- Starting a fintech business is now free due to open-source crypto technology and exchange software
- The crypto technology is getting expotentially more powerful than traditional fintech tech
- Building with the technology is getting easier as more blockchains become standardized and widely adopted
- People are building a preference for crypto exchages as their bank
- DeFi is also challenging this notion of a bank
First, what’s open-source?
Open-sourcing your software is the practice and philosophy of sharing the code for free to anyone to use or build upon. Free is great but many think free software means bad software, this thinking is especially prevalent with financial institutions that
equate expensive software as good software.
But wait, isn’t that true?
False, the reality is the opposite, the fact is freely available open-source financial software is already better and will be exponentially better entering 2021.
If we take some examples from the real world, nearly everything you use is connected to open-source software. When you browse the internet on your phone, your phone is probably using open-source Android. While browsing the web you’re probably using the Chrome
app. When you visit your favorite website, that website most probably lives on a server operating on an open-source Linux OS.
Heck! Even your favourite first-person shooter games tech link back to
id Software’s classic hit game Doom!
All of the above examples are important but what’s more important than all of those examples is money. Money is primordial.
But here lies the issue, nearly all financial technology or ‘fintech’ are closed off from public use and when we talk about your bank or an ATM likely the tech within these systems date back as far as the
So when we use the word fintech, it's a bit of a misnomer because ironically there isn’t much technology there and the tech that is there is rarely open for use.
Case in point, try building apps with your own bank account. Or if your a business try building your own financial solutions.
Building stuff on money is nearly impossible.
But all that’s changing thanks to blockchain based money protocols such as Bitcoin and Ethereum, which both by default are open-source monterey protocols. And thanks to new crypto software it is becoming easier to build with cryptocurrencies. The most popular
piece of software today are typically white label exchange solutions. These solutions provide
tools that allow anyone to build new crypto-based financial products. Finally, we have real fintech.
So what are the best free crypto software solutions out there? Below are the 3 best free white label open-source crypto platforms that can be used to build new crypto financial products.
Uniswap is the first majorly successful decentralized crypto exchange or DEX. Uniswap is simply a set of programs that run on the Ethereum blockchain which allow for decentralized
tokens to be swapped/traded.
What makes a DEX unique is that depositing money to trade isn’t required. Instead users connect directly, via a smart contract, with their crypto wallet app and transaction with the blockchain.
That’s because it is complicated! But the good news is the software is free. Anyone can take the Uniswap code and
rebrand it as their own.
What can you build with the Uniswap code?
You can start your very own decentralized exchange where anyone can lend their crypto to the unbuilt liquidity pools and in exchange for providing money to the pools, both you as an operator and the users can earn fees from each trade done on the platform.
So what's the catch? It only works with Ethereum and (ERC-20 tokens). This means fiat currencies like USD or EUR won’t work (although stablecoins can). Another issue
is the user experience or UX is completely different from any other finance platform which may alienate your users/customers.
Finally, if you aren’t crypto tech savvy you're going to have a hard time putting it all together and so some technical capabilities might be necessary.
2. HollaEx Kit
HollaEx Kit is a complete out of the box crypto exchange. It is the easiest and most practical crypto solution currently out there. If you’re looking for the essential tools, this is it.
The biggest advantage when using this exchange kit is the fact that it requires zero coding.
Once you connect the exchange to your domain a full trading platform with crypto wallets and an easy-to-use email signup system will be ready for your users to use.
The kit provides a straight forward buy and sell crypto experience and requires very little blockchain knowledge from both users and operators.
An optional cloud exchange service is available to expedit the exchange building process. And users of the cloud solution will have their exchange automatically hosted, and launched with your own custom domain name. You do however pay for that convenience
with a small fee but will save days of extra work setting up servers.
However, if you have a little skill in managing servers, and know your way around the command-line interface, then the HollaEx Kit can be used entirely free.
Overall, the kit requires the least technical skill to use and suits a broad range of use cases. Just host your exchange on your computer and open the sign ups to your customers and just like that you have a global online crypto exchange service.
Lastly, for business savvy people they may find the ability to add fiat currencies a major advantage. The exchange kit includes a bank plugin that, once switched on, will activate a fiat-to-crypto service that isn’t possible with a DEX system.
Bisq is probably the trickiest to get your head around. Simply put, Bisq is like an open-source eBay style currency exchange.
Like eBay, Bisq requires the traders to make the transaction happen themselves, whilst with a typical crypto exchange the trade would be automated for the traders.
Bisq software is a lot like Uniswap but one difference is that users are required to run the Bisq software on their computers. That means there isn't any user-friendly website service.
Because it's entirely a peer-to-peer system transaction tend to be much more private and this targets a special market due to that fact.
Bisq along with other
open-source crypto exchanges gives anyone the chance to build upon the software but may require a high level of technical knowledge due to its P2P nature.
The biggest advantage of Bisq is the built-in fiat based P2P trading which works through local bank transfers which is an elegant mix of traditional finance and crypto.
One downside to Bisq is the collateral requirement, meaning both parties that want to do an exchange are required to lock up their crypto in order to secure the trade. This makes developing and testing more complex for newbies.
Of the three, Bisq is the most challenging, but for those talented enough to build programs on top of their Bisq account can take advantage of arbitrage opportunities due to price premium which is typical in P2P trading world.
Premiums have 20% can be offered and any automated market maker here could carve out a nice niche.
It is important to think of the users that you're trying to build for.
Most people don’t know how to use a DeFi DEX style service. And most can’t afford putting up collateral in order to trade.
The fact is the email sign up process is what everyones is used to using. Most users when it comes to their finances are looking for a typical banking like experience.
If your user base likes using Coinbase for example, then a standard crypto kit solution such as the HollaEx Kit or even AlphaPoint is the best solution for building a crypto bank/exchange.
But if your users are crypto experts then cloning the Uniswap code or building on Bisq could lead to more novel and experimental financial products.
It wasn’t until
crypto exchange kits and DeFi was released that it was even possible to build upon money and now the whole fintech space has been turned upside down. The main takeaway is free is actually better when it
comes to software because the technology exponentially improves as more people develop on it.
Who would've thought that the best things in life are actually free!