The Importance of APIs for Blockchain Technology

October 28, 2020

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The role of API

Application Programming Interface (API) is a software intermediary designed to simplify the interactions with applications. APIs help applications talk to each other by retrieving and interpreting data according to the user’s demands. As such, they save users time and eliminate need for technical know-how while interacting with software and complex programs by providing feedback in a readable way. Consequently, APIs have become ubiquitous in the modern technological world as they facilitate loads of our interactions with different websites, mobile apps and computer programs. They have become an integral part in the operations of many businesses and even a valuable resource contributing a significant share of revenue for large organizations like Google, Amazon and Expedia, among others.

APIs are quickly becoming valuable and useful tools for blockchain technology, just like they are for modern businesses. They help investors, traders, businesses and basically anyone interested in the blockchain space to make sense of all the technical stuff going on in the background. Evidently, blockchains are designed in a complex manner, thus making them difficult to understand for those without a programming background. APIs remove this barrier by synthesizing blockchain data and converting it into easily accessible, understandable and actionable information. APIs also help sort and package the blockchain data into well documented information for specific audiences to facilitate decision-making. They make it much easier to query the blockchain due to their standardization, as well as their ability to version data in a useful way for various consumers.

Application of API in crypto

APIs are powering several essential tasks in the cryptocurrency industry, thus aiding in analyzing the market and performance of various blockchains. For instance, there is a host of crypto APIs for aggregating market data and analyzing transaction volumes across blockchains that traders can use to determine market sentiment.

Crypto entities such as CoinMarketCap and CoinGecko provide useful data, including coin prices, trading volumes together with high and low points, trading histories and current news that can help guide traders on the best actions. Their APIs also provide ranking for various coins in terms of popularity, market capitalization and other statistical data that users can rely on to develop their trading strategies.

It is almost impossible for individual traders to obtain such data on their own as it requires a huge amount of resources, expertise and complex execution. Therefore, such crypto APIs fill a very huge void and meet a great need with such great efficiency at significantly lower costs and great convenience for users.

Other useful APIs are those offered by crypto exchanges, thus allowing users to easily trade various coins among themselves in an open market. Crypto trading systems have great APIs that support the execution of orders at prevailing market prices to other legitimate traders. Particularly, decentralized exchanges provide APIs that enable live execution of trades from the user’s crypto wallet without requiring them to open the wallet itself. Other wallets, like Exodus, have built-in exchange functionalities, allowing crypto holders to instantaneously swap the digital assets based on their real-time value without having to visit crypto exchanges.

Crypto entities like HashCash have built bots and algorithms that enable users to deploy automated trading strategies. Such platforms use price and trade execution APIs to develop the model-specific trading strategies that professional traders like hedge funds can deploy for a completely hands-off approach.

API solutions for enterprises

The blockchain space is rapidly growing beyond the individual crypto users and retail investors with uptake by institutions growing over time. While organizations have hesitated to adopt blockchain technology due to its technicality, scalability issues and lack of fit, among other reasons, this has begun to change recently with the benefits of the technology becoming increasingly publicized.

The entry of institutions into the crypto space has not been entirely smooth, with organizations coming into direct contact with some critical hurdles that are innate to blockchain technology.

One of the major challenges for institutions has been extracting and exploring data from blockchains. This is due to the bulky nature of blockchain that makes data synchronization difficult. It is also not possible to directly analyze blockchain data using conventional methods due to its heterogeneous and complex data structure. The process, therefore, requires a huge amount of resources and skilled personnel that organizations may not have or would be willing to hire.

However, this shouldn’t be a problem for much longer as the blockchain community is working hard to develop enterprise-grade solutions to ease institutional adoption of the technology.

What are the best API solutions?

Covalent, The Graph, and Web3js are leading the charge in developing APIs for querying and obtaining blockchain data. They provide the best API solutions for individuals and organizations alike to generate specific information to support decision-making, create apps and execute trades, among other uses. By so doing, they knock down some major barriers that are inhibiting blockchain technology adoption.

Covalent API provides access to rich data from seven blockchain enabled by the platform’s robust software that has indexed over 25 billion transactions, over 200,000 smart contracts and 30,00 cryptocurrency price feeds. Their revolutionary indexing and query technology supports diverse use cases and is available for all. The Covalent ecosystem is built with the enterprise in mind. Thus it provides multiple solutions through specifically designed data points to support organizational decision-making. Covalent has developed an API Suite that developers can quickly integrate in their projects, enabling easy access to the richest blockchain data from their one-stop shop.

The Graph stores and processes blockchain data for networks like Ethereum and IPFS with verifiable integrity. The platform’s API makes querying of this data fast, reliable and secure. The platform is focused on developing solutions for DApps and as such is dedicated to providing reliable data to facilitate their creation process. In this regard, The Graph encourages contributions from the blockchain community through open APIs called subgraphs that allow anyone to build and publish on the platform. This is aimed at accelerating the building process, thus making the blockchain data easily accessible.

Web3js is an Ethereum javascript API that allows users to interact with the decentralized network through a local or remote node. Web3js has a collection of libraries that enables users to easily retrieve specific Ethereum blockchain data like user accounts, send transactions and interact with smart contracts, among others. Web3js has a huge collection of Ethereum historical data in its collection that individuals and institutions can query to obtain desired information and actionable insights. Although Web3js data is quite rich and robust, the platform is quite technical, thus requiring users to have programming skills in order to query their system.

Edda Viktor

Blockchain enthusiast learning to write and deploy my own DApp. Previously worked for the oil and gas industry as an IT administrator.

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