Why low latency is important for cryptocurrency exchanges, explained

In the volatile world of cryptocurrency, latency becomes even more important than ever before, as prices can move swiftly in a matter of seconds.

Extremely low latency will be essential in bringing institutional money into these platforms.

More than ever, traders need to know that their trades are being posted as quickly as possible.

Another latency issue that users encounter on cryptocurrency exchanges comes from a lack of standards or uniformity.

This can cause headaches, as many traders interact with multiple platforms, especially arbitrage traders who seek to make a profit from price discrepancies across different markets.

These opportunities don’t last long, and having low latency is essential to be able to capitalize on them.

These issues with performance don’t only affect individual human traders.

This is partly because of a trading technique that is now 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 for being ahead of the competition, but automated trades have pushed this to the extreme and given rise to what is known as high-frequency trading, or HFT..