satisfactorily resolve customer complaints and technical issues.
Customers should be responded to in a timely manner, so plan on implementing a ticketing system such as ZenDesk and staff it with knowledgeable and helpful representatives who are available 24/7, since cryptocurrencies never stop trading.
10. Maintain A Legal Team For Ongoing Compliance
We cannot stress enough that it is extremely important to maintain legal compliance and follow all current and proposed laws and regulations, not only in the jurisdiction in which your exchange is domiciled but also in all foreign jurisdictions in which your exchange members or traders will reside or conduct trading from.
Cryptocurrency laws are rapidly evolving globally, so it is very important to either hire a full-time, in-house legal compliance team or outsource to reputable law firms in order to keep your exchange legal in all geographies where you will conduct business.
ALSO READ: 20 Best Crypto-Friendly Banks in US, Canada, Europe (2022)
Frequently Asked Questions Starting A Bitcoin Business
Is Bitcoin Legal?
As to whether it is legal, in some countries it has been tagged as illegal although it is difficult to restrict people from using bitcoin.
What You Can Do With Bitcoin?
Regarding what can you do with Bitcoin in Nigeria, a couple of use cases are: using it as an investment vehicle to diversify your assets; trading by making gains off the price fluctuation just like forex trading. Bitcoin can also be used to transfer money across borders faster and cheaper.
How To Invest In Bitcoin
How to start investing in Bitcoin is pretty easy. A couple of years ago the reverse was the case but with platforms like Binance, investing in Bitcoin is seamless.
Binance is the largest crypto exchange in the world with over 13 million users around the world.
You can start investing in Bitcoin with as low as $5 and can fund your account with either your debit or via bank transfer.
All you need to do is Create an Account, Deposit Naira into your Wallet and then Buy Bitcoin.
Today, bitcoin has presented itself as a great investment product.
The demand and circulation of bitcoins will only keep on increasing, so there is a huge opportunity to make high profits by starting a bitcoin business using the techniques mentioned above.
Learn about 6 Easy Ways On How To Start A POS Business In Nigeria
What’s your opinion? Leave your comments below.