I want to talk about compound interest applied to cryptocurrencies.
But first, I will explain what compound interest is about.
compound interest Compound interest represents the accumulation of interest that has been generated in a period determined by an initial (CI) or principal capital at an interest rate (r) during (n) periods of taxation, so that the interests that obtained at the end of each investment period are not withdrawn but are reinvested or added to the initial capital, that is, capitalized. It is that interest that is charged for a credit and when liquidated it is accumulated to the capital (Capitalization of the interest), reason why in the following liquidation of interests, the previous interest forms part of the capital or base of the calculation of the new interest. Source of article
I explain it in a simple and graphic way.
With an initial capital CI of $50 USD to trade them in cryptocurrencies, obtaining a daily benefit of only 1%, I ask:
What would happen at the end of 1 year, 365 days, if we apply the power of compound interest?
Well, let's see.
The first day we would have a profit of $0.50 USD, and so our 1st day and our final capital, product of the sum of the initial capital CF ($50 USD) plus the benefit of our day BE ($0.505 USD) would be $50.50 USD and this would be our new capital.
On day 2 our capital of $50.50 USD would give a BE of $0.51 USD, slight differences at the beginning. Then they will be broader as capital increases. Our new capital CF + BE = $51.01 USD.
On day 3 our capital of $51.01 USD would give a BE of $0.51 USD. Our new capital CF + BE = $51.52 USD.
On day 4 our capital of $ 51.52 USD would give a BE of $0.52 USD.
Our new capital CF + BE = $ 52.03 USD, which represents a percentage of PB profit of 4.06%
On day 10 our capital of $ 54.68 USD would give a BE of $ 0.55 USD.
Our new capital CF + BE = $ 55.23 USD.
In just 10 days we have a total BT benefit of our CI of $ 5.23 USD.
PB = 10.46%
How much would it be in the first 31 days? let's see ...
On the 31st our capital of $ 66.73 USD would give a BE of $ 0.67 USD.
CF + BE = $ 67.39 USD.
BT = $ 18.07 USD.
PB = 36.13%
In how much time do you get $ 1 USD daily? On day 71, 2 months and 11 days.
On day 71 our capital of $ 100.34 USD would give a BE of $ 1 USD.
CF + BE = $ 101.34 USD.
BT = $ 51.34 USD
PB = 102.68%
In 3 months?
On day 90 (3 months) our capital of $ 121.22 USD would give a BE of $ 1.21 USD.
CF + BE = $ 122.43 USD.
BT = $ 72.43 USD.
PB = 142.44%.
In 6 months?
On day 180 (6 months) our capital of $ 296.82 USD would give a BE of $ 2.97 USD.
CF + BE = $ 299.79 USD.
BT = $ 249.79 USD.
PB = 499.58%.
1 year?
On day 365 (1 year) our capital of $ 1,870.47 USD would give a BE of $ 18.70 USD.
CF + BE = $ 1,889.17 USD.
BT = $ 1,839.17 USD.
PB = 3,678.34%. growth of our balance exponentially!
@alfredogarc
