Bitcoin Exchange Rates
While is is perfectly normally for you to run a small business within your city and never think about currency exchange rates because your clients are local and pay in local currency, dealing with cryptocurrencies, especially bitcoins, is a different ball game. It is necessary to keep track of bitcoin exchange rates. What even makes this a very serious issue to consider is the fact that Bitcoin is very volatile. On Jan 16, 2018, one bitcoin was $13,999 but rapidly dropped to $12,268 the very next day. That’s a price difference of $1,731 within 24 hours. Got the point?
How Much is 1 Bitcoin Worth?
This question should always be followed by a specific currency. For example, how much is 1 bitcoin worth in USD or how much is 1 bitcoin worth in XAF? It is a common question from traders buying bitcoins using XAF. The three-letter code for a bitcoin is BTC and just like USD or XAF, it can easily be integrated into formulas, equations and website urls, or even as queries in search engines.
For example. to search for the BTC/USD rate, search “BTC to USD” in Google Search. A two way exchange rate calculator will be displayed in the search results at the url https://www.google.com/search?q=BTC+to+USD
Can you guess what these other urls will do?
The last might appear a bit tricky because the XE Currency Converter uses XBT for bitcoin (not BTC).
Why So Many Different Exchange Rates?
In lay terms, let’s just say exchange rates are determined by statistical data gathered from different sources and each source has a unique way of gathering, analyzing, interpreting, publishing and updating the results. Beacause of this, one may find too many values for bitcoin exchange rates.
What is the Most Accurate Exchange Rate for Bitcoin?
Unlike time that is universally clearly defined by geographical latitudes and daylight savings, there is no universally accepted exchange rate for any currency or cryptocurrency at any given time. When deciding the current bitcoin exchange rate, one simply need to just choose a specific source and stick to it, or derive a value from statistics performed on multiple choices.
For example, my best place to sell bitcoin is LocalBitcoins.com. I have realized that the exchange rate programmed in their system is “the median price from several different trusted exchanges” which I have noticed to be very close to “Google Finance Today Average,” (programmable in Google Spreadsheets with the formula =GoogleFinance(“CURRENCY:BTCusd”)). For my personal forecasting to help me decide on how to buy/sell bitcoins, I use the month highs, lows and averages of GoogleFinance and CryptoFinance.
Bitcoin Exchange Rates in USD Versus Your Local Currency
The most popular exchange rate for bitcoin is always referenced in USD. It is common to see BTC/USD or USD/BTC and a dollar value associated with it. If I say USD/BTC = $10,000 or BTC/USD = $10,000, it all means the same thing- 1 Bitcoin is worth $10,000.
How Much is One US Dollar of Bitcoin Worth?
I get this question all the time and to be sincere, it makes no sense at all. But since I always understand what the customer means, I just go ahead and answer it.
The above question is always asked with respect to a local currency. For example, a buyer in Cameroon wants to use XAF to pay for $1 worth of bitcoins. Well, $1 will always be one dollar for eternity and when converted to XAF, it is very easy to know how much $1 is worth in XAF. But the real question should be How Much Bitcoin Will I get for $1?
Let’s do the simple math.
If BTC/USD is $10,000, then $1 will display on your wallet as 1/10,000 = 0.0001 Bitcoins. So, if you pay $1, you will normally get 0.0001 bitcoins assuming the seller is selling to you at the current exchange rate and making 0% profit (that’s strange).
But now, you are not paying in USD. You are paying in your local currency XAF. If the USD/XAF exchange rate is 500frs, then 500frs will get you 0.0001 bitcoins but by the time the bitcoin reaches your wallet, it will not display exactly as $1. You may see about $1.1 or $0.9.
I guess if you wallet shows $1.1 you will silently consider it a good deal. But if it shows $0.9, you might run around the whole city screaming you were cheated. No, you were not cheated. You simply don’t understand the meaning of the phrase “bitcoin is too volatile”.
The above scenario is stated with the following assumptions (which of course are not correct and the values are chosen solely to simplify the math)
- BTC/USD = $10,000
- XAF/USD = 500F CFA
- The seller is selling at the standard exchange rate.
Fiat Value Versus Actual Bitcoins- My Recommendation
When buying bitcoins, I recommend that your reference point should be the actual amount of bitcoin you want, not the fiat value for it. This is because the bitcoin is a constant but in relation to fiat, the value always changes. One bitcoin for example will always be 1 bitcoin, however today that same 1 bitcoin can be worth $10,000 but changes to $9,000 tomorrow.
Below are some Google Spreadsheets to help you make a purchase decission