It’s a well known fact that crypto traders use more than one exchange. Managing multiple portfolios can be difficult because you have to log into each exchange account any time you want to execute a trade. No one has time for that in a market as volatile and fast-paced as crypto.
If you don’t want to waste time inserting 2FA information, you can generate an API key and link it to a 3rd-party trading – such as Shrimpy – where you can manage all of your funds from one place.
The problem is that many newcomers don’t understand what API keys are and how they work. But no worries, I wrote a guide that explains how you can find and connect your API exchange keys on Binance – the world’s largest crypto exchange.
What are API Keys?
API stands for Application Programming Interface. API serves as an interface that connects two or more software applications – allowing them to send, receive, and process data. API in the crypto market is utilized to connect exchange accounts with 3rd-party platforms. Once connected, secondary trading tools can collect data and execute trades on exchange accounts without requiring you to log in.
Connecting exchanges with 3rd-party platforms works by generating an API key for your exchange account which you then pass over to the other platform. While generating the key, the exchange lets you choose which permissions the keys grant. Traders tend to enable trade execution and disable withdrawals to feel secure.
The API keys themselves act as a form of authentication. They are credentials much like the email and password we use when logging into an exchange. In fact, API keys have a set of private and public keys much like blockchain wallets do.
Are Exchange API Keys Secure?
Whether exchange API keys are secure or not depends on how you handle them. There’s no way to lose funds as long as you keep your API keys to yourself. Think of it as managing the safety of your crypto wallet’s seed phrases.
API keys consist of a public key and a private key. You use the private key to sign requests when requesting access to your exchange account. The exchange will authenticate the private key and grant you access, along with the ability to control your account funds.
Exchange API keys are additionally secure because exchanges let you decide what kind of permissions an API connection grants. You can decide to revoke withdrawal or deposit access and prevent anyone from moving your funds outside your account. And if you’re ever done using 3rd-party software, you can completely disable the API key.
Binance API: How It Works
Binance, the world’s largest crypto exchange by trading volume, offers retail users, developers, and institutional investors to manage their holdings outside the exchange via API keys. Binance makes it possible for all of its users to access API trading for spot, margin, futures, and options.
Developers will enjoy using Binance’s testing environment, which allows deploying code that doesn’t utilize real assets. The exchange offers quality API documentation and a sample code in six languages. Developers can access Binance Spot Testnet and Futures Testnet for free. Moreover, the APi is compatible with Python, Node.js, Java, DotNET, and Ruby.
How to Create a Binance API Key
The following section features a step-by-step guide to creating a Binance exchange API key. Follow the instructions below to generate a key which you’ll need to deploy code or use 3rd-party software. Later, I will also show you how to connect your API keys to Shrimpy.
Step #1. Locate API Management Tab
Binance features a dedicated tab exclusively for generating and managing API keys. You can find the tab by logging into your account, hovering with your mouse over your user icon, and clicking ‘API Management’ at the very bottom.
Clicking API Management will transfer you to Binance’s API interface which looks like this:
Step #2. Create Binance API Key
At the API Management tab, click the ‘Create API’ button located at the upper right part of your screen. Doing so will launch a new window where you need to label (name) your API key in order to proceed.
Once you click next, Binance will ask you to pass a security verification process by inputting your 2FA information. In my case, Binance prompted me to input my email code, SMS code, and Google 2FA code. After providing the necessary information, Binance will generate your new API keys.
Step #3. Edit Permissions
You can now view your API keys and add them to your 3rd-party trading software of choice. But before you continue, I urge you to check your API restrictions. You need to enable and disable certain options depending on what you will be using the API keys for.
For example, you need to enable spot and margin trading if you want to execute trades on spot trading pairs. Or if you want to execute an arbitrage trading strategy, you need to enable withdrawals and allow the relevant platform to transfer your funds.
You’re ready to mess around with API trading now that you have generated an API key. Simply copy the secret key and paste it into the relevant field inside your trading software.
How to Connect Binance API Key to Shrimpy
I will now show you how to connect Binance API keys to 3rd-party trading software by using Shrimpy as an example. Shrimpy is an automated portfolio management platform that allows you to rebalance portfolios, create custom index funds, automate trading strategies, and do much more.
I recommend starting by enabling spot and margin trading on your relevant API key and saving your public and secret keys. Also make sure that ‘Enable withdrawals’ is not checked.
Now log into Shrimpy and connect your account to Binance by clicking the ‘Link Exchange’ button. A new window will appear where you can select the exchange you want to link – in this case, Binance.
Select Binance, and in the next window, paste the public and private keys previously generated on Binance.
Click save, and Shrimpy will complete linking your exchange account. Your dashboard will start showing your portfolio information. You can now rebalance and manage your portfolio.
If you want to learn more about automated trading strategies, I recommend reading the following articles:
Marko is a crypto enthusiast who has been involved in the blockchain industry since 2018. When not charting, tweeting on CT, or researching Solana NFTs, he likes to read about psychology, InfoSec, and geopolitics.