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API, or "application programming interface," refers to a set of protocols and definitions used in software development. In a similar vein to how smart contracts function, an API enables communication between different software products. 

When a second party connects to an API, its specifications govern how that party can engage with the associated product. They are designed to facilitate smooth interoperability between products, ensuring they can interact seamlessly with minimal obstacles.

But do all APIs work similarly? And what does it even mean for your data? Let’s find out.

What is a Read-Only API?

Before we discuss a read-only API, it’s important to understand the broader concept of an API. 

APIs work as a bridge, enabling different software applications to communicate and exchange data with each other. They provide a set of rules and protocols to govern this data exchange, essentially dictating how different software components should interact.

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A read-only API, as the name suggests, allows applications to "read" or retrieve data but does not permit any modification or deletion of the data. It provides a "view-only" capability, ensuring that the data remains intact and unaltered.

This means it gives access to the data in a system without letting external sources make any changes to it. It is a powerful tool for disseminating information securely and maintaining the integrity of data.

What Sets Read-Only APIs Apart?

Read-only APIs are unique because they maintain a one-way flow of data. They facilitate 'GET' requests but restrict 'POST', 'PUT', 'DELETE', or any other method that alters the data. While they may seem restrictive compared to full-access APIs, their specific use cases present several advantages.

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The most prominent benefit of read-only APIs is that they assure the safety of your data. They prevent unauthorized modifications, which can be a big issue with full-access APIs. The data available through a read-only API is essentially a snapshot of the system’s data, with the actual data tucked away safely behind the scenes.

For instance, in crypto tax software, read-only access may be given to an exchange account. This enables the software to aggregate the user's transaction history from that platform for tax reporting purposes. 

The read-only API ensures that the software can only retrieve and analyze data without the ability to execute trades or perform any other actions on behalf of the user.

In contrast, a trading API would provide full control to a trading bot, allowing it to make trades autonomously on the user's exchange account.

How Do Read-Only APIs Assure Your Data Safety?

Since a read-only API only allows data retrieval, your original data remains untouched. No matter how many requests an application makes, it cannot modify the data in any way. 

This is a significant advantage when dealing with sensitive data that needs to be protected from potential threats or mishandling.

The safety assurance from read-only APIs makes them ideal for systems where data integrity is crucial. They eliminate the risks of data corruption, tampering, or accidental deletion. 

How does Kryptos use Read-Only APIs?

Given the highly sensitive nature of financial transactions involved in crypto trading, ensuring data safety is a top priority.

Featuring over 2000 integrations, Kryptos streamlines the aggregation of your crypto transaction history with seamless API integrations. By using read-only APIs, Kryptos retrieves all transactional data from user wallets that are synced to the platform. 

This allows it to calculate taxes based on the obtained data. However, despite having access to all this transactional data, the software cannot alter it and your data remains 100% safe.

Let's take a closer look at how Kryptos interacts with Binance's API as an example. 

To establish the API connection between the two platforms, you can refer to our guide here. 

https://www.youtube.com/watch?v=cYcLXV9xEjU

This connection enables Kryptos to request your transaction history from the Binance API, allowing us to load your transactions and facilitate accurate tax calculations. One of the advantages of API data imports is the ability to maintain up-to-date trading records automatically. Unlike CSV uploads that require manual re-uploading for updates, an API connection keeps your transaction records current with just a simple click.

Looking to calculate your crypto taxes securely? Get Started Now.

FAQs

1. What is the Read API Key?

A Read API Key is a form of authentication that is used to grant permission to an application or a user to read-only or retrieve data from an API without altering it. 

2. What is the full form of API?

API stands for Application Programming Interface. It is a set of rules and protocols that allow different software applications to communicate and interact with each other.

3. What are APIs used for?

APIs serve a variety of purposes including:

• Integration between different software to communicate and interact with each other, facilitating the sharing of data and functionality.

• APIs enable applications to retrieve data from a server and use that data in a meaningful way for the end-users.

• It allows for the automation of tasks by enabling different software systems to interact with each other without human intervention.

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All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!