A Beginner's Guide To Investing Bitcoin In Canada

Bitcoin is a cryptocurrency that was created in 2009 by Satoshi Nakamoto. It is a decentralised digital currency that exists in electronic form and can be used to buy goods and services online. Bitcoin can be purchased in Canada in various ways, including via Bitcoin exchanges, through CFD brokers, or at Bitcoin ATMs.

When buying Bitcoin, it is important to be aware of the risks involved. The cryptocurrency market is extremely volatile, and there are also security risks and the possibility of fraud. It is recommended that you only invest money you can afford to lose and that you take steps to secure your investment by using a secure digital wallet.

Bitcoin ATMs in Canada

Bitcoin ATMs are not linked to bank networks and are instead connected to the internet. They are designed to allow users to buy and sell Bitcoin and other cryptocurrencies. The world's first Bitcoin ATM was opened in a coffee shop in Vancouver, Canada, in 2013.

There are two main types of Bitcoin ATMs: basic machines that only allow users to purchase Bitcoin, and more complex machines that enable users to both buy and sell cryptocurrencies. As of July 2020, the main manufacturers of Bitcoin ATMs were Genesis Coin and General Bytes.

Bitcoin ATMs typically have higher transaction fees than exchanges, and limits on transaction sizes tend to be lower. However, they provide users with a high degree of anonymity, which is one of the desired characteristics of Bitcoin.

There are 2,528 Bitcoin ATMs in Canada, with the largest number located in Calgary (30), Montreal (47), Toronto (118), and Vancouver (47).

Localcoin claims to have the largest Bitcoin machine network in Canada, with ATMs in British Columbia, Newfoundland and Labrador, and Prince Edward Island.

How to buy Bitcoin safely

Bitcoin is a cryptocurrency that was created in 2009 by an unknown person named Satoshi Nakamoto. It is a digital currency that exists in electronic form, with no physical version for Bitcoin holders to possess. Bitcoin transactions are highly secure and cannot be easily shut down by governments.

If you are looking to buy Bitcoin safely, here are some steps and things to consider:

Choose a Bitcoin Exchange or Trading Platform

Firstly, you will need to decide on a Bitcoin exchange or trading platform to conduct your transactions. Examples of well-known and widely used platforms include eToro, Coinbase, and BitBuy. When choosing a platform, it is important to consider factors such as security, fees, ease of use, and availability in your country. It is also essential to ensure that the platform complies with regulatory requirements and offers features such as two-factor authentication (2FA) to enhance the security of your account.

Select a Bitcoin Wallet

Once you have chosen a platform, you will need to select a Bitcoin wallet, which is essentially a bank account for cryptocurrencies. There are two main types of wallets: hot wallets and cold wallets. Hot wallets are connected to the internet and offer more convenience and ease of access, but they are also more vulnerable to hacking attempts. On the other hand, cold wallets are not connected to the internet and store Bitcoin on physical devices like USB sticks, providing enhanced security.

Decide on a Payment Method

Different payment methods are available for purchasing Bitcoin, including credit/debit cards, bank transfers, cash, and PayPal. Each method has its own advantages and disadvantages in terms of convenience, speed, and fees. For example, credit/debit cards offer ease and speed but may have higher fees, while bank transfers usually have lower fees but can take longer to process.

Purchase Your Bitcoin

When purchasing Bitcoin, it is important to only invest an amount that you are comfortable with, as the cryptocurrency market can be highly volatile. Start slowly and take the time to learn the market before making large investments. Additionally, keep in mind that Bitcoin can be bought in fractions, so you don't need to purchase a whole Bitcoin.

Store Your Bitcoin Securely

After purchasing your Bitcoin, it is crucial to store it securely. You can keep your Bitcoin in your chosen exchange's online wallet, but it is generally recommended to transfer it to your own personal wallet, especially if you are planning to hold it for the long term. This gives you complete control over your digital assets and reduces the risk of losing them if the exchange platform is hacked or goes out of business.

Stay Informed and Be Vigilant

Staying informed about the latest developments in the cryptocurrency market and Bitcoin-related news is essential. Additionally, be vigilant about the security of your Bitcoin wallet and personal information. Enable security features like 2FA and regularly back up your wallet to protect your investment.

By following these steps and staying informed about the market, you can safely buy and own Bitcoin, taking advantage of its benefits as a decentralized digital currency.

