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API (Application Programming Interface)

An API is a set of rules that allows different software applications to communicate with each other. It determines the ways in which systems, applications, or devices can interact. Crypto exchanges often provide APIs to enable automated trading.

How do APIs work?

APIs work by establishing a contract between the provider of the API (the server) and the consumer (the client). Here's a simplified overview of how APIs function:

  • Request and Response: The client sends a request to the server API, specifying the desired action or data.
  • Processing the Request: The server API processes the request, performs the necessary actions, and retrieves the requested data.
  • Response: The server API sends a response back to the client, typically in a structured format like JSON or XML, containing the requested information.
  • Integration: The client application can then use the received data or utilize the functionality provided by the API to enhance its own capabilities.

Simplified API Explanation:

Imagine you're sitting at a table with a menu of all the dishes you can order. But the kitchen, where the food is prepared, is off-limits. You need a way to get your order into the kitchen and have your food brought out to you. That's where the waiter (or API) comes in.

The waiter is the link — the interface — that communicates your order to the kitchen and then delivers the food to your table. Similarly, an API takes a software program's request (like your order), tells the system what to do with it, and then returns the response back to the software program (like the waiter bringing your food).


  1. Using the Binance API to create a bot that trades automatically.
  2. Using the Coinbase API to connect an accounting software to automatically retrieve all the transaction history

In the examples provided:

  1. With the Binance API, your bot is like a customer at the Binance restaurant. The bot uses the API to place orders, check on prices, or make trades - just like you'd use a waiter to order food or ask for the check.
  2. For the Coinbase API, your accounting software is the customer. It uses the API to get transaction history, just like asking a waiter for the bill to see what you've ordered.

In both cases, the API helps your program to communicate with the system and get the information it needs or perform the action it wants.


Blockchain and Technology
Crypto Basics
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