If I know the exchange rate, how can I calculate the value of some amount bitcoins in my native currency?
I will explain how to calculate the value of some amount of bitcoins in terms of USD, but obviously the USD can be replaced by any other currency, and the corresponding exchange rate.
There are three figures involved in this calculation:
- The value in USD.
- The exchange rate, which gives you the relation of USD to BTC.
- The amount of bitcoins.
If you look at the units of the figures, you can figure out the following formula:
value in USD = exchange rate * amount of bitcoins
Or expressed in the units of the terms:
[USD] = [USD/BTC] * [BTC]
As you can see, if you multiply the
exchange rate [USD/BTC] with the
amount of bitcoins [BTC], the units of the right side will be reduced to
[USD], which is what we are looking for.
0.005 BTC and the exchange rate is
exchange rate * amount of bitcoins = 200 USD/BTC * 0.005 BTC = 200 USD * 0.005 = 1 USD
You can also turn the equation around to calculate any of the other terms:
To calculate the exchange rate, you take the amount of USD you paid, and divide by the amount of bitcoins you received.
exchange rate = 'value in USD' / 'number of bitcoins'
To calculate the number of bitcoins you might buy with a given amount of USD at a specific exchange rate, you divide the amount of USD by the exchange rate:
number of bitcoins = 'value in USD' / 'exchange rate'
Let Preev help do the math for you!
Calculating the price of Bitcoin based on the Bitcoin/USD exchange rate will probably not give you the exact actual cost of Bitcoin in your native currency. The price in your native currency is set by the supply and demand on a local exchange that deals in your own currency. This can vary by as much as 10-30% e.g. South Africa & South Korea at times.
So, you ask, would that mean there is a difference in value between Btc/USD, Btc/Native and USD/Native? Yes, that is what arbitrage is based on and many take advantage of the difference to make a profit wherever Btc is valued higher. So bottomline, if you're looking for exact exchange rate look on a local exchange.