Since the turn of the century, the world has rapidly become more and more digitized. Our lives are full of all different kinds of smart devices. Often they help us stay connected and encourage productivity. One area however has been slower than most to go completely online. While financial trading and transactions have gotten smarter, physical money remained the norm. Until the last few years, that is. Now, cryptocurrency is the way forward.
Cryptocurrency and blockchain are some of the most cutting-edge technologies in development today. Users can hold specific cryptocurrencies and trade them for profit, or use them for daily transactions. With cryptocurrencies, you can completely digitize your finances.
As you dive more into the world of cryptocurrencies and start investing in different coins, you’ll inevitably need to calculate exchange rates. For example, you’ll need to keep track of your profits and losses during trading, and stay updated about changes in each currency’s value. All these tasks are tedious to do manually, and that’s why exchange APIs like coinlayer help you automate cryptocurrency calculations.
This article will look into automating cryptocurrency exchange rates calculations. It will also demonstrate how automating these tasks benefits you.
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How Can You Calculate Cryptocurrency Exchange Rates?
Cryptocurrency exchange rates establish how actively a particular cryptocurrency is faring on the market. In addition, they give you an idea about each coin’s growth trajectory. This, in turn, helps you decide if a coin is a good fit for your cryptocurrency investment strategy.
Manually calculating the exchange rates, however, can get pretty tricky. This is especially true because cryptocurrencies are not priced according to ‘fundamentals’ like company stocks are. For this reason, most analysts believe a cryptocurrency’s exchange rate is speculative and depends on simple supply and demand. Some coins have limited numbers and are therefore more expensive. On the other hand, some coins’ value depends on how many coins are mined by their creators.
If you need to calculate a specific cryptocurrency’s exchange rate, your best bet is the volume-weighted average price. This takes into account different rates from multiple exchanges and multiplying by the volume traded through each exchange. Finally, you divide it by the number of exchanges you referred to for the prices.
While the volume-weighted average price can give you a reasonably good idea of a cryptocurrency’s true rate, it has its pitfalls. Some exchanges fake their sales volumes to manipulate currency prices for personal gain. In addition, this method is prone to human error. Using a trustworthy API like coinlayer helps you safely automate your calculations and mitigates those concerns.
Why Should You Automate Your Cryptocurrency Calculations?
Cryptocurrencies are a hot topic in technology and financial circles. This is because cryptos have encouraged a new crowd of young and enthusiastic individuals to start trading from home. This massive increase in investors makes it all the more important every investor stays alert and actively monitors the market.
While you could choose to stay stuck to your smartphone or computer and keep a lookout for any developments in the cryptocurrency markets, you have other options. Specifically, you can automate all your different cryptocurrency calculations by using a powerful API or programming framework. By using programmable tools, you can create scripts that monitor all the latest happenings like price surges or trading warnings.
Using a powerful API like coinlayer for your calculations, you can create converters to guide your trading strategy. In addition, you can develop dashboards to monitor the exchange rates of all in-demand cryptocurrencies. Using this kind of tool can drastically improve your cryptocurrency strategy. The best part about automating is that it providers you with reliable data at lightning speed.
What Should You Be Mindful Of While Automating Cryptocurrency Calculations?
Once you decide to automate your cryptocurrency activities, you need to select the right tools and APIs. This is crucial because cryptocurrency assets are volatile. Therefore, you need to make sure that whatever tools and APIs you choose, they give you the information you need.
The primary qualities you should be looking for in your cryptocurrency automation APIs and tools are as follows:
Your API Covers a Wide Range Of Coins
The number of cryptocurrencies is increasing staggeringly as more people decide to invest. You will need to ensure that the API of your choice can provide you with data about all the ones active in the market. Such an API will be easy to accommodate according to your cryptocurrency strategy.
Your API Uses Reliable Sources
As interest in the cryptocurrency market surges, misinformation about coins is rampant. Whatever API you choose, make sure it gets its data from dependable sources. You don’t want to be trading based on wrong or dubious data.
Your API Offers Powerful Data Delivery
The cryptocurrency market changes by the minute and coins can rapidly drop in value. It’s best to get second-by-second updates. Your API of choice should get you accurate data quickly so you can make informed, timely choices.
Your API Needs Excellent Security
Cybersecurity is a rising concern throughout the digital world, and cryptocurrencies aren’t any different. Similarly, your cryptocurrency wallet is always at risk of being stolen through hacking or from being poorly protected. Make sure the APIs you use have trustworthy security measures built-in.
Your API Should Have On-demand Support
A dedicated support system should come with the API of choice to help you when you need it.
Once you have made sure that your chosen API has all of these critical characteristics, you will be in good hands investing in cryptocurrencies. Most prominent APIs like coinlayer meet these criteria. Without them, your investment could insecure.
How Does the coinlayer API Help Automate Cryptocurrency Calculations?
Coinlayer is a robust API for all your cryptocurrency calculations needs. It provides you with exchange rate data and prices in a flexible JSON format. This makes it ideal to help you automate your cryptocurrency trading. It covers more than 385 coins and gets all of its data from a wide range of dependable exchange rate providers.
You can get data within seconds thanks to coinlayer’s cloud infrastructure. You can also can contact its dedicated support system if you have problems. Finally, it is backed with industry-standard 256-bit encryption system for end-to-end security. You can also go through historical data and chart the fluctuations in value to better inform your trading plan.
