Tracking a cryptocurrency portfolio might be challenging. Here’s what experienced inventors use to understand their crypto ROI.
Investing in cryptocurrencies can be challenging, especially for investors who are used to dealing with traditional assets. These investors often see the crypto market as highly volatile.
In addition, there’s a lot of market manipulation, which often causes drastic price movements.
However, most people get attracted to crypto investment and jump into a digital asset because of the possibility of a high return on investment.
Even the experienced trader who deals with gold might test out the waters and get into crypto, ready to take the risks.
Here’s how they calculate the ROI, rate of return, and their net profit.
Briefly on Cryptocurrencies
There’s a lot that can be said about cryptocurrencies, but new investors should know that it all started with Bitcoin (BTC) in 2009. It was the first-ever digital currency that introduced a peer-to-peer electronic cash system.
Once the first cryptocurrency started getting traction, others followed. Soon, a whole new market was born, and ever since, the financial industry hasn’t been the same. Cryptocurrency opened up many doors to investors who can now invest in these assets in several ways, such as:
Purchasing coins or tokens directly on the exchange
Investing in an Initial Coin Offering (ICO)
Investing via Initial Exchange Offering (IEO)
Getting into Crypto Exchange Traded Fund (ETF)
Some of the new options for investing in crypto include purchasing non-fungible tokens (NFTs) and lending money via some of the Decentralized Finance (DeFi) platforms.
How to calculate rate of return and net profit for crypto investments
Dangers of Investing in Cryptocurrency
Even though there are many ways to get introduced to crypto investments, novice investors often worry about the limitations regarding current and future regulations.
Many investors don’t consider the value, efficiency, or use case of the cryptocurrency they invest in. Some also completely ignore the technology behind the project and only follow a hyped community and current market sentiment.
This often results in a poor, emotion-driven investment decision, which brings a negative return on investment (ROI).
On the other hand, some investors are fortunate, and hit the nail on the head by getting into tokens which prove to be successful projects, bringing high ROI.
Still, those who purchased crypto and learned to manage the risks claim there’s a potential for a decent return on investment (ROI).
However, ROI depends on the current price of the asset and market fluctuations, which can be shaken with just one negative headline.
This is why calculating the rate of return and ROI can be tricky.
What Is Return on Investment (ROI)?
Return on investment, or ROI, is defined as the percentage growth or loss of investment, divided by the initial cost of an investment, multiplied by 100. ROI calculation measures the profitability of an investment.
On the other hand, the rate of return, or IRR, is the rate of all future expected cash flows of an investment. IRR measures the estimated return.
Both are used to measure the performance of investments, with ROI being used by individual investors or institutions and IRR being used by financial analysts.
Positive ROI and Negative ROI
The difference between a positive ROI and a negative ROI is simple. A positive return on investment means that net returns are greater than any investment costs.
The negative ROI percentage shows the net returns are poor, meaning the total costs are greater than returns.
The Importance of the ROI Metric
ROI is the key performance indicator that shows how successful an investment might be. ROI calculation can be handled in two different ways:
By using the standard ROI formula: subtracting the initial value of the investment from the final value of investment, and then dividing the number by the cost of investment x 100
By using the alternative ROI formula: dividing net return on investment with the cost of investment x 100
Still, investors should be mindful that the annualized return formula often ignores the compounding that’s added to the initial value, which is why it might give incorrect results.
Tools Investors Use to Calculate ROI
There are many tools to calculate ROI, and experienced investors often don’t even have to use a formula to get the numbers right.
For example, Navexa is one of the best ROI and portfolio trackers people can use to keep track of the money they invested.
It’s a smart portfolio tracker tool, developed to pull data from all sorts of platforms, including crypto exchanges.
Navexa helps traders and investors see their annualized ROI with ease — bypassing the need to use any manual calculation.
What is Crypto ROI?
Crypto ROI helps investors calculate the performance and efficiency of their crypto investment.
By calculating crypto ROI, traders and investors also compare how different crypto investments perform against one another, and which asset has the highest potential of bringing more money.
What’s more, crypto ROI is a key metric in determining the performance of an asset compared to its initial price.
Calculating crypto ROI has become a popular indicator for Bitcoin, Ethereum, and altcoin traders and investors.
Crypto ROI is observed in the same manner as traditional investments ROI — if an ROI is positive, that means the investment is performing well — the price is increasing over a certain period.
On the other hand, if the value of ROI is negative, that means the asset has lost value.
When it comes to crypto, it might be tricky to know whether a crypto investment will bring ROI.
Digital assets often look quite appealing, especially to new investors, but the market is very volatile and high ROI often depends on multiple factors.
Why do Investors Measure Investment ROI in Crypto?
The most common reason investors measure crypto return on investment ROI is to see whether the initial value of the investment has increased.
Calculating crypto ROI gives the general idea of how profitable an investment is.
It also shows how the investor’s portfolio performance compares to the initial investment.
Navexa tracks and reports on crypto returns & performance
How to Calculate ROI in Cryptocurrencies?
Investors usually calculate crypto ROI by subtracting the original cost of investment from the current value and then dividing it by the original cost.
Just like with traditional investment assets and markets, ROI calculation shows whether an investment strategy is working or not.
Is ROI an Ideal Metric?
While ROI is a powerful metric that shows the success or failure of the investment strategy, it has some flaws. For example, ROI doesn’t usually account for the time someone spent investing. This is why analysts often calculate annualized ROI, which shows the progress of profit or loss for a given timeframe.
ROI doesn’t explain the asset’s environment, market risk, and liquidity changes. This is why investors often rely on a few other metrics, and not just the ROI.
