Advantages of running trading platform?

[HaidarX]

Hello
Running a cryptocurrency exchange platform costs a lot of dollars.. A lot !
I need to understand what are the advantages of running such a platform?
What is the profit margin, in general, and is it really worth spending hundreds of thousands to have a white label platform?
I know it must be worth the price. But how?
I tried finding information on this online, but was not successful.
I appreciate any input regarding this...

HaidarX

[1Referee]

There are plenty of exchanges popping up lately and 95% fail after some times as there is no interest in them, or because they simply don't have the knowledge and funds to run it. As a serious exchange to start, you need to invest hundreds of thousand dollars upwards to a million in security, staff & support, servers, advertising, getting the right documents to start, legal fees, etc. And then you also need to have a huge bankrol in order to make sure people can convert their BTC to fiat and then cashout to their bank accounts. At the very beginning it's more spending than getting a decent income.

You need market movers, small traders, rookies, and make them trade as much as possible. BTC-E for example, made around $8000 from trading fees today. Bitstamp made around $20,000 from trading fees today. (All this is a very rough guess, so don't quote me on that.)

If you can't establish yourself well, then you end up with losing huge loads of invested money. You need to market yourself very well to have a chance to grab a part of this very aggressive market.

[Serpens66]

I think the best example for a very good newcomer is Kraken.com.
They did everything right. They are very professional and have a very good support. So it is no suprise, that they are that big now and will grow.

So the biggest problems I think are:
- be really professional
- get a bank account that you can use for deposits/withdrawals for your customers (alot of exchanges do not get a bank account, that's why justcoin or Yacuna failed)
- get some market makers (without orders in your orderbook, no one will register)

[HaidarX]

Thank you, 1Referee and Serpens66 for the rich information.
I believe this is good for starting to understand the business model and strategies.
Marketing is the main key in the end, I see.

Great help indeed.. Thanks again guys

All the best

[maokoto]

As I understand it, profit will come from:

-Trading fees. If trading volume is high, it can be quite a bit.

-You hold the money of the users and can profit from that (investing in other things). Kinda like a bank. You do not need to hold all money from all users without touching it, just having enough for those who want to withdraw.

-withdrawal fees. Most sites have 50k satoshis fee or more to process withdraws.

-The ability to predict market tendencies better than anyone. Perhaps you can profit from that too.

All those things do not seem too much, and the investment is high. I guess it would take long to pay back, though.