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In the volatile world of cryptocurrencies, latency becomes even more important than ever, as prices can move quickly in seconds. Additionally, extremely low latency will be essential for bringing institutional money to these platforms.
The digital nature of cryptocurrency, not to mention the hype and uncertainty surrounding most of the space, can lead to substantial volatility in cryptocurrency markets. Just a few seconds can make a huge difference in the success of a strategy. More than ever, traders need to know that their trades are posted as quickly as possible. & Nbsp;
Another latency issue that users encounter on cryptocurrency exchanges stems from the lack of standards or uniformity. One exchange can have great infrastructure and speed, while others lag behind. This can cause headaches, as many traders interact with multiple platforms, especially arbitrage traders looking to profit from price discrepancies across different markets. These opportunities don’t last long and having low latency is essential to be able to take advantage of them.
These performance issues don’t just affect individual human traders. The cryptocurrency space is currently being raided by institutional investors, and if this trend continues, there must be platforms that can cater to high-end customers. Institutions are already expecting the best and fastest services and only the platforms that offer it will be able to attract their business.
This is partly due to a trading technique that is becoming widely used in the world of digital assets, known as algorithmic trading. Here, trades are made by computers that have been programmed to follow specific strategies. With humans, speed was already essential to be one step ahead of the competition, but automated trading has pushed it to the extreme and gave rise to what is known as high frequency trading or HFT.
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