The API (Application Programming Interface) has contributed to the decentralization of the modern economy by facilitating online trading and giving thousands of retail merchants an opportunity to launch their businesses. APIs are also used by online enterprises of all kinds in both traditional industries and the crypto industry. Let’s find out what it is, how it works, and how it can benefit you.
What is API?
In the days before the Internet, to make a trade, you had to contact a broker who connected buyers and sellers. To trade, you need to be connected to the market. The process has been simplified today, but the essence remains the same. An API acts as an intermediary and provides you with precise and continuously updated information. APIs have been widely adopted due to their convenience.
APIs are used by a number of online applications. Essentially, API is like a built-in messenger for existing applications, so the apps don’t have to build it every time.
Let’s look at an example. Imagine you’re planning a trip so you need to look for the cheapest flights. You open an aggregator and fill in the details of your trip: where and when you would like to travel. Your request is sent via API, and the aggregator matches the contents of different airplane ticket websites with your demand.
Without API, the aggregator would have to integrate these websites into its own structure to exchange information with them. The API makes it easier to do this, so many people use it to create their online stores, which would otherwise be impossible. It enables the end-user to obtain all the necessary information quickly and save money on their trip planning.
What role does API play in crypto?
The crypto market changes very fast, with new projects launching daily, and existing ones skyrocketing at a rapid pace. For those involved in the industry, it can be a daunting challenge to stay on top of all the changes and make informed decisions.
APIs enable informed trading. If you’ve ever used a crypto exchange, you’ve likely taken advantage of this feature. All market data is provided to exchanges (and therefore, to users) through APIs, and is updated every second. This includes coin prices, market capitalization, and trading volume figures. Exchange APIs, Bitcoin APIs, Ethereum APIs, and many others exist to bridge exchanges with market data and allow you to trade.
Another API type, the execution API, lets users integrate their wallets and other necessary third-party apps with exchanges so they don’t need to sign in separately. This API allows communication between these tools, provides users with a more accurate picture of the market, and saves users’ time. Thus, instead of launching a few at a time, they can work on one platform instead.
APIs also facilitate algorithmic trading in cryptocurrency. Unlike traditional markets that close from time to time, crypto trading never stops. However, people are unable to stay awake 24/7 and also need to streamline their strategies, so APIs facilitate algorithmic trading for professional and corporate crypto investors.
APIs aren’t only useful when it comes to executing trading strategies — they also help traders build them. An effective strategy requires analyzing enormous amounts of market data, and APIs help crypto enthusiasts process that data and identify profit-making opportunities.
Once the strategy is ready, it can be executed by bots and software using APIs to receive real-time market data and make pre-modeled decisions.
Find the best API by following these steps
Determining your goals will help you pick the right API. Defining your requirements, you’ll be able to select a solution that fits your needs. When it comes to choosing an API for trading, you should consider the ease of use and the amount of data it can process. Ideally, it should be easy to use, intuitive, and flexible so you are not forced to limit your trading strategy because your API has low throughput.
The speed is crucial: you’d want a low-latency API that immediately keeps you updated with all events in the market. Some coins significantly drop and rise in price in a matter of seconds, so a fast API will help you save money or multiply your gains. You should also consider the price of an API: if it is not significantly different from what is available on the market, that is a sign you have an API that is reliable.
A good way to find a solid API is searching for a trusted service. Industry veterans like ChangeNOW, Kraken, or Bittrex know what traders need: cleanly-designed, well-documented, and easy-to-use APIs as well as a clear explanation of whether the API is compatible with the chosen tools and strategy.
When you work with risky assets like cryptocurrency, safety is always a priority. However, when you use automated tools like API to trade, security must be taken especially seriously. The universal rule to do your research is especially applicable to APIs for this reason. A well-known platform cannot always guarantee seamless service. Even though the platforms mentioned above are known for having robust APIs, such giants as Binance and Coinbase have had issues with their APIs.
Finally, you’re not limited to using one API — some traders prefer to use several at once. Compare different APIs and find one that suits your needs. ChangeNOW’s API solution is a great place to start.