Those crypto investors who prefer trading to holding should also account for other factors and costs, such as trading fees, wallet fees for sending the coins, and any other metric related to their expenses.
They should also account for the dates when they bought and sold an asset.
The ROI metric doesn’t reflect the risk associated with purchasing, trading, and holding crypto, which is why investors must rely on additional data.
Crypto ROI Calculator
There are many crypto investment ROI calculators out there and most are super easy to use to calculate profit on crypto investments.
Navexa is one of the top crypto ROI calculator tools investors use to get the percentage of their ROI.
The Navexa portfolio tracker calculates performance for stock and cryptocurrency holdings, including capital gains, currency gain tracking, income tracking and more. Navexa is easy to use and free to start with, so both novice and experienced investors can test out its features.
Example: Calculating the ROI of a Bitcoin Investment
Bitcoin is likely the first asset investors get into when they start investing in crypto. Here’s a simple example of how people calculate the ROI of BTC.
Let’s say someone invested $2,000 into BTC. After a while, their $2,000 grew to $6,500.
They would calculate the BTC ROI following the standard formula:
($6,500 – $2,000) / $2,000 = 2.25 x 100 = 225% ROI
Return on Investment for Different Digital Assets
With so many different assets on the crypto market, each asset may have a different ROI. Those projects that have a more active community, and a better use case for their tokens may provide higher ROI to early investors. However, that’s not always the case and this post should not be considered financial advice!
Bitcoin is already a somewhat established asset, and its ROI has historically been the highest compared to other assets. On the other hand, Ethereum is the second-largest cryptocurrency after Bitcoin, but it just recently provided a higher ROI for some investors.
Some of the best performing assets currently include The Sandbox, Terra, Decentraland, and other assets that are related to the metaverse, play-to-earn gaming models, NFTs, and a few other new technologies in the crypto space.
However, experienced investors know that the crypto market is unstable and that ROI on most crypto assets can become negative if the coins face a massive sellout.
Final Word on Calculating Crypto ROI
One of the reasons people get into crypto is the promise of a potentially high ROI. However, getting great returns with crypto can be challenging. Still, measuring ROI can help investors make more rational decisions. ROI metric also helps people allocate the money in their portfolio in the right way so that they’re more profitable in the long run.
On the other hand, calculating ROI on a crypto investment could be tricky, as investors often forget to account for their trading fees and other expenses they managed.
However, with Navexa, getting a clear ROI metric is easy 🙂
Our guide to what is — and is not — taxable for cryptocurrency investments in Australia. From basics like capital gains tax from selling crypto, to paying tax on crypto staking income, declaring capital losses and understanding how the ATO treats DeFi.
If you’re buying and selling cryptocurrencies in the hope the Australian Taxation Office either won’t know about, or won’t be able to tax, your profits and income, I have bad news:
Crypto’s ‘wild west’ days — at least in terms of mainstream adoption and regulation — are gone.
While you’ll find many a tweet about how ‘it’s not too late to be early’, it is, in fact, too late to slide into what was once a murky, misunderstood world of strange new digital currencies.
(As an aside, I first heard about Bitcoin from a friend of a friend on a tram in Melbourne around 2013. That was early.)
The markets have grown exponentially since Bitcoin’s inception.
Today, the Australian government, like many others around the world, has a greater grasp on the cryptocurrency markets and blockchain technology than ever.
As you’ll see in this guide to crypto tax in 2022, as the technology and markets for digital currencies and assets grows and becomes more complex, so do the tax laws surrounding them.
Now, more than ever, Australians investing in (or trading) the cryptocurrency markets need to prepare themselves to accurately track, report and declare their activity.
As the ATO states:
‘Everybody involved in acquiring or disposing of cryptocurrency needs to keep records in relation to their cryptocurrency transactions.’
This guide covers basic concepts around how the government in Australia treats digital currency for tax purposes, capital gains and taxable income, tax deductions and even tax-free digital asset transactions.
Plus, we’ll introduce some useful services and tools which may be helpful in tracking and reporting all the information the ATO requires when lodging crypto information at tax time.
Please bear in mind this article is neither tax nor financial advice. It is general information collated from credible sources, including the ATO.
Bitcoin, like other digital currencies, is subject to tax in Australia.
The ATO Knows About Your Cryptocurrency
As the crypto markets and the platforms people use to navigate them have grown in recent years, there’s been an increasing emphasis on ‘know your customer’, or KYC practices.
KYC is a way both for governments to impose regulation on crypto providers, and a way for crypto providers to communicate legitimacy — and distance themselves from the criminal activity which continues to plague the fast-evolving crypto space.
In Australia, this means you can’t register for a crypto exchange or wallet without providing documents and details that prove your identity (like your driver’s license or passport) and address.
The crypto providers, in turn, must provide details on their customers to the ATO, which began collecting details in 2019 to ensure Australians active in the crypto markets were complying with tax laws.
So if someone doesn’t declare their crypto activity, that doesn’t mean the Australian government won’t know about it. And, when someone does report it, the ATO can match what’s reported with what they have on file as a result of their data matching program protocol (the current version of which runs until 2023).
In other words, it’s probably not going to work out well for those who attempt to dodge declaring their crypto activity or paying tax on it — see here for more.
The ATO Can Legally Tax Australian Residents’ Crypto Activity
Australian tax law and the ATO have caught up to the crypto markets significantly in the past few years. As we mentioned, the wild west days are over. While Bitcoin survives, it’s now one of thousands of digital currencies.
Today, those investing in and trading ‘virtual currency’ need to accept taxation as a given, just as they would with traditional stocks and other assets.
