volatility of an asset to the volatility of the whole market. For example, beta could be employed to determine a projected <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-roi/">return on investment</strong></a> of an asset. It's calculated based on an asset's volatility in relation to the market.</p>\n<p>Therefore, beta is used to assess <strong>how much risk a certain investment will add to a current portfolio rather than measuring the risk of investment in a single asset. </strong>Mutual funds, for instance, could use beta to investigate how risky it would be to add a certain financial instrument to their investment portfolio. Therefore, based on the risk profile of a certain portfolio, the beta coefficient can assist users in determining which assets they should acquire.</p>\n<p>Beta is interpreted by measuring whether it's above 1 or below it. This is the case because beta would be equal to 1 if all investable assets were compared. However, if we compared a specific asset against the market, beta would probably be higher or lower than 1.</p>\n<p><strong>When beta is higher than 1</strong>, it means that the asset is both volatile and its price movements correspond with the market. However, <strong>when beta is lower than 1</strong>, it might indicate lower volatility, or that the price fluctuations of an asset correspond less with the market.</p>\n<p>However, beta can also be used as a risk measure that compares the risk of an investment to a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-benchmark/">benchmark. The benchmark could be depicted as a broad market index or a particular portfolio. <span style=\"font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;\">For instance, we could use </span><a style=\"font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;\" href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">BitcoinSatoshi Nakamoto</strong></a> who believed that financial transactions can be successfully executed without the need of a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-intermediary-middleman/">middleman. Being the first cryptocurrency, Bitcoin also mined the first block also known as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-genesis-block/">the genesis block</strong></a>.</p>\n<p>However, the term Bitcoin is often misused when referring to a distributed public ledger, a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchain, or a protocol.</p>\n<p>Bitcoin&rsquo;s decentralized public ledger is what <strong>enables <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-peer-to-peer-p2p/">peer-to-peer transactions</strong>. Each transaction is available to be accessed by anyone without compromising the anonymity of the sender and receiver. It is also known as the blockchain. In essence, a blockchain is a system that allows recording transactions in a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-trustless/">trustless manner. Meaning users don&rsquo;t have to trust a third party to ensure the transaction has been completed successfully. It&rsquo;s done purely through code and mathematical algorithms.</p>\n<p>Blockchain technology and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptography/">cryptography act as a sort of shield against fraud and other malicious attacks.</p>\n<p>Until 2014, Bitcoin was the name of <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-open-source/">open-source <strong>client software</strong> that was changed to <strong>Bitcoin</strong> <strong>Core</strong> to make sure people don&rsquo;t get the wrong idea.</p>","level":"easy","meta_title":"What is Bitcoin? Definition & Meaning | Crypto Wiki","meta_description":"Bitcoin meaning: Bitcoin - the first-ever cryptocurrency.","meta_keywords":null,"language":"en","created_at":"2022-05-17T10:14:57.000000Z","updated_at":"2022-06-07T11:49:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-bitcoin"},"prevSection":{"id":957,"original_id":null,"author_id":43,"translator_id":null,"title":"What is Binance Ecosystem Fund (BEF)?","slug":"what-is-binance-ecosystem-fund-bef","section":"B","keyword":"Binance Ecosystem Fund (BEF)","status":"published","definition":"a support fund on Binance.","content":"<p><strong>Binance Ecosystem Fund (BEF)</strong> is Binance&rsquo;s <strong>support fund</strong>. It&rsquo;s an initiative to create a space for <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-blockchain/">blockchain enthusiasts to collaborate</strong>.</p>","level":"easy","meta_title":"What is Binance Ecosystem Fund (BEF)? Definition & Meaning | Crypto Wiki","meta_description":"Binance Ecosystem Fund (BEF) meaning: Binance Ecosystem Fund (BEF) - a support fund on Binance.","meta_keywords":null,"language":"en","created_at":"2022-05-17T08:22:05.000000Z","updated_at":"2022-06-07T11:49:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-binance-ecosystem-fund-bef"},"currentChapter":"B","currentSection":"what-is-beta-coefficient","chapterTitle":"B","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-beta-coefficient","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
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Crypto Terms: Letter B

What is Beta (Coefficient)?

Beta (Coefficient) MEANING:
Beta (Coefficient) - a tool for comparing the volatility of a single asset to the volatility of the entire market or a specific portfolio.
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Let's find out Beta (Coefficient) meaning, definition in crypto, what is Beta (Coefficient), and all other detailed facts.

A beta coefficient can be used to compare the volatility of an asset to the volatility of the whole market. For example, beta could be employed to determine a projected return on investment of an asset. It's calculated based on an asset's volatility in relation to the market.

Therefore, beta is used to assess how much risk a certain investment will add to a current portfolio rather than measuring the risk of investment in a single asset. Mutual funds, for instance, could use beta to investigate how risky it would be to add a certain financial instrument to their investment portfolio. Therefore, based on the risk profile of a certain portfolio, the beta coefficient can assist users in determining which assets they should acquire.

Beta is interpreted by measuring whether it's above 1 or below it. This is the case because beta would be equal to 1 if all investable assets were compared. However, if we compared a specific asset against the market, beta would probably be higher or lower than 1.

When beta is higher than 1, it means that the asset is both volatile and its price movements correspond with the market. However, when beta is lower than 1, it might indicate lower volatility, or that the price fluctuations of an asset correspond less with the market.

However, beta can also be used as a risk measure that compares the risk of an investment to a benchmark. The benchmark could be depicted as a broad market index or a particular portfolio. For instance, we could use Bitcoin as a benchmark to determine beta for SOL in connection to the price and volatility of Bitcoin.

Additionally, the volatility of Bitcoin could be compared to stock or gold markets providing insights into Bitcoin's correlation with the traditional financial markets.
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