Blockchain has emerged as a disruptive technology, not just in the finance world but also in the data security domain. Blockchain technology plays a primary role in enabling cryptocurrency. It also finds applications beyond cryptocurrency, particularly in food safety, gaming, and health records. Due to the dynamic nature of blockchain technologies, cryptocurrency exchanges are adopting them aggressively.
According to a PWC report, more than 75% of financial institutions adopted blockchain technology to integrate cryptocurrency exchanges in their in-production system in 2020. This trend has also driven the demand for an independent blockchain. Major cryptocurrency exchanges, particularly the Bitcoin exchanges, are investing in their blockchain’s digital development, equipped with tailor-made exclusive encryption and absolute control on the transfer and verification of digital money. Bitcoin value reaches an all-time high and continues its bullish zone. Several people/investors are now planning to invest or trade in Bitcoin. If you are also planning to trade in Bitcoin, the Bitcoin Pro app is an automated trading platform that is a unique way to trade in Bitcoin, and it uses a smart trading algorithm. To know more, you can check Bitcoin Pro Review.
Bitcoin Exchanges and Blockchain
Bitcoin exchange is a cryptocurrency exchange that primarily deals with the trade of Bitcoin (BTC) tokens. It allows users to buy, sell, and trade BTC at market prices. For handling transactional data, Bitcoin exchanges are blockchain native. They must satisfy the data security requirements set by the blockchain to complete transactions.
For customization purposes, Bitcoin exchanges consider developing their separate blockchain. Both centralized and decentralized Bitcoin exchanges can run their blockchain independently to control their transactional operations. One of the main reasons why Bitcoin exchanges put more emphasis and effort in building their blockchain is that they can easily update their core. Their blockchain helps them keep their users interested in innovations.
What is the Importance of Blockchain in a Bitcoin Exchange?
Multiple factors highlight the importance of building a blockchain for Bitcoin exchanges. Business flexibility, smart contract enablement, and customer experience innovation are the three key factors for Bitcoin exchanges in building their blockchain.
Bitcoin exchanges, with their blockchain, can facilitate higher ease of use. They can easily satisfy their business needs without facing any major complexities. It allows them to run free versions of their exchange and scale their operations with their user base. Bitcoin exchanges also experience freedom with their coding. They can reuse their blockchain resources at will. They can also offer products or services more flexibly to their valued customers.
Smart Contract Enabler
Smart contracts allow Bitcoin exchanges to gain dominance in the crypto industry. Blockchain enables smart contracts as exclusive contributions and differentiators to Bitcoin exchanges. Enabling smart contracts drives the automatic execution capabilities of Bitcoin exchanges. With their privatized blockchain in place, the exchanges can run Bitcoin transactions securely. They can ensure that all transactions meet the criteria specified in the contracts and curb the inconsistencies caused by the middlemen.
Decentralized Bitcoin exchanges can run smart contracts in their core when they have their blockchain. It enables them to unlock new opportunities for decentralized applications (dApps). Bitcoin exchanges can integrate their dApps on multiple platforms via smart contracts. Backed by their blockchain, decentralized Bitcoin exchanges can also introduce new ways of BTC trading.
Innovative User Experience
Innovations are important in the crypto space. They drive the customer retention rate for crypto exchanges. In the same light, Bitcoin exchange platforms can attract more traders when they innovate via their blockchain. They can implement unique branding and marketing practices when they run their blockchain. It gives Bitcoin exchanges a standout identity, which is a huge attraction for crypto traders. All major Bitcoin exchanges such as Binance and OKEx have their native blockchain.
Need for Building Your Blockchain?
The decentralized nature of blockchain technology gives Bitcoin exchanges new opportunities for business growth. The need to create your blockchain comes from the growing demand for greater transparency and enhanced security for crypto transactions. Here’s why building your blockchain is important:
- Bitcoin exchanges can find their niche in the global market when they run their blockchain.
- It is easy to design and customize workflow during blockchain integration.
- The exchange is not forced to choose between a new and an existing blockchain.
- It can adopt the best of both blockchains and make them public or private at their discretion.
- Having your privatized blockchain also allows your exchange to create a consensus mechanism more relevant to your business.
Furthermore, building your blockchain also enables easier traceability, which is considered a breakthrough characteristic of leading distributed ledgers.
While building a Bitcoin exchange platform, having a native blockchain offers ample benefits. It amplifies your crypto transactional ecosystem with smart contracts and high-quality UX innovations. Native blockchain development also allows you to create and circulate native tokens, the future of business for Bitcoin exchanges.