How to Calculate Bitcoin Profit in 5 Easy Steps

Source: residencestyle.com

Becoming a part of the whole cryptocurrency industry is a decisive step that more and more people decide to take. Although most of the still have a lot of questions and uncertainties in their minds about it, they are more willing than ever to join millions of others and invest money in digital currencies. As the most popular and valuable virtual currency, bitcoin leads the way when it comes to how many people own it and choose it as their main crypto. Diversifying one’s portfolio is a must since keeping all of your eggs in a single basket is not advised, but still the largest chunk of an average investor’s balance tends to be in bitcoin.

Considering this fact, new investors and enthusiasts usually do not think twice about which crypto to support out of the gates. They first purchase or otherwise acquire an initial amount of BTC and then later branch out into others until they find what works best for them. However, one important question lingers in their minds during all of that time, and that is how they can calculate their bitcoin profit. Is something like this even possible and if it is, what is the easiest way to do so? You will be happy to know that it is more than possible to calculate the bitcoin profit at any point and in this article we will tell you how. If you wish to learn more about all of this, make sure to check out technologywire.net.

The Basic Question

Source: pexels.com

The most basic of questions regarding the calculation of bitcoin profit revolves around the initial investment and how it will be affected following the changes in bitcoin price. How much will you have made or lost if the price of a single coin skyrockets or dips significantly? For example, a customer buys $60 worth of BTC when it was worth $30,000 per coin. How much will they have if the price suddenly jumps to $36,000 and how can they calculate that? Is there a formula that can help you determine how much more the $60 is worth now that 1 BTC has jumped by a significant margin?

It is fake yet very viable scenarios that often persist in the minds of investors well before they make the initial investment and start trading. It is also not only present with simply buying and holding on while the prices go up, but with buying more, selling, and exchanging BTC. If it is a good time to have more BTC all of a sudden, can you calculate your potential profit based on the money you are willing to spend on a new batch of BTC?

Straightforward Math

Form what was mentioned earlier it may seem that it is rather complicated to calculate all of this. In reality, it is actually basic and straightforward mathematics that will be all you need in order to easily get the numbers you so desire. First of all, you should try to use fiat (traditional) currencies when doing your calculations. It is always best to use the United States dollar since it is still the go-to currency for comparing all other currencies as well as the money the world revolves around. In some cases, you can also use the Euro (EUR), the Great Britain Pound (GBP), the Japanese Yen (JPY), or the Swiss Franc (CHF).

We will require a real-life situation and therefore a simple example with round numbers. Say the current price of 1 BTC is $10,000 and you purchased $1,000 worth of it. It is easy to understand that you now own 0.10 BTC for the money you gave based on the current market value of the currency. If the price of BTC suddenly jumps and is now $15,000, the worth of your BTC will also be increased by the same 50%. Your balance will be worth $1,500 and if you decided to cash out then and there, you will walk away with a cool $500 of pure profit. Easy peasy. There is no rocket science behind it, and although it may be more difficult to do this with less rounded numbers and values, there are numerous calculators and exchanges where you can accurately get the calculations you want and see the profit you may get.

Summary:

1. Take the money you spent on BTC
2. Check how much 1 BTC was worth at the time of your purchase
3. Check the current value of 1 BTC
4. Calculate the difference between the old value (2) and the current value (3) in percentages
5. Your profit in percentages is the same as the difference in values (4)

Trading and Exchanging

Source: pexels.com

Another way in which you can calculate your profit is through satoshis. The unit lower than bitcoin is satoshi, named in honor of the founder of bitcoin Satoshi Nakamoto. One bitcoin is worth 100,000,000 satoshis. This works the same way cents are the lesser unit for dollars, and pennies are for pounds. Satoshis are important because most currencies, unlike BTC, cannot be straight up bought with traditional money. You first have to own bitcoin, then break it down to satoshis, and then trade them to obtain other cryptocurrencies. This is another reason why so many people first get a batch of BTC and then everything else.

The main reason why investing in alternative coins (altcoins) is to get a better return than bitcoin. Here you will measure all of your gains and losses against BTC because all coins are traded against it and measured in it. So, if you want to buy a crypto that is worth $0.30 per coin and use satoshis to get it, and it doubles to $0.60, you automatically have double the amount of satoshis too and you can revert them back to BTC, resulting in more BTC. The bad side of this is that sometimes bitcoin rises in value on its own while you have other cryptos, so much so that it no longer makes sense to buy anything else but just to hold on to the BTC.

As you can see, all the entire industry is very unpredictable and difficult to calculate and plan out. There is a lot of randomness and luck involved and sometimes the same move that used to be a moneymaker is now the cause for an extreme loss. The volatility of bitcoin makes it a hassle to calculate your profits in satoshis because you can never be sure in the accuracy. Free online converters and tools are your best and safest bet here so be sure to find one.

Summary:

1. Buy another cryptocurrency with satoshis
2. Check how much that crypto is worth against BTC
3. Wait for that crypto to rise in value
4. When it rises, your initial investment will be increased
5. Convert it back to satoshis for BTC profit

LEAVE A REPLY

Please enter your comment!
Please enter your name here

  −  1  =  1