mflb94 (OP)
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December 17, 2013, 08:59:25 PM |
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Okay so like the title says, I am looking to start up a new altcoin exchange but I just need to smooth out a few aspects of my business plan. For start up expenses so far, I have:
Cost of a web developer to make the site- 1-3k based on bids I've received on eLance.
Hosting- depends. First off in your (possibly expert) opinion, should I go with a VPS or dedicated server? I did some research and calculated that, on Bter.com today the total volume has been about 568.745BTC when totalling volume from all the altcoins. Basically what I am asking here is how much will I need for my server's total RAM, disc space and bandwidth. I am planning on using either High Secured or Easy Offshore Hosting, both Panama based. My hosting costs can be anywhere from $60-1k a month depending on how much bandwidth I need.
Domain- .01NMC. Because I really like this feature of Namecoin, and it is the cheapest way to register a domain. I have already registered an awesome .bit domain name.
Accounting- I can do this myself as I plan on running the site on my own. Although I will have to cough up $600-1k for professional tax software.
Am I missing anything else? If you know of any expenses I am overlooking I would greatly appreciate input.
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thesouljourner
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December 18, 2013, 12:06:55 AM |
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I hate to burst your bubble, but you can't build an exchange for 1-3k. Those freelancing websites are full of Asian and Indian developers that will bid low on anything with no hope of producing an actual product. A real exchange like cryptsy takes, at minimum, 3 months to build, and that's with a few great devs that know exactly what to build, with plenty of web dev experience who are actually on-site and invested in the end product (ie employees not contractors).
I've been in the software business for over 14 years, I guarantee you, you can't get a working site for anything other than a wordpress blog for 3k.
Keep in mind, this is people's money you're handling. Security had to be top notch, and you can't have serious bugs.
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markm
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December 19, 2013, 08:00:11 AM |
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Third party hosting seems pretty dumb idea for wallets, or even for anything that your at home in your steel doored room wallet-machine will trust to tell it how many coins to send where.
Unless you use something like Open Transactions, so that you have at all times crypto-logical proof that all parties agreed to their balances at all times so that the server itself need not be trusted. (You trust the crypto: no change to any account's balance without a crypto-signed acceptance of that change and the new balance it results in by the owner of that account.)
How many times have wallets been stolen by employees of hosting companies? The hosters usually say its up to you to back up your data, and accept no responsibility for any losses you suffer and so on.
You could use the "hot wallet' concept so only your "hot wallet" can be stolen by the security guards who guard the hosting place or the superusers who control all the virtual machines or the technicians who have physical access to the machines and so on, but if so how often is your budget going to assume the entire contents of all hot wallets vanish? Make it part of your budget maybe, always assuming that any day or week or month or year you don't lose your hotwallets contents is a bonus, free extra money to buy better security maybe or something...
-MarkM-
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MGUK
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December 19, 2013, 09:58:36 AM |
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I agree with what the above are saying.
I'd also like to ask what your motives are: Why are you doing this? What do you intend to achieve? What are you doing that is new or different from any other exchange? What makes you the ideal person to do this?
Don't get a VPS. Best option would be to have your own dedicated servers. But getting that setup, and then a sys admin to maintain it is going to add another $50k /year for it to be done properly and safely.
You'll need a proper security audit. That's going to cost a lot too.
You'll also need and accountant and/or legal team.
You could just go with a VPS and your $3k developer, but that wont be secure, your bank will most likely shut you down, and when (not if) you get hacked, liability will fall on you for not taking necessary precautions. Even if nobody takes legal action, you can consider your reputation destroyed.
Even if you handle just cryptocurrencies, I think it's only a matter of time before they start to become regulated (meaning you'll probably need to get other licenses and registrations depending on your jurisdiction.)
Please please PLEASE, unless you're going to do it properly (at least a high 5 figure budget) just don't do it. Last thing cryptocurrencies need is another exchange to fail and get hacked because you feel like setting up an exchange.
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thesouljourner
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December 19, 2013, 12:06:18 PM |
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Please please PLEASE, unless you're going to do it properly (at least a high 5 figure budget) just don't do it. Last thing cryptocurrencies need is another exchange to fail and get hacked because you feel like setting up an exchange.
High 5 figures is honestly laughable. You need an ops guy, at least a couple devs, and at least one legal guy. You can't get any of those guys for less than 80k a year, and spending 100k will get you much better candidates (and therefore much more likely to actually succeed). Those guys need benefits, or they're going to go somewhere else, so that's another 40k each. You're looking at over 500k in the first year just for salaries of the core employees.... and yes, again, you want salaried people, not contractors or freelancers. Contractors don't magically produce maintenance-free code. You'll have bugs and new features and all that... there's never a time when developers are short on work, so you might as well have people who are invested in making the company succeed. Software development is expensive. Really really expensive.
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jixin55
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December 19, 2013, 02:12:53 PM |
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i'm willing to code for equity with such an operation.
-can hand-code btc transactions in javascript (node.js or client-side)
**I agree with the higher cost estimates posted on this forum. 1-3k is not going to cut it unless all programmers are working for equity only. If you plan on paying salaries, nothing less than 100k USD is even worth considering starting the operation.
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leckey
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December 19, 2013, 02:41:19 PM |
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You've vastly underestimated your overall IT budget here. Seriously. And it's something you really shouldn't skimp on. Don't use eLance. Find a developer local to you (bonus if they use bitcoin already) so you can meet them, discuss the project, plan out development timeframes and costs. You'll also need someone to handle server setup. And I mean someone good. Last thing you want is your site getting hacked because of a poorly configured setup. And realistically you should probably need three servers: 1 to host the frontend of the site, a database server, and a server for the wallets.
Oh, and remember: don't use Linode.
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coinrevo
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December 19, 2013, 03:57:51 PM |
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Truly, globally scalable exchanges are on the order of a 1M$ p.a. project. Ask MtGox. Problem is on the order of magnitude of bitcoin itself it you want to reach >10'000 orders/sec througput, not speaking of the millions of messages per second that a NYSE does. Some highfrequency shops on the buyside invest 1M$ per month on the buy side for sub microsec latency.
So first thing would be to find someone who knows how exchanges work. They'll explain why this is a very hard problem. There won't be 1000's cheap exchanges, there will be 10 major ones. They might share some code in an opensource fashion. Hasn't happened yet though. So all these threads on this forum are not anywhere close to serious. Anyway, end of rant. In the end: try it and you will probably discover what I mean. Don't burn too much money on this though.
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