Cryptocurrency price indices, explained | Cointelegraph

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The most common sources of data are the cryptocurrency exchanges.

The cryptocurrency exchanges are ground zero for most of the trading activity. It is the time when the price of a currency is established, depending on the purchase and sale price that traders are willing to accept anywhere on that specific market. Exchange prices are therefore the most accurate representation of the obtainable market value of a currency and the best place to collect data from.

Prices may vary slightly from exchange to trade, depending on the specific market, so cryptographic price indices generally collect data from multiple exchanges to get the most accurate price. You can see which exchanges an index used to collect data by clicking on the market tab of a specific currency. This will show a list of trades on which the currency is traded and where the index collected the information.

A commonly traded currency, like Bitcoin, will have several hundred markets, while IOTA – although still a popular currency – may have just 30 markets.

The exchanges make the trading data available through the open APIs (Application Programming Interface) that facilitate the collection of the necessary data to the indexes.

An & # 39; API is simply a mechanism that allows different software to communicate and exchange data or messages in a standard format. It's like a messenger running back and forth between applications, databases and devices to create a connection and provide data.

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