What Are APIs and How Are They Used in Cryptocurrency Trading?

API (Application Programming Interface) has helped decentralize the modern economy by facilitating online commerce and allowing thousands of retailers to start their own businesses. Trading through API interfaces is also being utilized by online businesses of all kinds, both in traditional industries and in the crypto industry.

This article will give a general idea of what is crypto API, how crypto API works, and how crypto API can help a trader in the cryptocurrency market.

What Is an API in Cryptocurrency?

In general terms, an API (Application Programming Interface) is an interface that allows two or more unrelated digital systems to communicate with each other. For example, a stock exchange server allows both traders and brokerages to interact.

The API specification describes how each of the systems included in the common pool must interact with the API itself. This includes, for example, the programming language to be used, the format of digital messages that are sent back and forth, how fast the messages can be sent, the cybersecurity system, etc.

Specifically for cryptocurrency trading, an API platform allows users to interact with a cryptocurrency exchange to receive real-time market data, make trades, and manage the client account.

Before the advent of the Internet, to make a transaction, you had to contact a broker who connected buyers and sellers. Today, the process has been simplified, but the essence remains the same - an API acts as an electronic intermediary and provides accurate and constantly updated information.

APIs are used by almost all online applications. Essentially, an API is like a built-in messenger for existing applications.

For beginners, this can be explained in simple words with an example. Let's imagine that a trip is planned and we need to find the cheapest airline tickets. We open an information booking aggregator and fill in all the details of the trip: where and when to go, hotel reservation, transfer request, insurance policy. The request is sent via API, and the aggregator matches the content of various websites selling airline tickets and required services with the client's request.

Without an API, the aggregator would have to search the different service websites separately and find the required information for each type of service. The API simplifies this. It allows the end user to quickly get all the information they need in one place and save money and time on trip planning. Similarly, this system works the same way for trading on crypto exchange platforms.

Here are some of the system tasks that can be accomplished using the API:

• Download historical market data (charts, tables)
• Stream real-time market data - broadcasting asset quotes from a cryptocurrency exchange online
• Place and cancel trade orders in the general trading system of the exchange
• View and manage account balances
• Download trading systems and terminals, robots, make financial transactions - deposit, withdrawal, storage of assets, and much more

So, what is the exact role of API in crypto trading?

What Role Does API Play in Cryptocurrency Trading?

The cryptocurrency market is changing very quickly, with new projects launching every day and existing projects growing rapidly. For those working in the crypto industry, it can be a challenge to stay on top of all the changes and make informed decisions in the market. The main functions of APIs in the crypto industry:

• APIs for crypto market trading platforms. All market data is provided to exchanges and users via APIs and is updated every second. This includes crypto and fiat exchange rates, market capitalization, and trading volume. Exchange APIs, Bitcoin APIs, Ethereum APIs, and many others exist to connect trading platforms with market data and allow customers to trade.

• Another type is the "execution API." It allows users to integrate their wallets and other necessary third-party applications with exchanges. This API enables communication between cryptocurrency instruments, provides users with a more accurate picture of the market, and saves them time. So, instead of running multiple applications simultaneously - like a wallet, trading platform, and quote table - they can get the entire service on one platform, virtually on one monitor.

• APIs simplify algorithmic cryptocurrency trading, with the help of trading robots. Unlike traditional markets that shut down from time to time, cryptocurrency trading never stops. However, humans cannot stay awake 24/7, and they also need to optimize their strategies. Therefore, APIs make algorithmic trading easier for professional cryptocurrency investors.

• APIs are not only useful when it comes to implementing trading strategies - they also help traders create trading strategies. An effective strategy requires analyzing huge amounts of market data, and APIs help crypto traders process this data efficiently and find strategies to generate profits. Once a strategy is ready, it can be executed by crypto bots and software using APIs to get real-time market data and make pre-modeled decisions.

So, what are the best APIs for crypto trading? Let`s discuss it!

Choosing the Best API for Crypto Trading

Some cryptocurrency APIs provide several features. But to perform better and faster, it is recommended to combine multiple APIs for optimal performance in each of the tasks to be performed. Such tasks can be as follows.

Buy, Sell, or Send Cryptocurrency

If an API for cryptocurrency trading is needed, the main criteria should be stability, uptime, cost, trading features, and customer service format. Based on these criteria, there are 2 cryptocurrency exchanges to choose from:

• Gemini
• Kraken

These exchanges are much less popular compared to such giants as Coinbase or Binance, but the platform language and features are convenient and understandable for users from any country.

Managing Cryptocurrency Wallets

If you need an API that will help you effectively manage your crypto wallet, it is recommended to use:

• Blockchain Wallet API
• Gemini

The Gemini platform is not only a secure functionality for getting cryptocurrency rates or trading but also a service that gives more flexibility in wallet management. Gemini also provides digital asset insurance that protects against things like security breaches or hacking, fraudulent transfers, etc.

Unlike Gemini, you can't trade cryptocurrencies in the case of Blockchain Wallet API. However, this service provides excellent functionality when it comes to managing your wallet, such as sending and receiving Bitcoin payments, getting your wallet balance, transferring money to crypto addresses, etc.

Obtaining Online Quotes and Historical Price Data

For those who have chosen crypto trading, it is important to get as often and as much data as possible, and at the lowest possible price. The best APIs for getting current/historical cryptocurrency exchange rates tend to be expensive. But several APIs do this for almost free. Here's a list of some of the best crypto APIs:

• CoinGecko
• CCXT
• BraveNewCoin
• Blockchain Exchange Rates API

A good way to find a reliable API is to search for a great information resource. Industry veterans like ChangeNOW, Kraken, Binance, or Bittrex are very knowledgeable about what traders need. They are conveniently designed, well-documented, and easy-to-use resources that can help you find an API with any compatibility of your chosen trading tools and strategies.