Why low latency is important for cryptocurrency exchanges?


Latency in cryptocurrency exchanges is an important aspect of successful transactions. It is the speed of data transmission. A ‘low latency’ exchange means a quicker data transfer.

With the improvements in the world of technology, the data speed is decreasing significantly. Low latency is principally important in cryptocurrency trading. Knowing the volatility of the market, the trader would want the exchange to happen as soon as he clicks the ‘Confirm’ button.


Otherwise, that exchange may be considered unsuccessful. Traders often make precise pre-calculations on what and how they want to spend their money. A high latency does not satisfy their pre-evaluated objectives. 

Therefore, online exchanges use new technologies in order to reduce latencies and satisfy their customer needs. Knowing that prices move in a split of a second, high latencies become a risk, especially when big money is involved. 

Another problem posed is the lack of uniformity among different online exchanges. Some use the latest technology and infrastructure, while others do not. This creates chaos for traders, as they seek to profit from price disparities.  

Cryptocurrencies are at the center of interest for institutional investors as well. They invest a considerable amount of money, and they do expect the best service that can be provided.  

A well-known strategy to reduce latencies is algorithmic trading. That means, the transactions are made from a computer, and not directly from a human, eviting the ‘Click Confirm’ button. HFT ( high-frequency trading) is considered a fast service, contributing to better execution of the strategy. 

Where can I trade for the lowest latency?

Good news for everyone. Most of the exchanges online, do offer low latencies for average traders. For the big investors, who want further advice and calculations, they are beginning to provide colocation services. 

Another aspect worth mentioning is the internet speed. That means, even if the trader uses the lowest latency online exchange, and the latest algorithms are known in the crypto world, if the internet connection is not good, the transaction cannot be completed in real-time, because the order will be received later than requested.

That means, when doing a transaction, make sure to have a reliable internet connection so you can make the most out of the technologies you choose to use. 

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