Bitcoin as an investment or digital asset

Bitcoin is a decentralised digital currency that was created in 2009 by Satoshi Nakamoto. It is a cryptocurrency that exists in electronic form and is independent of governments and central banks. Bitcoin transactions are recorded and stored on the blockchain, a public ledger that is found on all the computers within the Bitcoin network.

Bitcoin can be bought and sold using a crypto trading platform or online exchange. In Canada, it can be bought online or in-person at ATMs. Bitcoin can also be purchased through CFD brokers, allowing investors to trade Bitcoin's price fluctuations without holding the coin.

When buying Bitcoin, it is important to consider the payment method, fees, security, and the amount of personal information required. It is recommended to use a digital wallet to store cryptocurrencies and interact with others via blockchain technology.

There are two types of wallets: hot and cold. A hot wallet is connected to the internet and offers convenience but may be more vulnerable to hacking. A cold wallet, on the other hand, is not connected to the internet and provides greater security, such as a USB drive or paper wallet.

When investing in Bitcoin, it is important to be aware of the risks, including volatility, security threats, and fraud. It is crucial to only invest what you can afford to lose and to familiarise yourself with the process and potential scams.

Bitcoin wallets

Hot Wallets

Hot wallets are connected to the internet and are often free to use. They are typically in the form of mobile, desktop, or web apps, making them convenient and easy to use for transactions. However, they are more vulnerable to hacking attempts as they are connected to the internet. Examples of hot wallets include Trust Wallet, MetaMask, and the Coinbase Wallet.

Cold Wallets

Cold wallets, on the other hand, are not connected to the internet. They are usually hardware devices specifically designed to store your crypto offline, making them more secure than hot wallets. However, if you lose the device, recovery can be challenging. Examples of cold wallets include Ledger and Trezor.

When choosing a Bitcoin wallet, it is essential to consider factors such as security, ease of use, supported cryptocurrencies, and integration with other platforms. It is also worth noting that some hot wallets can be converted to cold storage, providing an extra layer of security.

How to sell Bitcoin

Selling Bitcoin (BTC) is similar to buying it, but in reverse. To sell BTC, you must first have BTC in your wallet.

There are several ways to sell Bitcoin, each with its own pros and cons. Here are some of the most common methods:

Cryptocurrency Exchange:

Exchanges are a one-stop solution for trading Bitcoin. They act as intermediaries, holding the funds of both sellers and buyers. To use an exchange, you'll need to set up an account, verify your identity, and connect a bank account for withdrawals. Simply place a sell order stating the type of currency, amount, and your asking price. The exchange will automatically complete the transaction once your offer is matched. It's important to note that exchanges may have restrictions based on your country and can be targeted by hackers, so exercise caution.

Peer-to-Peer (P2P) Trading:

P2P trading involves selling Bitcoin directly to another person, either online or in-person. Online P2P platforms, such as Binance P2P, facilitate these transactions by allowing buyers and sellers to connect and trade. In-person transactions can also be arranged through these platforms or independently. P2P trading offers flexibility and can be a good option if you want to sell Bitcoin for cash. However, it's important to exercise caution when meeting strangers and be aware of potential scams.

Bitcoin ATM:

Bitcoin ATMs are located worldwide and allow users to buy and sell Bitcoin with cash. They are connected to the internet, not your bank account, and typically charge high transaction fees. The process for selling Bitcoin at an ATM can be cumbersome, often requiring identity verification and multiple steps to complete the transaction. Additionally, not all Bitcoin ATMs offer both buy and sell functionality.

Brokerage:

If you use a broker to buy Bitcoin, selling through the same broker is often the easiest option. Simply execute a trade on their platform, and you'll have the cash in your account afterward. This method streamlines the process and avoids the need to transfer funds between platforms.

Stablecoin Exchange:

Another option is to exchange your BTC for a stablecoin, such as Tether, which is pegged to the value of a fiat currency like the US dollar. This can be done on a cryptocurrency exchange, and then you can choose to keep the stablecoin on the exchange or withdraw it to a personal wallet. Exchanging for a stablecoin can be useful if you want to hold a less volatile asset while still remaining in the cryptocurrency space.

When deciding how to sell your Bitcoin, consider factors such as convenience, transaction fees, anonymity, and control over funds. Each method has its unique processes and considerations, so it's important to research and choose the one that best suits your needs.

Frequently asked questions