A Brief History of Exchange System Development

From a single line of code to a trillion-dollar market cap industry, the cryptocurrency industry has taken nearly 13 years.

Crypto Exchanges are the most important role in the ecology of the cryptocurrency industry. Countless new exchanges are born every year. Some of them have developed rapidly and are now the world's leading companies. Some have closed down due to poor management or unexpected incidents. A high-quality exchange system can make the exchange calmly respond to emergencies and become the basic guarantee for user acquisition; a set of poor quality exchange systems may become the cause of business failure. A safe and stable exchange system is the key to business success.

Crypto Exchange Hacks: The Mt. Gox Scandal and More ...

What should a high-quality cryptocurrency trading system look like?  The answers are similar if you ask any experienced developers.

High-availability, High-performance, High-scalability, Guaranteed system security, and the ability to prevent hacker attacks and safeguard the assets of investors effectively.

And if we set the time back to ten years ago, when the cryptocurrency industry was just born, crypto transactions were only a handful of cypherpunk games, and they did not have high requirements for professional parameters such as system availability. At that time, the core criterion for a high-quality exchange system was only whether it could withstand hacker attacks.

In the early days of the cryptocurrency industry, there were many crypto exchanges that went bankrupt due to hacker attacks, among which the Mt.Gox incident was the most well-known. As early as 2011, Mt.Gox had been hacked twice in April and June. The first hacking resulted in the loss of 80,000 Bitcoins in Mt.Gox, and the second one caused the price of Bitcoin to be within a few minutes. The internal currency fell from US$17 to US$0.013. In this incident, a total of 261,000 bitcoins were traded at a price of 1 cent, and the personal information of thousands of users was leaked. It was not until the end of 2011 that Bitcoin recovered to a price of $2.

These two hacking incidents proved that Mt.Gox's system has obvious security risks. However, the technical team did not repair it in time, which led to a devastating blow in 2014. Hackers attacked Mt.Gox's system and caused more than 850,000 bitcoins were stolen, and the loss amounted to 7 billion U.S. dollars. This incident directly caused the price of bitcoin to plummet, and eventually the Mt.Gox exchange was forced to close.

Mt. Gox is not the only one to be plagued by hackers, many well-known crypto exchanges have been hit hard by hacker attacks.

In 2013, BitFloor was shut down due to hacking;

In 2016, the world's leading exchange Bitfinex stolen nearly 120,000 Bitcoins due to hacking attacks;

In 2018, Binance encountered hacker attacks twice;

South Korea's largest exchange Bithumb has been hacked for three consecutive years in 2017, 2018, and 2019...

Frequent hacking incidents continue to remind exchange operators that they must invest sufficient manpower and material resources in system security.

The first-generation high-performance trading system

In the history of Bitcoin, 2013 was a special year. Bitcoin broke through $100 and $1,000 in April and November of that year, respectively.

At that time, the largest exchange in the Asian market was BTCChina, and the sharp rise of Bitcoin in a short period of time paralyzed its website. As the number of people trading Bitcoin increases, the market needs more new exchanges with better performance.

In 2013-2014, many new exchanges were born, Huobi, Okex, Bittrex, Gemini, Poloniex and other well-known exchanges were established in this period. Venture capital institutions have begun to pay attention to digital currencies, and the industry has entered a new stage of development.

At the same time, the CTOs of the exchange continue to think about how to make a trading system with higher availability, better performance and better performance.

The cryptocurrency trading market is a 24/7 market, and the trading system also needs to operate non-stop, which is quite difficult for the technical team of any company. When extreme market conditions occur, first-tier international exchanges such as Coinbase and Binance have also experienced downtime problems, causing users to suffer losses.

Huobi has developed the first high-performance trading system in the cryptocurrency industry. In 2014, James Ju, a senior blockchain technology expert, joined Huobi as CTO. He led the team to upgrade Huobi's trading system, which became the industry's first high-performance trading system.

With good timing, the price of Bitcoin has risen all the way, and the number of Huobi users has achieved exponential growth. At the same time, Huobi has been continuously upgrading its trading system. OKex, another leading exchange, has also continued to invest in the trading system and iterate the system to enhance competitiveness.

A stable and high-quality trading system is a prerequisite for the development of the exchange’s business. Therefore, all exchanges have invested a lot of funds for cultivating technical teams and maintaining the trading system.

The development of a trading system requires at least dozens of developers, it takes more than half a year, and the research and development costs may exceed millions of dollars. Many small and medium-sized exchanges do not have enough funds to develop the exchange system.

In 2017, “SaaS Cloud“ products gradually began to appear. Through such products, the new exchange does not need to form its own technical team to start its own exchange business.

The era of cloud exchanges has arrived

The first to be bullish on the track of the cloud exchange was CZ Zhao, the founder of Binance. In 2015, CZ founded Bijie Technology in Shanghai to provide exchange system services. Since 2017, several companies focusing on technical services for exchange systems have gradually emerged. From a global perspective, Bluehelix, AlphaPoint, B2Broker, Shiftmarket and other companies are among the best.

Bluehelix 's core founding team consists of top talents from first-tier tech and financial companies including Alibaba, Tencent, Baidu, Barclays Capital, Societe Generale, etc. Founder James Ju is a senior technology expert and a successful serial entrepreneur. Based on its deep industry experience and technical strength, Bluehelix has been favored by many high-reputational capital such as Huobi Global and OK Group since its establishment in 2018. its Bluehelix Cloud SaaS and White Label solution have served more than 350 crypto exchange clients worldwide, including Japan's licensed exchange Xtheta, South Korea's leading exchange Hanbitco and Chiliz.net.

AlphaPoint, which received a $15 million investment from Galaxy Digital in 2018, is one of the more well-known companies in the field of blockchain financial technology services. B2Broker, established in 2014, is also one of the new cutting-edge forces and has a certain reputation in the Asian market.

Cloud exchanges have become an inevitable trend. There are more and more cloud exchange products on the market, but it is difficult for people who do not understand technology to distinguish the difference.

Bluehelix Cloud CTO Shi Liang pointed out: The securities trading business system is complex and sophisticated. A set of securities trading cloud system requires at least 2 to 3 years of research and development time. Therefore, choosing a technology company with strong strength and experienced team can at least get a basic guarantee. Secondly, the cryptocurrency industry is developing rapidly, so it is necessary to choose a technical service provider with innovative research and development capabilities in order to continue to provide the exchange with the latest technical capabilities.