Advantages of Starting an OTC Exchange

Launching a cryptocurrency exchange requires a deep understanding of different types of exchanges and their differences. Your goal might be to design either a P2P or an OTC exchange, each of which has its own features and target users.

In this article, we will explain what an OTC cryptocurrency exchange is in detail. Stay with us to learn about the advantages of OTC trading in crypto, and key points for designing this type of exchange so you can make an informed decision when starting your business.

What is an OTC cryptocurrency exchange

OTC (Over-the-Counter) exchanges are platforms where cryptocurrency transactions take place directly between a user and the exchange itself. In this setup, the user buys or sells cryptocurrency directly tofrom the exchange.

This is different from P2P (Peer-to-Peer) exchanges, where users trade directly with each other. In OTC exchanges, the exchange acts as an intermediary and allows users to buy and sell cryptocurrencies. The prices are usually set by the exchange, and users can buy or sell based on these prices. OTC exchanges in crypto are often used for large-volume transactions.

Make sure to read: The Impact of AI on Cryptocurrency Exchange Development

Designing an OTC exchange website

Designing an OTC exchange website gives your business many opportunities but also has some challenges. Now that you know what an OTC exchange is, let’s look at the advantages, disadvantages, and key tips for designing a successful platform:

1. The importance of liquidity in OTC exchanges

If you want to launch an OTC exchange, the first thing you need to know is that you must have a lot of liquidity (money or assets) to handle users’ orders. Managing an OTC exchange is not easier than managing a P2P exchange.

In P2P exchanges, users create supply and demand, and the platform just connects them to trade. But in OTC exchanges, the platform must always be ready to buy or sell cryptocurrencies for users.

The amount of liquidity you need depends on how many users you have and your position in the market. The more users and types of transactions your platform handles, the more strategies you need to provide cryptocurrencies. Starting this type of business requires a bigger investment, but it can also bring higher profits for the owner.

2. The importance of simple UI/UX in OTC exchanges

One reason users choose OTC exchanges is the speed and ease of transactions. P2P exchanges usually have better prices because they are competitive, but OTC users want simple and quick trading.

This means your platform must have a clean and easy-to-use interface (UI) and a good user experience (UX). It should be simple so users can buy or sell cryptocurrencies without difficulty or delays. This is a key point when designing an OTC exchange website.

Make sure to read: Types of spot trading crypto exchange platforms

3. Higher profits with flexible pricing

OTC users are usually less sensitive to the price of transactions. These users may not know how to use P2P platforms or prefer fast and simple transactions.

This allows OTC exchanges to make higher profits. The platform owner can set the prices of cryptocurrencies using their own strategy and also decide the transaction fees. This creates more ways to earn revenue.

4. Guarantee of fast and easy transactions

The cryptocurrency prices on OTC platforms are often slightly higher, and this is reasonable and justifiable. An OTC exchange essentially guarantees users that their cryptocurrency needs will be met quickly and easily, no matter the quantity.

For example, when you visit an OTC exchange, you can instantly see the price of the cryptocurrency you want—say, Tether is priced at 70,000 toman. You can easily buy 100, 1,000, or any other amount of Tether without worrying about availability. You simply place your order and complete your transaction quickly.

In contrast, on P2P platforms, buying any amount at any price isn’t always possible. For instance, you may see Tether priced at 69,000 toman on a P2P exchange, but since the supply is provided by other users, availability can be limited. For example, there might only be 1,000 Tether available at that price, restricting your purchase. Estimating the final cost on P2P platforms is harder, so some users prefer the convenience of OTC exchanges for their transactions.

Make sure to read: How to create a cryptocurrency website?

5. Innovation: The key to success in OTC exchanges

If you want to start an OTC exchange, adding innovative features is essential for successfully entering the market. In the past, many creative features didn’t align with the simplicity and speed expected from OTC platforms. As a result, innovation was often focused on P2P exchanges.

Today, however, innovation is growing in OTC exchanges too. Examples of creative features include staking, various investment funds, advanced access options, news and price comparisons, alerts, and bulk purchases. Since market leaders are already adding these features, you should incorporate them into your OTC platform from the start to make it more attractive to users.

