What is the Binance API?
The Binance API is a method that allows you to connect to the Binance servers via Python or several other programming languages. With it, you can automate your trading.
More specifically, Binance has a restful API that uses HTTP requests to send and receive data. Further, there is also a WebSocket available that enables the streaming of data such as price quotes and account updates.
Why should I use the Binance API?
Binance has established itself as a market leader when it comes to cryptocurrency trading. It currently ranks number one for Bitcoin volume according to coinmarketcap.com and ranks well for many other currencies.
Commissions are very competitive and you may be hard-pressed to find another exchange with lower fees.
Lastly, Binance has a good track record of security. There have only been a few instances of Binance getting hacked which is something that all exchanges are susceptible to due to the nature of the business.
The most important part, when Binance got hacked in 2019, and more than $40 million was stolen, Binance covered the users that were impacted.
Why shouldn’t I use the Binance API?
While security is a big plus point for Binance when it comes to exchanges, there are better alternatives, depending on your needs.
If your primary interest is trading Bitcoin, you might be better off trading Bitcoin futures with a regulated broker like Interactive Brokers for example.
The benefit of a regulated broker is that they have insurance schemes in place to protect the consumer.
If trading futures is not your thing, there are several regulated brokers that offer CFD trading on cryptocurrencies which can be a good alternative.
It should be noted that these options don’t have nearly as extensive of an offering as Binance. And in most cases, the trading fees are significantly higher.
Another challenge with API trading at Binance is that API changes occur often.
API changes are generally a good thing. It means the exchange is trying to update and improve their infrastructure (most of the time).
However, this involves keeping a close eye on Binance’s API announcements and updating our trading algorithms as required. Not all changes will lead to our code breaking, but some of them certainly can.
There are also outages. In late 2020, Binance took its API offline roughly once a month for a few hours each time for planned updates. This requires manual intervention and additional position management for algo traders.
In early 2021, amidst a surge in crypto prices, Binance experienced outages during volatile times due to an influx of new users signing up and a sharp rise in trading volume.
Binance CEO Changpeng Zhao, better known as CZ, has commented several times that outages are normal in a growing industry such as crypto, and that users should expect it could happen again in the future.