Order book in the crypto space is an electronic or digital list containing buy and sell orders for a particular security or financial instrument organized according to their price levels. The number of tokens being bid or offered at a particular price point is listed in an order book. This helps the participants to identify the market sentiment behind every buy and sell order. Order books help to achieve transparency in the market by providing valuable information to the traders and investors by keeping the actual identity of the investors safe.
Order books are used by every crypto exchange to keep track of its assets. Lists like these help in improving market transparency since they provide important information such as depth of trade, availability of a particular asset, and its prices at a specific point. An order book has three parts– buy orders, sell orders, and order history.
An order book is dynamic in nature. This implies that it is updated in real-time throughout the entire day. These order books exist for every asset such as shares, stocks, and bonds apart from cryptocurrencies. The different types of order books contain different information relevant to the investor. For instance, buy orders contain the buyer information such as bids, the amount for which they wish to purchase, and the asking price, while market order histories have all relevant information related to every transaction that has taken place in the past.