Calculating cryptocurrency profits follows the same principle as figuring out gains and losses in mathematics. One of the basic concepts to do it is net profit – read on to find out what this term means and how to work with it.
What Is Net Profit?
The general net profit definition states that it is the actual financial gain one receives after deducting the working expenses that were not included in the calculation of gross profit.
In the cryptocurrency context, this means subtracting the costs incurred during the time of trading, such as exchange fees, gas, investment charges, and so on.
What You Need To Know About Net Profit
Usually, a fiat currency like the Dollar or Euro is used to calculate cryptocurrency profits.
Suppose, you bought 2 Bitcoins (BTC) for $15,000 and sold them for $20,000. First, you will need to find out the difference between the selling price of Bitcoins and the price for which you purchased them.
The calculation will be as follows:
$20,000 (Purchasing Price) – $15,000 (Selling Price) = $5,000 (Gross Profit from selling 2 BTC)
Note that $5,000 here is the gross profit. To determine the net profit, you must deduct all the other costs that you had to cover when trading.
If your transaction fee equals 2% of the total sales, here’s how you will find out the net profit:
$5,000 (Gross Profit) – $400 (Fee) = $4,600 (Net Profit from selling 2 BTC)
While it is important to understand how to calculate gross and net profit manually, traders who invest in multiple digital currencies often use crypto profit calculators for the sake of speed and accuracy. Some of the most popular free tools are Coinmash and Easy Bitcoin Calculator.
