Bitcoin is a cryptocurrency that was created in 2009 by Satoshi Nakamoto and was designed to be a digital currency that fell outside the reach of governments and central banks. It is a decentralised currency, with transactions all over the world recorded and stored on the blockchain, a public ledger that is found on all the computers within the Bitcoin network.
There are several ways to buy Bitcoin in Canada, including via Bitcoin exchanges, through CFD brokers, or at Bitcoin ATMs.
To buy Bitcoin, you will need to sign up to a crypto trading platform, fund your account and start trading. You will need to decide where to buy Bitcoin, how to fund your account, and where to store your Bitcoin.
Some of the most popular places to buy Bitcoin in Canada include Bitbuy, Coinbase, and Kraken.
Characteristics | Values |
---|---|
How to buy Bitcoin in Canada | Sign up and get KYC (Know-Your-Customer) verified on a Canadian crypto exchange like Bitbuy. |
Deposit CAD to the exchange directly from your bank account | |
Store Bitcoin on your exchange account or transfer it to a wallet | |
Make a Bitcoin Buying Strategy | |
Decide Where to Buy Bitcoin | |
Sign up & Get Verified to Buy Bitcoin | |
Fund Your Canadian Crypto Exchange Account | |
Sending Bitcoin Off a Canadian Cryptocurrency Exchange |
Bitcoin wallets
Hot wallets are on devices that are connected to the internet. They are often free to use and offer add-on services such as trading or staking in exchange for fees. However, they may be more vulnerable to hackers. Examples of hot wallets include the Crypto.com Defi Wallet, Zengo Wallet, Guarda, Exodus, Coinbase Wallet, Trust Wallet, and MetaMask.
Cold wallets are on devices that are disconnected from the internet. They tend to cost money as you have to buy a piece of hardware. They may be harder for other users to reach but if you lose the device, recovery could be difficult. Examples of cold wallets include Ledger and Trezor.
When choosing a Bitcoin wallet, it is important to consider factors such as security, ease of use, and compatibility with other devices and software. It is also important to remember that losing access to your private keys could result in losing your cryptocurrency forever.
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Bitcoin exchanges
A cryptocurrency exchange is a platform where buyers and sellers meet to trade cryptocurrencies. They tend to have more complex interfaces with multiple trade types and advanced performance charts, which can be intimidating for new crypto investors. However, they often have relatively low fees. Some of the most well-known cryptocurrency exchanges in Canada are:
- Coinbase: Over 98 million users globally, handling over $96 billion USD in assets since 2012. Coinbase offers a free wallet for its Canadian users.
- Kraken: Offers some of the lowest fees available, along with unique features like staking. Kraken has over 9 million users globally and is one of the world's largest exchanges.
- Bitbuy: A cryptocurrency exchange based in Canada. You can buy Bitcoins, Litecoin, Ethereum, and other coins with Interac e-Transfer or bank wire for as low as 0.1% fees.
- Uphold: A global exchange supporting residents of Canada. Uphold offers a free wallet and is registered with the Financial Transactions and Reports Analysis Centre of Canada.
When choosing a cryptocurrency exchange, it is important to consider factors such as security, fees, ease of use, and the range of cryptocurrencies offered. It is also essential to ensure that the exchange is compliant with regulatory requirements and provides good customer support.
In addition to traditional cryptocurrency exchanges, there are also peer-to-peer platforms and decentralised exchanges that allow users to buy and sell Bitcoin directly with other users. These platforms often have lower fees and offer more privacy but may not provide the same level of security and customer support as traditional exchanges.
Tips for Choosing a Bitcoin Exchange
- Do your research: Research different exchanges and compare their features, fees, security measures, and customer reviews.
- Consider your needs: Different exchanges cater to different types of investors. Some may be better suited for beginners, while others offer more advanced features for experienced traders.
- Check for regulation and security: Ensure that the exchange is compliant with regulatory requirements and prioritises the security of user funds and personal information.
- Review fee structures: Compare the fees charged by different exchanges, including deposit, withdrawal, and trading fees. Look for transparent fee structures and avoid exchanges with hidden costs.
- Payment methods: Ensure that the exchange supports your preferred payment method, such as bank transfers, credit/debit cards, or Interac e-Transfers.
- Customer support: Look for an exchange that offers responsive and helpful customer support through various channels, such as live chat, email, and phone.
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Payment methods
There are several payment methods available to Canadians looking to invest in Bitcoin. These include:
- Interac e-Transfer: This is one of the easiest and cheapest ways to buy Bitcoin in Canada. It is supported by most local exchanges and allows for quick funding of accounts. The processing time for an e-Transfer is typically up to 30 minutes, with a minimum deposit of $50 and a daily maximum of $10,000.
- Bank wire transfer: This method is suitable for larger deposits as it has no maximum limit. However, it can take 1-5 business days for processing and usually has a minimum deposit requirement of $10,000.
- Credit/debit cards: Using credit or debit cards is a convenient way to fund your account, with near-instant processing times and minimum deposits as low as $50. However, credit card companies often charge high transaction fees for Bitcoin purchases, and some treat them as cash advances with higher interest rates.
- Cryptocurrencies: Some exchanges allow users to fund their accounts using other cryptocurrencies, providing a fast and low-cost option.
