Crypto Basics Crypto Knowledge

APIs, Blockchain & Cryptocurrency

What is an API?

Pretty much anyone who uses the internet has benefited from APIs, with or without knowing it. An API is a program which allows one software application to interact with another, acting as a messenger between them. API stands for Application Programming Interface and, in essence, is a piece of code that allows two applications to share information.

The billion-dollar “API-powered economy” is serving almost every enterprise sector out there and makes sure things run smoothly. Take for example a travel or airline website which has a large pool of partners advertising there. Once you submit the desired location, dates, and other preferences, the comparison site searches through all available databases of the API providers and provides you with the options.

APIs also help developers in many ways. APIs make the life of developers much easier as they allow them to use existing functionalities and data. Take for example the Google Maps API, where the location of a store or hotel is shown. The developer is not required to code or draw a map from scratch when simply using the Google Maps API will save considerable effort, time and money.

In the crypto space, blockchain provides free APIs enabling developers to access Bitcoin, Ethereum and other digital assets’ payment processes, wallet services, transaction data, blockchain data and cryptocurrency data to seamlessly use on their website and applications. Another great API for blockchain developers is Websocket, which allows the receiving of real time market data with the trading system in JSON format.

All of these shortcuts offered by APIs offer done with the help of the aggregator capabilities that APIs possess. There are, of course, countless other examples where APIs are used, including trading on crypto exchanges.

How traders use APIs

When trading APIs, users are allowed to seamlessly interact with a trading system. More specifically, traders who run algorithms on their own trading systems on an exchange and want to receive live pricing updates, as well as execute trades once their trading signals have triggered, or supply market data to trading bots, very often use trading APIs.

Trading APIs are particularly popular among hedge funds and large trading firms due to the constant functionality requirement of algorithmic trading programs. Nevertheless, private investors can also make good use of trading APIs provided by online brokerages and, more recently, by cryptocurrency exchanges. Many popular crypto asset exchanges such as Bitfinex, Binance, Bittrex, Coinmarketcap and Coinbase Pro, offer their users trading APIs which enable real-time data pricing feeds and direct trade execution.

Over time crypto trading professionals have added more APIs to their arsenal in order to conduct more profitable trades. With the use of such crypto API programs traders actually make the crypto market more liquid and efficient.

The trillion-dollar API opportunity

As mentioned before, APIs are not only used in financial trading but also in almost every part of today’s digital world. One of the largest API Marketplaces, RapidAPI, has over 10,000 APIs used by over one million developers. They already process in excess of 1 trillion API calls a year, and their hockey-stick rate of growth is accelerating. When taking a look at the Top 50 Most Popular APIs on RapidAPI (2020) by developer usage, we can clearly see why APIs continue to be so valuable. The use cases for APIs are accelerating swiftly, especially in the digital economy and the blockchain ecosystem. In fact, the world is fast becoming an “API-powered economy” that will eventually be measured in trillions of dollars annually.

The OpenAPI Initiative (OAI)

The Linux Foundation has initiated an open-source OpenAPI Initiative which is a consortium of forward-looking industry leaders who understand the benefits of making APIs more mainstream. Since 2016 the main tech initiators have been Ron Ratovsky (SmartBear Software), Darrel Miller (Microsoft), Marsh Gardiner (Google), Jeremy Whitlock (Google), Uri Sarid (Mulesoft), and Mike Ralphson (Mermade Software).

As part of the program, OpenAPI Specification (OAS), a programming language-agnostic interface description for REST APIs, allows seamless connection for people and computers to a service without requiring access to source code, additional documentation or inspection of network traffic. OAS is, to date, the most popular open-source framework used by thousands of developers, with the capacity to create RESTful APIs.

Band Protocol

Band Protocol, for example, is a cross-chain oracle platform that enables smart contract applications such as DeFi dApps to be build on-chain. As blockchain technology has been optimized for immutable storage and verifiable computations, all data needs to be generated inside the blockchain network. The recent partnership between OpenAPI Initiative (OAI) and Band Protocol enables blockchain API applications to easily leverage off-chain APIs in order to better engage with centralized data sources.

Conclusion

APIs’ popularity has been increasing across all sectors of the economy, making everything more interconnected from the very start all the way to the endpoint. Both users and developers gain from the enormous data APIs transfer rate, making their interactions more seamless, effortless and enjoyable. APIs are definitely here to stay and continue to expand across various verticals.

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