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One of the most promising investment instruments right now is the cryptocurrency one. Bitcoin and other cryptocurrencies have risen exponentially over the last decade. In July 2010, the price of one Bitcoin was $0.08. It is currently over $16,000.
This means if you would have bought bitcoin worth $100 in 2010 for $0.08 your investment would have ballooned to $20 million today. Bitcoin touched a record high of $20,000 back in December 2017 and then crashed to $3,100 a year later. Since March 2020 it has more than doubled and is again on the radar of crypto enthusiasts.
The Ultimate Guide to Investing in Bitcoin for Canadians
What is a cryptocurrency and what is Bitcoin?
According to Investopedia, “A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.”
Cryptocurrencies are not issued by any central authority which means they are immune to government interference or manipulation.
Bitcoin is the most popular cryptocurrency and can be likened to an online version of cash. Each bitcoin is similar to a computer file and can be stored in an exchange, a digital wallet, a smartphone, or your laptop.
As every bitcoin transaction is recorded in a public list called blockchain, it is impossible to trace the history of these transactions. Hence, it has been criticized by regulatory authorities as it’s used for illegal activities over the dark web. Alternatively, Bitcoin and other cryptos are transparent, inflation-free, divisible, and portable.
How to buy and invest Bitcoin & cryptocurrency in Canada?
The first step to buying a Bitcoin is to figure out how much of the asset you want to purchase. As the currency is trading at a price of over $16,000 per unit and you have just $5,000 to invest you can still buy a fractional amount.
Right now, the cryptocurrency is unregulated and very volatile. This increases investment as well as regulatory risks. It is advisable to invest only how much you can afford to lose if you are looking at the long-term.
The next step is to figure out where to buy Bitcoins. There are several platforms discussed below that Canadians can use to trade Bitcoin and other crypto-assets. You can also buy them via Bitcoin ATMs though they may charge high fees with less than ideal exchange rates. Further, Bitcoin ATMs are not all that common.
Another way is to buy Bitcoins are from other peer-to-peer trading marketplaces such as Paxful which follows a barter system model. There is also the option to buy the cryptocurrency from “over the counter” brokers that help HNI’s trade billions of dollars in crypto.
Here we take a look at the different platforms and exchanges where you can buy Bitcoin in Canada.
You can buy and sell Bitcoin and Ethereum on the Wealthsimple application which is also the most popular trading platform among Canadians. The Wealthsimple Crypto app is available on iOS and Android through the Wealthsimple trade app. The trading platform claims you can sign up in minutes and you will not pay commission fees and offers free deposits and withdrawals as well.
Coins on the Wealthsimple app are held by Gemini Trust Company LLC, a regulated crypto custodian with $200M in cold storage insurance coverage.
This Vancouver-based company help users easily buy and sell crypto-assets in Canada. Netcoins is a regulated MSB and works closely with the BCSC to help define regulation in the Canadian crypto space.
The currencies that are available on this platform include Bitcoin, Ethereum, Ripple, Bitcoin Cash, QCAD, Litecoin, and Tether. Netcoins levies a trading fee of 0.5% and does not charge any amount for deposits or cash withdrawals.
Coinsmart is another Canada-based exchange and aims to change the landscape by making cryptocurrency accessible to Canadians, with all levels of crypto experience. By breaking down the barriers of complex and confusing crypto transactions, CoinSmart offers a simple trading interface, learning tools, and 24/7 client support.
The platform features enterprise-grade security, cold wallet storage, and easily-generated tax-time reports. For more experienced investors, CoinSmart offers advanced charting, order book functionality, and dedicated SmartReps for wealthy clients.
Another crypto platform for Canadians is Coinberry, which offers the most common Canadian funding methods like; Interac eTransfers, credit cards, and wire transfers. So you can start trading within minutes. It uses industry-standard cold storage to store crypto assets and Schedule I Canadian Banking partners for CAD assets.
Coinberry is FINTRAC registered which means that it is fully compliant and committed to proper user onboarding, fraud monitoring, and reporting.
Paying for funds and selecting a wallet
There are several ways to fund your bitcoin purchase. While most exchanges allow you to buy crypto via your credit card, you are also allowed to use PayPal or bank transfers. Once you have purchased the asset, you need to store it in a digital wallet.
According to Wealthsimple, “If you store your Bitcoin on cryptocurrency exchanges, the exchanges technically have control over the crypto. But if you withdraw to a wallet, you have complete control over your digital assets. This is very important: if you keep your funds in exchanges, there’s a chance that the exchange might go bust, or the owners run away with customer funds.”
A few popular wallets include Trust Wallet and Electroneum, states Wealthsimple.