Crypto Terms:
Letter R
Jun 19, 2023 |
updated Apr 02, 2024
What is ROI?
ROI Meaning:
ROI -
an indicator that shows the proportion of a company's net profit to its investment costs.
Let's find out ROI meaning, definition in crypto, what is ROI, and all other detailed facts.
ROI is a short term for “Return on Investment” and it is used to show the proportion of a company's net profit to its investment costs. It's a metric that cryptocurrency traders use to assess a crypto investment's performance and efficacy, as well as to compare the performance of various crypto assets in a portfolio.
A positive ROI number indicates that the crypto investment is profitable, whilst a negative ROI number indicates that the crypto investment is losing money. Investors in a crypto project through a token sale might ask about the ROI or the projected ROI.
ROI is determined by subtracting the investment's initial value from its current value and dividing the result by the investment's initial value. The formula is:
ROI = (Present Value of Investment - Initial Value of Investment) / Initial Value of Investment
After calculating ROI, the rate of return can be determined by multiplying the ROI by 100.
Though there are some drawbacks to using ROI to determine the profitability of cryptocurrencies. The time period is not taken into consideration while calculating ROI. A crypto trader who wants to sell might have to wait considerably longer than another crypto trader. The former trader's ROI might be lower in this situation, but the ROI figure wouldn't reflect that.
Note that increased profits and lower costs might lead to a higher ROI. However, while this might exaggerate the ROI figure, it also could result in increased expenses and performance concerns for the crypto projects in the future.
Lastly, keep in mind that, when analyzing the success of crypto assets, ROI is a valuable indicator but it should always be used in combination with other factors.
Bitcoin (BTC)<\/strong><\/a> around 2011 — before the price of one coin exceeded $1. He has since been involved in several Bitcoin <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-hard-fork-blockchain/">hard forks<\/strong><\/a>, such as Bitcoin Cash and <strong>Bitcoin TX<\/strong>, due to their offerings of larger block sizes. In 2012, he became one of the founding members of the Bitcoin Foundation.<\/p>\n<p>One of the key beliefs held by Ver is that Bitcoin can rival some of the biggest <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat currencies<\/strong><\/a>. Until August 2019, he was the CEO of Bitcoin.com before moving on to the <strong>Executive Chairman position<\/strong>. He was later mistakenly identified as one of the co-founders of Bitcoin Cash by Fortune Magazine.<\/p>\n<p>Over the years, Ver has been involved in other bitcoin-based startup projects, such as <a href=https://www.bitdegree.org/"https:////en.wikipedia.org//wiki//Ripple/strong>_(payment_protocol)/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Ripple<\/strong><\/a>, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-bitpay/">Bitpay/strong>/a>, and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//kraken/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Kraken<\/strong><\/a>. He was ranked as one of <strong>Fortune's The Ledger 40 under 40<\/strong> in 2018 for his role in FinTech development. Ver is a strong proponent of economic freedom through the means of cryptocurrency.<\/p>","definition":"early Bitcoin investor and promoter, also known as Bitcoin Jesus.","status":"published","updated_at":"2024-04-02T14:16:56.000000Z"}"
:model="{"id":646,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Return_on_investment","level":"easy","section":"R","keyword_en":"ROI","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","slug":"what-is-roi","title":"What is ROI?","keyword":"ROI","content":"<p>ROI is a <strong>short term for “Return on Investment”<\/strong> and it is used to show the proportion of a company's net profit to its investment costs. It's a metric that <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrency/strong>/a> traders use to assess a crypto investment's performance and efficacy, as well as to compare the performance of various crypto assets in a portfolio.<\/p>\n<p>A <strong>positive ROI number<\/strong> indicates that the crypto investment is profitable, whilst a negative ROI number indicates that the crypto investment is losing money. Investors in a crypto project through a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-token-sale/">token sale<\/strong><\/a> might ask about the ROI or the projected ROI.<\/p>\n<p>ROI is determined by <strong>subtracting the investment's initial value<\/strong> from its current value and dividing the result by the investment's initial value. The formula is:<\/p>\n<p><span style=\"color: #236fa1;\">ROI = (Present Value of Investment - Initial Value of Investment) \/ Initial Value of Investment<\/span><\/p>\n<p>After calculating ROI, the rate of return can be determined by multiplying the ROI by 100.<\/p>\n<p>Though there are <strong>some drawbacks<\/strong> to using ROI to determine the profitability of cryptocurrencies. The time period is not taken into consideration while calculating ROI. A crypto trader who wants to sell might have to wait considerably longer than another crypto trader. <strong>The former trader's ROI might be lower<\/strong> in this situation, but the ROI figure wouldn't reflect that.<\/p>\n<p>Note that increased profits and lower costs might lead to a higher ROI. However, while this <strong>might exaggerate the ROI figure<\/strong>, it also could result in increased expenses and performance concerns for the crypto projects in the future.<\/p>\n<p>Lastly, keep in mind that, when analyzing the success of crypto assets, ROI is a valuable indicator but it should always be used in combination with other factors.<\/p>","definition":"an indicator that shows the proportion of a company's net profit to its investment costs.","status":"published","updated_at":"2024-04-02T14:16:56.000000Z","author":{"id":1,"user_id":1,"image_id":2641,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-02-29T07:19:25.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","referral_token":"05TMu2NysXOCn525","referred_by":null,"last_connected_at":"2024-04-09T08:14:54.000000Z","created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-04-09T08:14:54.000000Z","full_name":"Aaron S."}}}"
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current-chapter="R"
current-section="what-is-roi">