As the crypto space continues to expand in bold new directions (while initial coin offerings were once crypto’s hottest topic, NFTs are the latest booming multi-billion dollar acronym), the tax regulation surrounding it grows ever more complicated.
Below, you’ll find introductions to many different tax scenarios surrounding various areas of the crypto markets (like DeFi and staking).
The basic premise though, is this: The ATO does not treat virtual currencies like currency at all. It’s not ‘money’ for tax purposes. They treat digital assets as property.
For the purposes of applying capital gains tax, or CGT, the ATO treats crypto like any other investment asset (like shares or property). In other cases, it will treat crypto as taxable income.
The ATO makes a distinction between two types of crypto activity.
The ATO can tax trading, staking, and other blockchain activities.
The Difference Between Investing In & Trading Cryptocurrency
As in the traditional investment markets, there’s a distinction between investing and trading in crypto, too. Some people buy some Bitcoin or Ethereum in the hope they’ll someday realize a huge profit.
Others will buy and sell frequently, perhaps even as their full-time job.
With crypto, the ATO makes this distinction between investors and traders.
How a person classifies their crypto activity has a significant impact on how they’ll be taxed on it in Australia.
You’re A Crypto Investor, If…
You are an individual buying crypto for the purpose of generating a future return. This means you buy and sell digital currencies as you would shares in a company, with the same goal — profiting from long-term capital gains as those assets rise in price.
Generally speaking, most Australians in the crypto space would be classed as investors by the ATO.
You’re A Crypto Trader, If…
You use crypto activity to make an income from a business. This includes short-term buying and selling, mining crypto, and operating an exchange, for example. Whatever proceeds you generate from your crypto business activities, the ATO treats as taxable income.
Obviously, given the ATO’s oversight on crypto activity in general, both of these use cases demand detailed record keeping, regardless of how seriously or casually one is active in the market.
The big difference from a tax perspective is that while investors can qualify for capital gains tax discounts (resulting from holding an investment longer than 12 months), traders cannot, since their crypto profits are classed as taxable income, not capital gains.
For the purposes of this explainer post, we’ll focus on crypto investing, not trading.
Which Crypto Activity Does The ATO Tax?
In short, everything. The ATO classifies four main CGT events for crypto activity.
You’ll be taxed when you:
Sell cryptocurrency (or gift it to someone).
Exchange one crypto for another.
Convert crypto to fiat currency like AUD.
Pay for good or services in crypto.
These are just the main taxable events the ATO looks at. We’ll get to the more complex scenarios shortly.
First, it’s worth noting that the ATO doesn’t consider a digital crypto wallet as an asset. Rather, it treats the individual crypto assets within a wallet as separate CGT asset (the same way that an investment portfolio is not taxable — the investments within it are).
There are some similarities between cryptocurrency taxation and traditional investment taxation.
Paying Tax On Crypto Capital Gains
Australians pay capital gains tax on their crypto investments at the same tax rate they pay on their personal income for the financial year.
So, for example, if someone earns $100,000 from their employment and makes a $20,000 profit from selling some Bitcoin and Ethereum, they’d held for less than 12 months, their capital gains tax rate would be 32.5%.
This means they would be taxed $6,500 on the capital gains they realized by selling their crypto.
It’s important to note that capital gains tax rates differ for individuals, companies and self-managed superannuation funds in Australia.
Australian tax law makes a distinction between long term and short term capital gains. This effectively incentivizes investors to hold investments for more than a year.
In the example above the investor has held their Bitcoin and Ethereum for fewer than 12 months before selling and realizing their capital gain.
This means they pay the same tax on their crypto gains as they do their personal income (for tax purposes, capital gains profits are added to other income to determine the tax rate).
But if they held the Bitcoin and Ethereum for more than 12 months, they’d qualify for a 50% CGT discount.
So, instead of paying $6,500 of their $20,000 capital gain, they’d only need to pay $3,250 — substantially less money.
Learn more about capital gains tax obligations in Australia here (ATO) and here (NAB).
Declaring Capital Losses On Crypto
Of course, people don’t always sell cryptocurrency for a capital gain. If someone bought 100 Solana at $100, got excited when it rose to $150, but then panicked when the coin dipped back to, say, $70, they might choose to sell to stop any potential further losses.
In that case, they’d be selling for $7,000 a crypto investment they paid $10,000 for in the first place — realizing a $3,000 capital loss.
Firstly, they don’t need to pay any tax on the $7,000 they received from selling the asset, since it represents a loss. Secondly, they can deduct that $3,000 loss from any other capital gains they might declare in the same — or a future — financial year.
Going back to the previous example, assuming someone needed to pay a $6,500 capital gains tax on their crypto profits, but had in the previous year realized a $3,000 loss, they could apply that loss in their current tax return, bringing the total payable CGT on their crypto down to $3,500.
Declaring a capital loss on crypto can allow an investor to offset gains they may have realized not just on other crypto, but on shares or property. They cannot, however, carry them over as a deduction on regular income.
Crypto-to-crypto trades are generally considered CGT events in Australia.
Paying Tax On Crypto-To-Crypto Transactions
The ATO doesn’t just view selling crypto for fiat currency (like AUD) as a CGT event. It also requires Australian investors report any crypto-to-crypto transactions for capital gains tax.
Remember, for tax purposes in Australia, every asset within a digital wallet is considered a separate CGT asset. So when people trade between different assets within a wallet or on an exchange, they need to track and record this like any other investment CGT event.
Since crypto is effectively property as far as the ATO is concerned, its value is based on a given currency’s market value at a given time.
