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While it was often regarded as a new unknown prospect, as the number of people investing continues to grow substantially, cryptocurrency is becoming widely accepted by the financial community.

To clear up some mystery surrounding cryptocurrency, we’ll explore how different forms of hosting are utilised across the industry. Before we can do this, it is worth looking at one of the fundamental elements – blockchain. 

What is Blockchain? 

Blockchain is a piece of technology that enables the existence and operation of cryptocurrency. While there are several different types of cryptocurrencies, Bitcoin is the most notable example and the founding currency that utilised blockchain technology. 

Blockchain is a system of recording information in a way that makes it difficult to interfere with, hack or cheat. It is essentially a digital ledger of all transactions made, distributed across a multi-layer network of computers worldwide. Where more common databases such as SQL or sales systems such as Salesforce are physically and actively managed by someone, blockchain is deliberately different as it has no-one in charge. Instead, it is effectively self-managed by the users. 

Crypto Exchange Hosting 

Naturally, such a system of operation creates a unique set of technological challenges. One of the most notable challenges in the world of cryptocurrency is the question of Crypto exchange hosting and the on-going debate of cloud vs on-premise hosting. While there are several reasons for this debate, the large focus area is currently centred around performance. 

Although cryptocurrency is built on the notion of self-regulation, the increased institutional interest in cryptocurrency and the continued need for technological development and maintenance has created the need for crypto exchanges. Furthermore, due to the sheer number of investors choosing to place their money in the world of cryptocurrency, the need for a fair and reliable trading venue, such as exchanges, has never been so important. 

With the need for these exchanges to be live 24/7, pushing for optimal performance in these locations is vital. Not only do they need to be able to handle large order volumes and deep liquidity, but they also need to execute orders with the least possible latency, whilst staying secure. 

Exchange Cloud Hosting 

Choosing the best place to host a crypto exchange is a difficult decision for those in the world of crypto-currency. From on-premise to cloud hosting, which is considered the best option ultimately depends on the individual needs of the exchange. Let’s take a look at some of the benefits of cloud hosting for crypto exchanges.

Flexibility 

While performance is often cited as the most important factor, keeping up with the times and developing when needed is regarded as equally as important. 

In an industry that is continuously witnessing periods of change and technological developments, there is an inherent need for crypto exchanges to keep abreast of relevant developments and maximise their ability to adapt. This is where the cloud’s strengths are recognised. While it is possible to modernise the physical equipment or move an exchange to a new location, this process may take months and cost thousands in downtime. Whereas, changes on a cloud network can take just a matter of hours, limiting the financial cost of development or reputational damage of being offline. 

The key difference when it comes to cloud vs. on-site hosting is speed. Setting up the relevant infrastructure on a cloud system is simply faster. Rather than taking weeks or months to undertake necessary developments to physical hardware, the same developments can take a matter of hours.

Customisation

In an industry where continuous developments and maintenance is required, exchange operators must be able to meet the requests, demands of investors or the ever-changing marketplace. With the ability to implement a range of measures, quickly scale if needed and implement storage, security and developer tools when needed, many see the cloud as the way forward. 

In a market that is expected to grow substantially in the coming years, having the ability to adapt and customise to meet certain market or investor needs is incredibly important to the survival of these exchanges.

Latency

One of the most important benefits that is often overshadowed is the extremely low latency of cloud-hosted exchanges. 

Latency is a measure of delay; in terms of a network or system, latency measures the time it takes for a piece of data or action to get to its final destination on a network. When latency is low on a system, it refers to a quick delivery time between the intended action and outcome. 

An exchange with low latency can almost provide immediate feedback from a transaction, or provide up-to-date market information as it comes through. With such development in the role of the cloud in limiting the latency of crypto exchanges, they are able to offer a trading experience similar to that of traditional financial markets or trading platforms. 

Are you looking to find out more regarding cloud hosting for crypto exchanges? Get in touch with our sales team on 0800 612 2524 or email sales@hyve.com today.

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