An API is basically like a messenger. We use APIs on a daily bases on our life, although we do not realize that. Let’s see what APIs are and what role they play for a cryptocurrency trader.
What is API?
API is an acronym for Application Program Interface. API allows one software application to interact with one another. When searching for something on Google, there is an API that finds the best results for you. For example, when searching for a flight, there’s an API used by the website to comb through a database of available flights.
Some of the examples of common APIs are:
- Google Maps – an API that gives you access to information from GPS satellites and maps.
- DoorDash – an API on the site gives you access to restaurants’ menus.
- Yahoo Finance – an API provides statistics and charts based on financial data.
What are the cryptocurrency APIs?
Cryptocurrency APIs are used to provide information about cryptocurrencies and help to execute trades. A crypto API will allow you to connect to a cryptocurrency exchange and give you access to real-time market data, execute trades, and manage your account.
Here are some of the things a crypto API does:
- They provide information about the price of a coin
- Show trading volume opens, closes, high and low points
- Provide historical trading data, and display news feeds about cryptocurrency
- Rank the most popular coins by trading volume, popularity, or other statistics
We commonly encounter these kinds of APIs when going through a cryptocurrency exchange site, such as CryptoAPI, Coinbase, Binance, etc.
How are APIs used to place cryptocurrency trades?
APIs are not directly used to place trades, but they help traders when making the trading strategy. Since they provide all the information mentioned above, such as live price and historical price data, a professional trader can use it in a trading strategy and place a trade accordingly. He can combine data from a price API with data from a trading history API to output reports regarding prices that triggered intense trading activity.
To sum up
Cryptocurrencies have grown increasingly throughout their short history of existence. People have jumped to invest as they have seen a chance to make profits, especially since Bitcoin is very volatile. Crypto APIs play a key role for traders as they help them execute trades more accordingly. Blockchain is now being used in cryptocurrency and other industries as well. Moreover, cryptocurrencies are becoming a part of the global financial market. Therefore, the use of APIs in crypto is just increasing as more investors are jumping into the crypto ecosystem.