If a new crypto v crypto exchange were to be built and launched. What would tempt you to use it rather than what you currently use? Or what improvements would you like to see from the way things work now.
A popular opinion in the Bitcoin space is that transparency is key for Bitcoin businesses. Bitcoin and it's pseudonymous nature make it very suitable for scams and corruption.
Competitive fees or additional payment options are no longer the key to the success of an exchange. There are so many exchanges that you can almost certainly find what you need feature-wise. However the important question that remains is whether the exchange you found can be trusted with your money.
Proof of Reserve
Fortunately, the nature if Bitcoin's technology also has a positive side with regard to transparency: the Bitcoin block chain is public and everyone can verify it.
This allows for the possibility of exchanges to verifiably proof that they hold all the money of their customers. CoinDesk explains this here. Some exchanges like Kraken have recently published such proof of reserve.
An ideal situation would be for an exchange to provide a method that allows users to constantly verify of their money is still there. F.e. by keeping every customer's coins at a fixed address (this could be quite costly) or publishing a proof of reserve on a weekly or daily basis (this could be done automatically).
In my humble opinion the ideal exchange works without needing to be trusted.
I mean that this exchange must find a way to work without having direct control on customer funds, this controls (private key) remain in the hands of the customers. If this is not possible for the trade to occur, limiting as much as possible the funds controlled by the exchange is the most desiderable feature to me. This is needed to avoid what happens to mtgox
I think (not sure) "smart contracts" of new cryptos like Mastercoin, Counterparty, BitShares, Ethereum could technically address this solution
1) An ideal exchange, in my opinion, should implement a form of the Tobin tax.
Plenty of times I've been burned trying to take advantage of a large price gap in a coin that apparently does see movement. I may place a buy/sell offer just to see, some seconds later, my offer being surpassed by another by just some satoshis. Should I try to pass it again, the offer gets passed again, and again and again - until one of 2 things happens: someone fulfills my order once the price gap has all but disappeared or I cancel all my orders just to see, some seconds later, all the successive orders that continuously passed mine disappear as well, seemingly leaving the market at a wide price gap again.
Other times, I've seen some participants "compete" for the price of a coin until the price does move in a direction and, once a high enough number of other participants try to ride the wave, a dump - at that point it becomes obvious it was really 2 members of the same team attempting to manipulate the market.
2) Another improvement I wish existed in exchanges is to place a limit in the number of orders/cancels per time period per market, so that participants with very fast Internet connections and trading with bots don't have too big an advantage over humans with less than ideal bandwidths. Plenty of times I've seen traders putting an offer and cancelling it after just some seconds, again and again several times per minute. Obviously it's a trap for humans with slow connections who might be tempted to trade at the price they see unaware that such price is no longer the best.
A hard limit of orders/cancels per second and a system that executes trades every 10 seconds (so to say) would ensure most participants have the same view of the market.
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3) Something else an ideal exchange should have: the ability for a trade to go thru different coins if doing so allows the customer to get more coins for what they already have.
At some exchanges there's a BTC/DOGE market, and there's also a LTC/DOGE market. But then there's a BTC/LTC market, so should there be a sudden increase in the value of LTC vs. BTC , for some time it'll become cheaper to buy dogecoins in BTC, and more profitable to sell them in LTC. Some coins can also be bought with Primecoins, adding the markets XPM/BTC, XPM/LTC and XPM/DOGE to the mix and lots of potential inefficiencies.
The markets eventually reach very similar levels of mutual coin worth after some minutes but never exactly the same, have seen it a number of times. If I were allowed to indicate in which coins I'd like to pay/be payed, I could get a better deal when I want to get, say, 42coins in exchange of my potcoins. Having the exchange look at the potential exchange paths available at a moment and choosing the one that benefits me the most.
At this point, I believe such an exchange would basically mimic the Ripple network.
I think with the latest set of IRS rules, the best exchange would allow for autotracking and calculation of transactions and capital gains. One can imagine at tax time have a push button system that autogenerates all the information needed by the IRS. I can image this could become a rather large document, but if a standard format and file could be generated, then it would be a selling point for the exchange.
A new exchange needs to have:
Volume Top most point - Developing an exchange is not just enough, you need to think on to get volume, the more volume you've on exchange you've better chances to create a place among largest prevailing exchanges.
Functional capabilities The functional which can stand among the largest available exchange that the way to attract end user to trade on an exchange.
Platform Infrastructure Exchange infrastructure must be robust to handle high volatile market in peak trading session, it should not hang or stuck.
Order Matching Engine A proper unit test of order matching engine is important because its all about to fulfill the supply and demand the various users from different location dealing with different crypto coins. Order matching engine is the main part and you need to make sure that its algorithm should have enough capabilities to handle millions of transaction in fraction of time.
Coin Pairs A trader always looks for comfortability on an trading platform, they want to trade with easy. Most of traders want to trade using BTC but someone choose to trade in ethereum or usdt pair. So you need to make sure that you've atleast btc, eth and usdt pair on your exchange. you can also create your own coin pair to offer something good to end users.
Security The most important things is that your exchange is secured or not, you need to make sure that end users funds are secured in your exchange wallet. You need to make sure that your system should not have any low pools in deposits/withdraw of coins also the verification method are important to work properly.
Many more that needs attention to launch crypto exchange in competitive market