Here’s an example to illustrate crypto-to-crypto tax in action:
Crypto-Crypto CGT Example
An investor trades some ETH for some SOL.
Say they bought $2,000 worth of ETH. Over three years, their $2,000 investment rises to $6,000.
Then, they trade it for $6,000 worth of SOL. By doing so, they realize a capital gain of $4,000, because they’re effectively ‘selling’ out of their ETH investment. It’s just that they’re realizing their gain in SOL, as opposed to AUD.
So while they don’t convert any crypto back into AUD, they still need to declare this trade as a CGT event when they file their tax return.
Similarly, had their ETH investment fallen by 50% to $1,000, and they’d traded that for SOL, they’d be able to declare a capital loss of $1,000.
Transferring crypto between different digital wallets is not a taxable event in Australia, since people don’t realize a capital gain by doing so.
Staking = taxable income
Crypto Staking Rewards = Taxable Income
Crypto ‘staking’ is a blockchain mechanism whereby holders of particular cryptocurrencies can contribute to the coin’s blockchain by making their coins available to help validate transactions.
If that’s too complex, don’t worry. The simpler way to think of crypto staking is like a savings account that pays interest.
When you stake crypto, you earn more of that crypto back as a percentage of the amount you choose to stake on its blockchain.
For example, say I have 100 SOL worth $10,000 ($100 each) and I choose to stake it at a rate of 7% per annum. Nine months later, I ‘unstake’ my SOL and receive an extra 5.25 SOL in staking rewards.
Let’s say in the nine months I staked my SOL, the value rose 50%.
So when I receive my new 5.25 SOL, they’re worth $787.50 — the market value at the time I receive them.
How To Treat Staking Rewards For Tax Purposes
Unlike the other transactions we’ve looked at so far in this post, the ATO considers staking rewards as ordinary taxable income.
This is different from a capital gain. In this case, the $787.50 gets added to my regular income (like my salary, for example) and taxed at the appropriate personal tax rate.
In other words, it’s taxed like interest I might earn from keeping money in a savings account.
But, were I to sell the extra SOL I earned by staking my initial investment, I would have to pay capital gains tax on that — although the base price would be the market value at the time I received it, not the price I paid for the initial investment.
Crypto Tax On Decentralized Finance (DeFi)
Decentralized Finance, or DeFi, is one area of crypto where Australian tax policy is seemingly still playing catchup.
DeFi is, in basic terms, is the finance marketplace on the blockchain. As the name suggests, this is finance without centralization — or intermediaries like banks, finance brokers or credit card companies.
DeFi protocols allows people to lend and borrow capital through blockchain-based peer-to-peer financial networks.
While you could argue DeFi is still in its infancy, reports suggest there is already nearly $1 trillion ‘locked’ into DeFi protocols such as Aave (AAVE), Solana (SOL) and Uniswap (UNI).
At this stage, while the ATO doesn’t have any specific guidance as yet, this doesn’t mean that DeFi activity can’t be taxed.
If someone uses a DeFi protocol to earn crypto, chances are the ATO would consider this taxable income. And like crypto staking, if they sold or traded any crypto earned through DeFi, this would trigger a CGT event.
This excellent guide details the possible tax implications of various DeFi actions.
Crypto investors are entitled to certain tax breaks in Australia.
Tax Breaks For Australian Crypto Investors
It’s not all tax obligations when it comes to crypto activity for Australian investors.
As with traditional investments, there are three main ways the ATO offers tax relief.
The first is the standard personal income tax break on the first $18,200 of personal income. While it’s probably unlikely someone in the crypto markets would make less than that in a financial year, it is, technically possible to pay no tax on crypto gains in this respect.
Second, the 50% capital gains tax discount is not to be underestimated. If someone realized $100,000 in gains on crypto they held less than 12 months, and that gain is taxed at the highest rate (45%), they’ll net just $55,000.
But, if they tactically hodl longer than 12 months before realizing the gain, that $45,000 tax bill comes down to $22,500 — meaning they keep $77,500. This is a significant financial difference when you consider that the difference between ‘less than’ and ‘more than’ 12 months is a single day.
The third way Australians can qualify for a crypto tax break is through personal use. The window for claiming crypto activity as personal use is quite small. Basically, if someone buys up to $10,000 worth of crypto and then immediately buys something else with it, they can claim personal use (as opposed to investing for a future gain).
As with everything when it comes to crypto tax, it’s always important to closely track and record every transaction. The burden of proof is on investors to produce the records required to prove what they claim in their tax return.
Tax-Free Crypto Transactions? They Exist!
Not only are there tax breaks available to those investing in crypto in Australia — there’s even a list of crypto transactions that trigger no tax events.
These are, of course, transactions in which the person probably won’t make a significant profit.
Australian investors won’t pay crypto tax when they:
Buy cryptocurrency
Receive cryptocurrency as a gift
Give cryptocurrency as a charity donation
Hold cryptocurrency (even if it goes up 10,000%)
Receive cryptocurrency from ‘hobby’ mining
Move cryptocurrency between digital wallets
Buy goods and services up to the value of $10,000 using cryptocurrency (see the personal use scenario above)
Where To Find Tools & More Information About Crypto Tax In Australia
It might seem difficult to understand the nuances of crypto tax law in Australia. But the reality is that for the average crypto investor —someone who buys and sells crypto with the objective of making some money — it should be pretty straightforward.
By and large, you could apply the same tax rules to your crypto portfolio as you would for investments in stocks.
If you sell an investment for a capital gain, you’ll need to pay a capital gains tax.
