An application programming interface (API) is a code that allows two applications to exchange information. Companies such as Facebook, Amazon, and many others have established APIs. They enable companies to access some of their services without moving entirely into their ecosystem. Using this paradigm has led to the rise of the “API economy,” which enhances an organization’s bottom line. Thus, improving interoperability and converting existing systems into new ones.
Developers can use an API to connect a series of automated trading algorithms and a trader’s preferred trading platform. In this way, traders can obtain real-time quotes and pricing data or place electronic trades in the domain of financial markets and trading.
Types of API
When it comes to APIs, there are four types primarily used in web-based applications. The “type” in this context is the intended scope of use.
Public APIs: A public API is open to the public and can be used by any outside developer or business. A company that develops and offers a public API will have a business model that includes sharing its applications and data with other companies.
Internal APIs: An internal (or private) API is solely meant for use within the corporation to link systems and data. Internal APIs have generally had inadequate security and authentication – or none. They are designed for internal usage, and such security measures are believed to be in place via other regulations.
Partner APIs: A partner API is a way to facilitate business-to-business interactions. They are only available to explicitly selected and authorized outside developers or API consumers. Partners have certain rights and licenses to such APIs. As a result, partner APIs typically include enhanced authentication, authorization, and security procedures.
Composite APIs: Composite APIs integrate two or more APIs. In this way, they provide a sequence of connected or interdependent processes. Composite APIs can be useful for addressing complex or closely linked API behaviors, and they can occasionally outperform individual APIs in terms of speed and performance.
APIs enable developers to leverage existing functionality and data rather than relying on a workaround or creating it from scratch. For example, by utilizing the Google Maps API to display the location of a store or restaurant, the programmer eliminates the need to draw or code map capabilities from the ground up. It saves a lot of time and money.
Cryptocurrency exchanges also provide APIs. Traders can use these APIs to feed market data to trading bots. It allows them to execute trades on their behalf (based on predefined instructions). It is referred to as algorithmic trading (or bot trading).
Blockchain, for example, offers free APIs that allow developers to gain access to Bitcoin financial transactions, wallet services, transaction data, and market statistics for use in their websites and apps.
APIs exist anywhere different pieces of software need to interact, and many of them are free to use because making data public is beneficial for business.