6. Support for a wide range of cryptocurrencies

An online OTC exchange should support various cryptocurrencies and networks. In P2P exchanges, liquidity is provided by users, so only popular cryptocurrencies with strong demand are usually traded.

However, when a user visits an OTC exchange, they expect not only major cryptocurrencies like Bitcoin and Tether but also trending tokens like Hamster or Doge-related coins to be available. As the owner of an OTC platform, offering less popular and short-term trending cryptocurrencies can be a great marketing strategy, as P2P platforms usually don’t focus on these.

7. Dedicated wallets for each user

Another important aspect of designing an OTC exchange is the wallet architecture. In the past, OTC platforms often used a single wallet system. However, as these platforms have evolved, and due to security, regulatory, and user expectations, wallets should now be designed individually for each user. The exchange must also be capable of managing this larger number of dedicated wallets efficiently.

Make sure to read: How to Start a Crypto Exchange like Binance?

Advantages and disadvantages of starting an OTC exchange

At the start of this article, we introduced OTC exchanges and their features. Based on the points discussed, the advantages and disadvantages of OTC exchanges can be summarized as follows:

What are the benefits of OTC crypto?

Higher Profitability: With greater control over pricing and transaction fees, there is potential for higher profits compared to P2P exchanges.
High Flexibility: You can provide customized services and support a wide range of cryptocurrencies.
Fast and Easy Transactions: With well-designed UI/UX, users can enjoy a smooth and fast trading experience.
Liquidity Management: Proper financial management ensures sufficient liquidity to meet user demand.
Innovation: You can introduce new features and services to attract users and stand out from competitors.

Make sure to read:How to make a finance website?

Disadvantages of OTC exchanges

High Initial Costs: A significant initial investment is required for liquidity and platform development.
Greater Responsibility: The OTC exchange manager is directly responsible for ensuring liquidity and securing user assets.
Intense Competition: The OTC market is highly competitive, requiring constant innovation to succeed.
Security Risks: Protecting user wallets and preventing hacking attempts is a serious challenge.
Regulatory Compliance: Adhering to cryptocurrency regulations can be complex and costly.

Key Tips for success in starting an OTC exchange

Ensure Sufficient Liquidity: Have strong financial resources to meet user demand.
Simple and User-Friendly UI/UX Design: Create a positive user experience to attract more users.
Support a Wide Range of Cryptocurrencies: Cater to the diverse needs of users.
Continuous Updates and New Features: Keep the platform engaging and attract new users by adding innovative features.
Focus on Security: Implement the strongest security measures to protect user assets.
Regulatory Compliance: Ensure the exchange operates within the framework of existing laws and regulations.
Effective Marketing: Promote the exchange to attract and retain users.

Conclusion

In this article, we provided a comprehensive explanation of what an OTC exchange is, how it works and key tips for setting up such a platform. As you can see, OTC exchanges offer many opportunities for businesses but also come with specific challenges. We also tried to answer what are the benefits of OTC crypto.

DigiAlpha, with its expertise in designing cryptocurrency exchange websites, is ready to guide you on this journey. Our expert team will assist you in creating a professional and efficient OTC exchange. From designing a simple and attractive user interface to implementing robust security systems and supporting a wide range of cryptocurrencies, we cover all aspects.

If you’re planning to enter the cryptocurrency space and want to start an OTC exchange, contact us today. Our consultants are ready to answer your questions and help you succeed.

ملخص

صرافات OTC (Over-the-Counter) هي منصات تتيح للمستخدمين شراء وبيع العملات الرقمية بسهولة وسرعة دون الحاجة للتعامل المباشر مع المستخدمين الآخرين. تتميز بمرونة عالية وأرباح أكبر بفضل التحكم في الأسعار، لكنها تتطلب استثمارات أولية كبيرة، إدارة نقدية دقيقة، وتركيزًا على الأمان والابتكار لجذب المستخدمين.

هل ترغب في إطلاق صرافة OTC احترافية؟ تواصل معنا الآن لتصميم منصة مبتكرة وآمنة تلبي احتياجات عملائك وتحقق نجاحك في عالم العملات الرقمية.

What Are the Advantages of Designing an OTC Trading Exchange in Crypto