If you make money from an investment, you’ll need to declare it as income and pay tax at the marginal rate applied to your total income for the financial year.
But, as you’ve seen in this post, things can quickly grow more complex the deeper you get into the crypto markets.
Here at Navexa we’re proponents of continuously searching for and acquiring financial literacy.
Here are some resources we consulted in putting this guide together that may help you with your own crypto investing and tax reporting:
As always, seek professional advice and support when considering investing and its tax implications!
Navexa helps speed up the crypto tax reporting process
Navexa: Automated Tracking For Crypto Capital Gains & Income
If you’re investing in cryptocurrencies and you’d prefer a quick, automated way of not only tracking your portfolio performance and returns, but also of generating comprehensive, accurate tax reports, try Navexa.
We’ve developed Navexa to give investors radical insight into how their portfolio performs over time.
Not only does the platform break down your total return by capital gains and dividend income, it calculates the impact of trading fees on your portfolio performance.
As you may already know, trading fees can have a massive impact on crypto transactions. The Ethereum blockchain has been notorious in recent years for slapping users with transaction fees which often outweigh the value of the coins being transacted.
If you don’t consistently and accurately track the impact of fees on your crypto investments, you may end up with a distorted picture of how they’re performing.
Proper tracking is also a requirement if you find you need to provide detailed information to the ATO regarding your tax return. As we outlined above, you need to be able to show the fine details of transactions to substantiate capital gains, losses and income that you’re claiming in a tax return.
While you can pull this information together using data from exchanges and wallets, Navexa allows you to consolidate your crypto portfolio data even if you trade across multiple platforms.
Remember the 50% capital gains discount the ATO offers on crypto investments held longer than 12 months? If you’re filing a tax return containing 100 trades off various sizes across 100 different dates within the financial year, calculating which qualify for the CGT discount could quickly become a headache.
With Navexa’s tax reporting tools, this calculation is completely automated — your account gives you a detailed breakdown of which holdings qualify and which do not in a single click (so long as all your portfolio data is accurate and up to date!).
We’ve built (and are constantly) developing Navexa’s analytics and reporting tools to empower investors in stocks and crypto to get powerful insights into their portfolio performance and make calculating and reporting tax details fast and easy.
Buying, trading and tracking cryptocurrencies? Chances are you’ll come across Blockfolio, Delta and Coinbase. Here, we explain how to use each — comparing Blockfolio vs Delta, Blockfolio vs Coinbase, & Coinbase vs Delta.
If you’re taking the plunge into the world of cryptocurrency investing or trading, you’ll need three things.
As Bitcoin and the ever-expanding universe of so-called ‘alt coins’ gains more exposure and popularity, so too does the number of technologies, platforms and applications that support the crypto ecosystem.
And if you are new to the crypto world, you may find yourself overwhelmed at the amount of apps and services vying for your time and attention.
Chances are that you will quickly come across three of the biggest platforms in the crypto world: Blockfolio, Delta and Coinbase.
While Blockfolio and Delta are similar services (with some key differences you should know), Coinbase is a very different platform.
In this post, we’ll introduce you to each, outline its capabilities and the key pros and cons.
Then, we’ll compare the services directly; Blockfolio vs Delta, Blockfolio vs Coinbase and Coinbase vs Delta.
This should give you a great general overview of these three services.
If you’re considering signing up to some or all of them, we encourage you to read this post (and do further research) first!
Blockfolio vs Delta vs Coinbase: Understanding Trackers, Wallets & Exchanges
It’s important to understand that comparing these three platforms requires that you know their particular roles in the crypto world.
Blockfolio started out as a crypto portfolio tracker and has recently added the capability for its users to buy crypto assets within its app.
Delta is a portfolio tracker for cryptos and stocks. While you can’t buy Bitcoin in its app, there are other things you can do which make it potentially very useful.
As the largest cryptocurrency exchange in the United States (Binance is the world’s biggest at the time of writing), Coinbase’s main service is an app you can use to buy, store and trade Bitcoin and other crypto assets.
Confused? Don’t be.
Just understand this; in the crypto world, there are three distinct tools you need to use.
The crypto exchange: This is where you exchange fiat currency (dollars) for crypto assets like Bitcoin and Ethereum.
The crypto wallet: This is where you store and secure your crypto assets.
The crypto portfolio tracker: This is where you monitor the performance of your crypto investments and track your portfolio’s progress.
Coinbase is primarily an exchange. But it also offers a wallet for secure storage — which you can even connect to a debit card!
Blockfolio — while originally just a crypto portfolio tracker — has now branched out to offer exchange functionality.
And Delta, another portfolio tracker, doesn’t allow you to buy crypto.
But, it does allow you to connect your crypto wallet so you can automatically update your portfolio tracker account.
So not only are there many different types of platforms you’ll engage with on your crypto journey.
There’s also an increasing amount of integration as companies like these move to offer exchange, wallet and tracking services within a single platform.
Let’s get into Blockfolio in a bit more detail.
Blockfolio: The Original Cryptocurrency Portfolio Tracker
Blockfolio has been around since 2014. It started at a standalone crypto portfolio tracker.
The idea was simple: No matter where you bought or stored your crypto, you could add your trade data to your Blockfolio app and monitor your performance in one place.
And that simple idea has taken Blockfolio a long way.
Today, about 6 million people are using Blockfolio to buy, trade and track their cryptos.
Here’s what it looks like:
The Blockfolio App
One of the features Blockfolio offers is Signal, which runs in parallel with the News tab.
While news delivers articles and updates from across the crypto space, Signal is a channel where crypto developers and companies communicate directly with Blockfolio users.
