What’s in an API?

Barry McCarthy
October 25, 2021 | Hedging Insights


A pudgy 40-year old bloke in an ill-fitting brown suit ambles into a restaurant.  


He sits at a table, grabs the menu, and is about to peruse the mains when an impossibly tall waiter with a bulbous nose coughs to attract his attention.  


No, this isn’t one of those guy-walks-into-pub / restaurant / [insert ultra-specific establishment here] jokes.  


It’s a metaphor for APIs.  


Whether you realise it or not, chances are you and your business rely on several API-based software tools on a regular basis. But if the vast majority of us have heard of APIs — and many might know that API stands for Application Programming Interface — few understand what an API actually is and how it works.  


In this post, we’re going to break things down in the simplest terms possible, so you can grasp the basics of APIs and explain them to your colleagues. 

A tale of two choices

To properly explain APIs, we need to rewind a bit further and start our brown-besuited friend’s story at an earlier stage. Specifically, we need to go back to the moment when he’s stricken with his first hunger pang.  


I could murder a big, juicy steak right about now,’ he thinks to himself as his stomach rumbles. At which point, he realises he has two choices: 


  • Head over to his local supermarket, buy the ingredients, and cook the meal himself 
  • Go to a restaurant and order steak off the menu 


Both options will take him to his end goal: satisfying his craving for steak. But one of the options is easier and more likely to help him succeed than the other.  


With option one, our friend needs to find a recipe, buy ingredients from the supermarket, cook his meal, and then clean up after himself.  


This requires time and effort. And, more importantly, it assumes he can execute the recipe correctly. If he’s the kind of guy who always manages to burn toast, his steak probably won’t be very tasty.  


But, with option two, he’ll almost certainly eat a delicious meal. And he’ll eat it sooner than he would if he went ahead and cooked it himself.  


All he has to do is pick a top-rated restaurant from TripAdvisor, walk in, and order off the menu. A team of professionals will make sure everything is cooked to perfection, bring him the meal, and do the dishes after he’s done, so he can sit back and enjoy his meal.  

APIs are like restaurant menus

So what does all this talk of steak and badly-dressed guys have to do with APIs? 


Well, because an API works in much the same way as a menu. Put simply, it’s a string of computer code packaged in a way that makes it easy for you to communicate with a third party piece of software and get what you need.  


In other words, just as the menu allows our hungry friend to explain what he wants to the restaurant kitchen and to obtain it from them, an API allows you to easily get a desired output from any program.  


This could be anything — reports, data visualisations, or even a foreign currency hedging product 

Why are APIs such a big deal?

The beauty of APIs is that they’re packaged as products. So they’re simple to use, cost-effective, and maintenance-free. 


Commercially available APIs are built to follow an established standard — this is typically HTTP or REST. They’re also thoroughly documented and designed to be easily understood by the people they’re intended for.  


The upshot is that APIs make getting what you want out of a third party program quick and easy, even if you’re not a technical person. As simple, in fact, as walking into a restaurant and ordering steak off the menu.  


But the best thing about APIs is that they allow you to take advantage of another company’s expertise. 


While you could arguably cook a decent steak even if you’re not a culinary genius, it would not be as good as what you’d get at a Michelin-starred restaurant. To reach that level, you’d need to master professional techniques. And this takes years of study and dedication.  


The same goes with technology. To build a sophisticated tool that does what you need it to do well, you need to invest in the right hardware and software and hire people who know what they’re doing to develop it, launch it, and keep it running smoothly.  


Even then, a certain amount of trial and error is inevitable. Depending on the program’s scope and complexity, the process of designing, testing, fine-tuning, and, eventually, deploying software could run into months or years.  


Plus, you’d need to monitor the system on an ongoing basis to make sure there are no bugs or security issues.  


With an API, you can plug into a service that’s proven to work — one that’s been developed and maintained by a company with a proven track record — so you can start getting results straight away without having to worry about the complexities.  


More to the point, where the cost of developing and maintaining your own software can run into the hundreds of thousands, you can access API-based software by paying an affordable monthly subscription that also includes regular updates and upgrades.  

Why spend years at cooking school when you can buy the meal right now?

You wouldn’t spend thousands of Euro and commit to several years of study and a gruelling apprenticeship if you fancied eating a Michelin-starred steak.  


So why saddle your business with huge costs and complexity when you can entrust highly technical jobs to the experts and concentrate on what you do best? 


With APIs, you can do just that: get instant access to market-leading tech at low cost, without having to worry about maintenance, security, or ongoing development.  


So take a page out of our hungry, badly-dressed friend’s playbook.  


Spare yourself the stress and burnt fingers, put down the grill pan, and head over to a good restaurant. 


But, do wear a better-fitting suit in a nicer colour. 

High Risk Investment Notice


Trading in leveraged financial instruments such as Options or other financial derivatives, carries a high level of risk and may not be suitable for all investors.  Investors who make use of these financial products run the risk of substantial capital losses which may exceed your initial deposit. Assure Hedge (UK) Limited makes no claim or warranty regarding either the appropriateness or suitability of these instruments for your purposes whether commercial or otherwise. Assure Hedge (UK) Limited may provide general commentary or educational material available on its website or otherwise, which is not intended as investment advice. You should carefully consider your financial situation and needs and seek independent advice from a duly authorised financial adviser. Assure Hedge (UK) Limited assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy, completeness of information, text, graphics, links or other items contained within these materials. You should read and understand Assure Hedge (UK) Limited’s Terms and Conditions prior to taking any further action.


Barry McCarthy
Founder & Head of Embedded Hedging at Assure Hedge