How to Use a Bitcoin Investment Calculator

May 20, 2020

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When using an online calculator to determine bitcoin calculator profit, you will need to input a start date, end date, your starting investment and then the calculator will adjust for inflation. Trading in bitcoin can be much more volatile than other commodities, with no close in the market, so all potential investors should keep the relative instability of this digital currency in mind when viewing calculations.

What is Bitcoin?
Bitcoin is the largest cryptocurrency in the world and is traded peer-to-peer with no ties to any particular single bank.

Bitcoin is a computer file
Bitcoin is stored in digital wallets rather than banks
Bitcoin can be traded between digital wallets or individuals
Bitcoin transactions are recorded in a blockchain list which is publicly visible

How to Trade in Bitcoin in the UK
When deciding to buy bitcoins in the UK, there are number of methods you can use, including –

Exchanges
CFD Trading
Spread Betting

Exchanges hold large amount of bitcoins at once, so are prime targets for hackers. A whopping $195,000,000 was hacked from BitGrail at the start of 2020, so keep this in mind when using exchanges as bitcoin is not yet as regulated as more traditional ways of investing.

CFDs (contracts for difference) uses financial leverage to make a profit, but can be subject to capital gains tax, although this can be offset, so check with your accountant first! CFD focuses on hedges and existing portfolios rather than physical assets and encompasses shares, commodities and currency pairs amongst its indices, included the FTSE 100 so is popular worldwide as well as in the UK.

Spread betting is tax free in the UK and Ireland (hurray!) and requires a generally smaller deposit to cover the cost of the trade. Having said that, losses can be high due to the leveraged nature of the product as losses and gains are calculated at full trade value, so is not suitable for cautious investors.

One of the most popular and profitable ways of investing in BTC is by utilising the bitcoin block reward system. Blocks of bitcoin currency are traded using a process known as mining. For mining a block of currency, hash rates are currently at a return of 12.5 BTC so it is worth exploring block rewards for a decent profit.

Mining pool fees vary so be sure to check these along with their reliability, security and pay-out policy before you buy. Here 3 of the top rated mining pools for your consideration –

SlushPool (medium to large pool size) – 2 percent average fee
Antpool (medium pool size) – 1 percent average fee
BTC.com (large pool size) – 1.50 percent average fee

Bitcoin and cryptocurrencies are not directly linked to the GBP or the stock market, so can be a good choice for those looking to diversify their portfolios. For further analysis into the correlation between bitcoin to pound has more information.

How to Trade in Bitcoin in the US
If you are interested in buying and selling bitcoin in the United States you will probably want to use Coinbase as it is currently the quickest and easiest way to purchase bitcoins in the US.

How to Use a Bitcoin Investment Calculator
A bitcoin profit calculator can give an indication as to an expected return, but as prices are calculated on multiple exchanges and the market is so volatile, it is hard to predict long term results with complete accuracy.

Below are the following outcomes to consider –

Total Return Percentage
Annualised Return Percentage
Ending Value in Your Currency
Check CPI Adjusted

Electricity and Bitcoin
When mining bitcoin, it is important to keep in mind the electricity cost. Yes, really. The computer power needed to successfully solve the mathematics of bitcoin blocks uses an estimated 215 kilowatt hours per problem which can quickly eat into your profits and see your energy bills increase rapidly. If you are primarily interested in mining bitcoin, your first step should be to seek out a cheap electricity supplier to prevent bills soaring. Check out comparison sites to see the best rates in your area or try an app such as USwitch for a quick and easy way to compare prices.

Social Media and Bitcoin
As an illiquid currency for the digital age, it is perhaps no surprise that Bitcoin and social media have a close relationship. Satoshi Nakamoto, the name used by the as yet unknown creator or creators of Bitcoin, first promoted and discussed Bitcoin on social media, with the first Bitcoin trade ever taking place via an online forum. As such, social media is a great place to keep up to date with Bitcoin developments and investments and some even pay you in cryptocurrency, including –

Steemit
Mamby
Sola
Indorse
APPICS

Forget Instagram influencers, from now on it is all about the money to be made from users contributing to cryptocurrency sites instead.

Predictions for Bitcoin in 2020
As the world becomes more uncertain, it seems that bitcoin is still holding its own when it comes to profitability, with 2020 predicted by many traders to reach an all time high when it comes to price. Bitcoin prices are exciting because as an illiquid currency, anything is possible and it is likely that even in what looks like the looming recession, a bitcoin investment could still reap big rewards.

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mdora
Your go-to source for all things crypto, fintech, and financial regulations. With a passion for staying at the forefront of the digital financial revolution, I'm here to simplify complex topics and keep you informed.