In our experience, Blockfolio is pretty robust (it has been known to crash occasionally and fail to display some data, particularly for smaller cryptos) and fine looking crypto portfolio tracker.
Since they were acquired by crypto exchange FTX, they’ve started offering exchange services within the app.
Track Your Cryptos’ True Performance
Join thousands of intelligent investors tracking their
true portfolio performance and making decisions based on real-time
analytics & reporting.
Delta arrived on the scene a few years after Blockfolio, in 2017.
Like Blockfolio, Delta is primarily a crypto portfolio tracker.
You can view price action for about 7,000 different crypto assets, follow the coins you’re interested in, and synchronise your account across multiple devices.
The biggest benefit of using Delta to track your crypto portfolio is the probably the fact that you can link your crypto wallet.
That means you can integrate your crypto trades seamlesslesy.
Delta supports data from about 300 crypto exchanges.
Which means whether you trade with Binance, eToro, Bittrex or any of the other myriad platforms out there, there’s a good chance you’ll be able to sync your trades.
While it’s simple enough on Delta to manually enter a trade, it becomes far easier to use once you’ve integrated an exchange and automated your buy and sell updates.
You can see the Delta interface doesn’t differ much from Blockfolio’s:
The Delta App
You can also set up your Delta app to send you push notifications based on what you’re tracking and how you use your account.
For a portfolio tracker, Delta packs in plenty of functionality when it comes to seeing price action, all-time and 24-hour gains.
But, like Blockfolio, it lacks a couple of major features. We’ll get to that soon.
First, let’s look at Coinbase.
Coinbase: The Largest U.S. Cryptocurrency Exchange
Unlike Blockfolio and Delta, Coinbase didn’t start life as a portfolio tracker.
Coinbase began as a Bitcoin brokerage service in 2012.
It was a place for investors to convert fiat currency into BTC.
Today, Coinbase is the biggest U.S. crypto exchange and one of the most widely used on the planet.
It’s an exchange, a wallet, an index, a venture capital fund developing and acquiring other crypto projects, and a provider of custodian services for institutional investors moving large sums into the crypto space.
Not only that, but Coinbase has grown so powerful that it even created its own token, USD Coin.
USD Coin is a cryptocurrency that tracks the price of the US Dollar — the fiat currency which those in the crypto world (for all their talk of ‘exiting the system’) tend to use to measure the relative value of Bitcoin and the other cryptos on the market.
If you want, you can do all your crypto investing, trading and tracking with Coinbase, from buying Bitcoin to trading it for other cryptos (even holding in USDC if you want) and tracking the value of your investments.
But since Coinbase is an exchange first and foremost, it offers a very different experience from Blockfolio and Delta.
Blockfolio vs Delta: Portfolio Trackers With A Key Difference
As you can see, Blockfolio and Delta look very similar.
And as portfolio trackers, they pretty much are.
But if we’re comparing Blockfolio vs Delta, these are the most striking differences.
Blockfolio (as of recently) allows you to trade directly within the app. Delta does not (yet).
Delta allows you to link your exchange account, automating the flow of data on new trades. At the time of writing, you still need to manually add your trades to Blockfolio (although you can link some wallets).
Delta allows you to track stocks as well as crypto. Blockfolio is a crypto-only app.
Blockfolio’s Signal feature allows you to hear directly from the developers and technologists behind the cryptos you’re tracking. Delta doesn’t offer this.
Delta lets you export a .csv file of all your crypto trades — handy if you want to back it up before resetting a phone, for example, or adding your trades to another platform (like Navexa).
Blockfolio is totally free (they generate revenue through advertising and, now, trading services via their new owner, FTX), whereas Delta has a free and ‘PRO’ version.
Those are the main differences between Blockfolio and Delta.
Blockfolio vs Coinbase: Both Trying To Become Crypto One-Stop Shops
So, now that you have an idea about how Blockfolio works, let’s compare it with Coinbase.
Blockfolio vs Coinbase isn’t a like-for-like comparison.
As mentioned above, Blockfolio started life as a portfolio tracker, and Coinbase as a Bitcoin brokerage.
Today, they’re getting closer to meeting in the middle.
Since FTX acquired it, Blockfolio now complements its coin and portfolio tracking functionality with trading services.
In other words, you can buy Bitcoin directly through the app.
For Coinbase, buying Bitcoin was the first service the platform ever provided.
Today, it offers a huge range of tools when you sign up.
One of the ways Coinbase has expanded is that it, too, offers a portfolio tracking service as well as its exchange and wallet service.
Take a look:
Coinbase
Like Blockfolio and Delta, Coinbase lets you track coins and trades in a simple, clean interface.
But in our opinion, the Coinbase portfolio tracker doesn’t offer as much information as Blockfolio.
Comparing Blockfolio vs Coinbase, these are the main differences.
Coinbase doesn’t provide the same direct feed of developer news as you’ll get with Blockfolio’s Signal feature.
If you’re already trading and storing crypto on Coinbase, you might find it more straightforward to track your cryptos there, instead of manually adding them into Blockfolio.
Since Blockfolio is a tracker first and trading platform second, you might find its tracking interface and features more useful than Coinbase’s.
Coinbase vs Delta: To Trade Or Not To Trade
Since we’ve already covered the key differences between Blockfolio vs Coinbase and Blockfolio vs Delta, you can probably see how Coinbase stacks up against Delta.
These are the big differences.
As an exchange and wallet, Coinbase lets you buy, trade and store crypto. While Delta lets you connect an exchange account (like Coinbase), you can’t trade and store cryptos on its — just track them.