- Cash: Bitcoin can be purchased with cash through peer-to-peer transactions on sites like LocalBitcoins or Facebook Marketplace, or through Bitcoin ATMs. However, peer-to-peer transactions carry a higher risk of scams, and Bitcoin ATMs typically charge high fees.
- PayPal: Although less common, some platforms like Coinmama and LocalBitcoins support the use of PayPal for buying Bitcoin.
- Prepaid cards: QuickBT is a Canadian broker that allows users to purchase small amounts of Bitcoin ($200 cap) using Flexepin vouchers.
When choosing a payment method, it is important to consider the associated fees, processing times, and security. Additionally, some exchanges may offer lower fees for certain payment methods, so it is worth comparing the options available on different platforms.
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Bitcoin ATMs
The machines are often found in convenience stores, malls, and coffee shops, and there are several providers with good reputations to choose from, including:
- Localcoin (821 ATMs)
- Bitcoin Well (229 ATMs)
- HoneyBadger (199 ATMs)
- Bitcoin Depot (198 ATMs)
- Instacoin (151 ATMs)
- Hodl Digital Services (151 ATMs)
- Bitnational (140 ATMs)
- FastBTC (93 ATMs)
- Bitcoin4U (69 ATMs)
- Bitcoiniacs (54 ATMs)
You can use websites like Coin ATM Radar to locate your nearest ATM.
The fees for using a Bitcoin ATM are higher than traditional banking fees. For example, purchasing $20 of Bitcoin can cost an additional $2.75 plus 10% on top of that. However, the benefit of using a Bitcoin ATM is the speed and convenience, and there is no need to sign up to an exchange.
To use a Bitcoin ATM, you will need to verify your identity using your mobile phone number, and you will need to scan your wallet QR code or enter your address. Then you simply insert the cash, and your Bitcoin will be deposited into your wallet.
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Bitcoin brokers
Cryptocurrency brokers simplify the process of purchasing crypto by offering user-friendly interfaces that interact with exchanges for you. Some brokers charge higher fees than exchanges, while others claim to be "free" while selling your data or not executing your trade at the best possible market price. Wealthsimple Crypto is one of the most well-known crypto brokers in Canada.
When using a broker, you may face restrictions on transferring your cryptocurrency holdings off the platform. For example, Wealthsimple Crypto previously did not allow users to transfer their crypto holdings out of their accounts. This is important to consider as advanced crypto investors prefer to hold their coins in crypto wallets for extra security.
- AvaTrade: This broker provides cryptocurrency trading and allows users to open an account, download their trading platform, and fund their account using credit card, wire transfer, and PayPal as payment methods.
- CEX.IO: This exchange has a low trading fee of 0.2% and allows customers to buy Bitcoins with credit cards, bank transfers, SEPA transfers, cash, or AstroPay. Credit card purchases are immediate, but bank transfers can take up to 5 days.
- Coinbase: Supports 32 countries and has more than 10 million customers. Canadian customers can buy using credit and debit cards, with fees of 3.99% for purchases.
- Coinmama: For purchases under $150, no identity verification is required, but there is a transaction fee of around 6% for customers buying with credit or debit cards.
- GDAX: One of the larger US Bitcoin exchanges, where customers can transfer funds via bank transfer, SEPA, or bank wire.
- QuickBT: A Canadian broker that sells small amounts of Bitcoin ($200 cap) and releases the Bitcoins within minutes of payment.
It is important to research and understand the features, benefits, security, and privacy policies of each broker or exchange before choosing one that suits your needs.
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Frequently asked questions
First, you need to sign up for an exchange and create an account. Then, you will be required to upload a picture of your ID, and/or a picture of you with your ID/driver's license. Next, select a payment method to deposit CAD into your account. Once your ID is verified, you can easily purchase Bitcoin.
All investments carry an element of risk, but there are a few unique risks associated with Bitcoin. The most obvious is its volatility. For example, on February 21, 2021, one Bitcoin was worth $57,128.64. One week later, it plummeted to $45,092.81. Two weeks after that, it was over $60,000. These giant swings are not for the faint of heart, and there’s no telling if (or when) the bubble will burst. Bitcoin investing also comes with fewer protections than other types of investments and is not insured by the government. Apart from volatility, there are also security risks. If you don’t take proper precautions, hackers will try to drain your accounts. Lastly, as Bitcoin has exploded, so has Bitcoin-related fraud. Before investing, make sure to familiarize yourself with the most common Bitcoin risks and scams.
You have several options: cryptocurrency exchanges, traditional brokers, Bitcoin ATMs, and peer-to-peer exchanges. Cryptocurrency exchanges are one of the easiest places to buy Bitcoin for beginners.
In Canada, cryptocurrencies such as Bitcoin and Ethereum are not recognized as legal tender. Instead, they are treated as commodities by the Canada Revenue Agency (CRA). This classification has significant implications for how your transactions with these digital assets are taxed. When you buy and hold cryptocurrencies, there are no immediate tax implications. However, when you decide to sell or use cryptocurrencies to purchase goods or services, you must consider the tax implications. The CRA requires that any capital gains or losses resulting from the sale or other dispositions of cryptocurrencies be reported on your income tax return.