How Does a Cryptocurrency Calculator Work?

If you’re a beginning crypto investor, or you’ve been one for a while and are looking to advance your crypto research and analytical skills to make some big crypto trades this year, you may want to consider how a cryptocurrency calculator works and test out different crypto trading strategies using a crypto profit calculator to plan your digital asset investments.

This quick guide to how cryptocurrency calculators work— and how to use them to generate investment ideas, and analyze and refine your trading strategy— includes a review of three different kinds of crypto calculators with a link to a working calculator of each kind hosted by the CoinStats crypto portfolio tracker app so you can try out what you learn in this article today. 

Use This Crypto Profit Calculator to Plan Your Investments

The Crypto Investment Calculator by CoinStats is a crypto profit calculator built so that CoinStats users can daydream about future gains and drill down into the research they do with some calculations to plan their next trades or overall strategy for the next relevant period for their portfolio. You don’t have to sign up for an account, download their app, or give them any info at all to use it. The calculator is completely free and easy to use.

Just select a crypto asset from the dropdown menu under “Coin” and the calculator will automatically load the current average spot price of the coin or token at exchange into the “Buy Price” and “Sell Price” fields. You can then add the USD figure for your Buy or Sell amount in the “Investment” field and the brokerage or exchange fees. The crypto calculator will then return your profit/loss figure.

This Crypto Return Calculator Is A Free Cryptocurrency Tax Calculator

Want to calculate your crypto returns using a free cryptocurrency tax calculator so that you can determine your income tax obligation or deduction from your crypto trading gains or losses? CoinStats has another useful, free, and easy-to-use calculator that does just that for you.

While the cryptocurrency calculator referenced above is good for planning different future investments and trades, this one is for calculating returns in gains or losses from historical trades you have already made. That way you can use it for a cryptocurrency tax calculator. 

Just select the coin you traded, enter the USD exchange value of the coin at the time you made your trade, and then the USD exchange value of the coin when you exited your trade. The first figure is what tax accountants and authorities call your “Cost Basis.” That figure less the USD value of your trade when you exited is your capital gains or capital losses on the trade.

Generally speaking, you add your crypto gains to your total income reporting for your income tax obligation and can deduct crypto losses from your reportable income up to a certain amount. Please familiarize yourself with your tax authorities’ rules and consult a tax professional if necessary to avoid underpaying and incurring any fines or fees to pay the correct amount.

Here’s a Crypto Converter for Making Currency Conversions of Key Pairs

Now if you’re looking for a crypto calculator that makes cryptocurrency conversions between the two elements of a key trading pair (like BTC/ETH or ETH/BUSD) the Coinstats crypto portfolio tracker service has one of those for you too. 

To use the crypto keypair conversions calculator, simply select two cryptocurrencies, tokens, or central bank currencies and enter an amount in the field next to either one. The currency converter will automatically update the other field with the correct and up-to-date amount to exchange for the other currency. 

For example, if you select USD for U.S. Dollar and FIL for Filecoin, then enter $10 into the field next USD, the conversion calculator will update with the amount of Filecoin you can trade $10 for at today’s current average spot price on crypto exchange markets. When I did it for this article USD $10 would fetch 1.29 of (FIL) at the exchange.

If you think about it, Bitcoin was the world’s first cryptocurrency calculator

Bitcoin was the world’s first cryptocurrency and you can easily think of it as the world’s first cryptocurrency calculator. What does Bitcoin calculate and how does it do it in a nutshell?

The Bitcoin network and economy are constantly evaluating the sum of all future value of all extant bitcoin in the global economy (there will never be more than 21 million BTC), financially discounted to its present value today.

How does Bitcoin accomplish a computation so complex and self-referential? All markets are constantly calculating to solve for what economists call the “Market Clearing Point” or “Equilibrium.”

This is the price at which the curves of supply and demand intersect on a coordinate plot for the quantity and price of the good. Bitcoin markets don’t have to bother wondering about supply. The predictability of Bitcoin supply is one reason it is so valuable as a currency.

Instead, crypto markets are constantly guessing what demand will be now and into the future over their relevant investing timeframes. Given the let’s say “boisterous” activity of Bitcoin exchange markets since its 2009 debut, they certainly expect demand to continue to increase robustly for the foreseeable future.