While both apps are established, robust players in the crypto technology market, they have very different interfaces — Delta’s being more optimized for a trading-style view.
No Matter Where You Invest, Here’s Why You Must Track Your Portfolio
Comparing Blockfolio vs Delta vs Coinbase highlights a few things you should understand before you sign up to any, or all of these services.
First, trading, storing and tracking cryptos has tended to happen across multiple different services. These services often integrate with one another to some extent, and they increasingly offer users a full service platform (see Coinbase) from buying crypto all the way through to tracking its performance in your portfolio.
One thing we’ve noticed comparing these crypto platforms is that, while they all offer portfolio tracking, that functionality is in reality quite limited.
Here at Navexa, we take portfolio tracking — for stocks and cryptos — seriously.
We help you dive deeper into your portfolio performance beyond just daily or annual gains.
Navexa Portfolio Tracker
Navexa tracks the annualized, true performance of your portfolio and its constituent holdings with a high degree of clarity, depth and detail.
By ‘true’ performance, we mean your net gains (in dollar and percent terms) after the platform accounts for the time in the market, trading fees, currency gains or losses, taxation, and dividend income.
Last year was packed from beginning to end with extreme and unexpected events. The cryptocurrency markets were no exception. In this post, we reveal the top 10 performing cryptos in 2020, how they compared to the top performing stocks, and share some analysis and predictions on Bitcoin and the wider crypto and blockchain sectors for 2021.
Bitcoin is the coin we most often talk about when discussing the boom and bust cycle of the cryptocurrency markets. The original crypto recently smashed through US$40,000 to make yet another all-time high.
But looking back on 2020, it turns out Bitcoin didn’t even make the top 10 in terms of gains.
When you zoom out and compare the crypto markets to the major stock markets in the US, you’ll see that the top performing crypto — with a tiny market caps relative to Bitcoin — eclipsed even the so called ‘Golden Bull’ microcap NASDAQ top performer last year.
So what wild and unexpected twists and turns will we see across stocks and cryptos in 2021 after the crises-packed 12 months just gone?
Let’s start with the top performing cryptocurrencies of 2020 (all prices are in US Dollars).
An Average Gain Of Nearly 1,700%: The Top 10 Performing Cryptocurrencies Of 2020
With so many different exchanges and price trackers around for cryptocurrencies, it’s not uncommon for investors to never really know the all-time high for a particular coin.
The same goes for determining the precise price movement for a given period.
According to coincodex.com, the top performers for 2020 were:
Bitcoin came in 15th, just over 300%, before it embarked on its steep ascent to new highs the first weeks of 2021.
Ethereum was by far the biggest crypto by market capitalization in the top 10, ending the year just over $100 billion.
Top performer, KSM, had just over half a billion dollar market cap.
So you can see that much like the microcaps that come from nowhere each year to top the stock market gains leader boards, it was — apart from ETH — the smaller, lesser recognized cryptocurrencies that produced the biggest gains in 2020.
A $1,000 investment in KSM could have transformed into just under $50,000 in 12 months.
As for the top 10 cryptocurrencies by market cap, this widely-referenced annual experiment spread $1,000 evenly across each.
The return, a less stellar but nonetheless impressive 139%.
Still, when you compare that against the S&P 500’s 16% gain in 2020 (admittedly, still impressive during a pandemic!), there’s no denying where you would have been better investing that $1,000 last year.
Given the explosive start to the year cryptos have had in 2021, what might be possible in the next 12 months? We’ll get to that. First, let’s look at stocks.
NASDAQ Plays Host To Biggest 2020 Stock Gains (Thanks BTC) While Tech Stocks Dominate S&P 500
The NASDAQ more than doubled the S&P 500’s 16% annual gain in 2020, finishing up 43% higher at the end of the year.
But the top performing stocks on those indices gained way more than that.
Technology dominated the S&P 500, where Tesla ended 2020 the top performer on 743%, Etsy delivered 302% and Nvidia gained 122%.
Over on the NASDAQ, however, a string of microcap tech companies not traded on the S&P 500 delivered some crypto-esque gains.
In fact, the top performer, Bit Digital (which gained 3,691%) owed it’s number one status directly to the crypto bull market that took hold late in the year.
The microcap car rental company focused on mining bitcoin, which allowed it to outperform vaccine companies, renewable energy stocks and biotech players.
Three of the NASDAQ’s top 10 last year gained their spots through cryptocurrency activity.
The highest performing non-crypto stock on the NASDAQ last year was Novavax, which received more than $1.6 billion as it emerged as a player in the COVID-19 vaccine contest of 2020.
So it’s not as though last year was a write-off for stocks and a home run for cryptocurrencies.
But, while the best performing stock on the major US exchanges could have turned $1,000 into more than $40,000 (thanks Bitcoin), the top performing crypto last year still could have made you a better return.
And if you’d gone for a more measured approach and deployed that $1,000 across the top 10 cryptos by market cap (which represent most of the capital in the crypto markets), you could still have more than doubled your money, compared to relatively weaker double-digit gains from the NASDAQ and weaker again from the S&P 500.
Here at Navexa we aren’t in the business of telling you what to buy or sell.
Whether it’s an asset class, a sector or an individual investment, we only look at the data. The past is never a guide to future performance for any market, sector or investment.
When you consider what a wild ride the world and the markets went on last year, you can understand why making predictions about 2021 is especially fraught.
Our Crypto Analyst’s Three Predictions For 2021
Aaron Boyd is a blockchain engineer and co-founder of Pretoria Research Lab in Berlin.
According to Aaron there are three major developments on the cards in the crypto space this year.
The first hinges on continuing monetary expansion and currency devaluation (which you can read more on in our Medium article here).
“Twenty five percent of all US Dollars in existence were printed in 2020.”
That’s not a typo.
The amount of money in the global financial system exploded higher again last year as governments keep up the same strategy they’ve been using to deal with crises for centuries — printing more.
Aaron: “Trillions more Dollars will be printed in 2021 for COVID relief and stimulus packages. This will result in new all-time highs for crypto assets — and stocks.”
That might sound strange, but as fiat currency itself grows less valuable as a result of its diminishing scarcity, that ‘cheap money’ pours into the stock market at the same time as it boosts interest and confidence in Bitcoin’s intrinsic (and decentralized) scarcity.
In other words, in terms of crypto and stock prices in 2021, expect to see more of the what we saw in 2020.
Aaron notes that cryptocurrencies are increasingly becoming a credible alternative hedge to expansive monetary policy.
Gold and other precious metals have historically held this safe haven role.
But in 2021, we’ll see more private investors and institutions choosing Bitcoin over bullion.
It won’t all be smooth sailing and ever higher prices, though, according to Aaron.
“There will be another market correction after the past couple of months’ bull run.
“Bitcoin will be declared dead for the 417th time!”
No Matter Where Stocks & Cryptos Go In 2021, Make Sure You’re Effectively Tracking Your Performance
Whichever way you slice it, 2021 is going to be an unprecedented year for the markets.
Bitcoin probably could be declared dead yet again… And then go on to hit $100,000 a month later.
That’s not a prediction. But after such a turbulent 2020, you have to concede that anything is possible this year — in both stocks and cryptos.
Whether you’re investing in one or both, make sure you’re getting the data and insights you need to make informed decisions.
The Navexa portfolio tracker gives you the tools to track, analyze and report on ASX, NASDAQ and NYSE holdings and every cryptocurrency, as well as cash accounts and unlisted investments.
We’re growing our service in line with what our
growing community of customers requires.
The numbers show cryptos are becoming an increasingly
significant part of Australians’ wealth building strategies.
So providing crypto analytics for Navexa users makes
sense.
However, there are those who wouldn’t agree.
Top of the list in terms of influence would be the
great Warren Buffett.
We’ve written about Buffett before.
The ‘Oracle of Omaha’ (worth approximately $90 billion USD) is a legend in value investing circles.
He’s renowned for making big bets on businesses that
generate big long-term returns for investors.
But…
Warren Buffett Is Not A Big Fan Of Crypto
“Warren Buffet just gave up on newspapers and sold his last investment in the industry after fighting the rise of the internet. It took him 20+ years. No wonder he doesn’t see crypto coming.”
— Blockfolio
Buffett
is known for avoiding the complex in favour of the simple.
He
goes for relatively boring, traditional companies as opposed to speculative
startups trying to take big technological or financial leaps.
So,
you can understand why he believes cryptos will “come to a bad ending”.
You
can’t deny Buffett’s approach has worked out well for him.
But that doesn’t mean he hasn’t made mistakes.
While
the investment titan ideally prefers to hold a position “forever”, he recently
bailed on an underperforming group of assets.
More
than 20 years ago, Buffett’s Berkshire Hathaway bought a swathe of newspaper
business across the United States.
You
might recall that about 10 years ago, the print news industry started coming
under serious pressure from digital media.
To many, the writing for newspapers was on the wall around the turn of the millennium.
Circulation and advertising revenues were plummeting.
Traditional
publishers scrambled to find a way to move online and remain profitable.
But
Buffett grimly held on to his newspaper businesses, believing the rise of
digital news to be a fad and the challenges facing the print media to be
temporary.
Ten years later, and Reuters reported last week that Buffett has finally dumped the struggling newspaper businesses.
In
other words…
Buffett Just Admitted He Was Wrong.
“[Bitcoin] is a remarkable cryptographic achievement… Lots of people will build businesses on top of that.”
— Eric Schmidt, Executive Chairman, Google
Buffett’s anti-crypto stance squares with his
long-term reliance on investing in simple, relatively traditional businesses.
He doesn’t put money into things he doesn’t
understand.
You have to admire that. To a point.
But as his newspaper investment saga reveals, Buffett
doesn’t always get it right when selecting assets and sectors.
Buffett was wrong.
Not only that, but he stuck with an investment that
went nowhere for many years.
It’s possible he was blinded by his conviction that
the traditional could withstand the pressure from new, disruptive digital competition.
So perhaps it’s worth entertaining the idea that
Warren Buffett is wrong, too, about cryptocurrencies.
Bitcoin launched in 2013.
Between 2013 and today, the original cryptocurrency
has rocketed more than 100,000% higher.
The newspaper business, in that time, has foundered.
Buffett made no money on his decades-long newspaper investment.
He lost about $2 million.
In contrast, you could have made $2 million from just a $2,000 investment into Bitcoin when it launched in 2013.
And right now, the numbers show that here in
Australia, crypto adoption is progressing.
In just five years there will be a majority of
investors under 40 holding crypto assets.
More broadly, in the next 10 years, Generations X and
Y will control more than two thirds of the world’s financial assets (more on that here).
Cryptos would appear to be a big part of this
generational shift.
And as Eric Schmidt says in the above quote, cryptocurrencies
offer a platform for a whole new breed of digital businesses.
Just because people like Warren Buffett don’t
understand or approve of disruptive new tech and the associated financial instruments
they create…
…does not mean cryptos or blockchain technology is
going to fade into obscurity and leave the current financial status quo
untroubled and unchanged.
