How To Buy Bitcoin In Canada?

Bitcoin has come a long way and has gained a lot more acceptance ever since it was first launched in 2009.

With the recent bull run (since March 2021, pandemic and now), Bitcoin has officially crossed the $33,000 USD mark-making all-time highs yet again.

The prediction (Winklevoss brothers – former Facebook founders) is that BTC will hit the $100,000 mark by the end of 2021. But, how far is this true, can we reach these levels or are we bound for the reversal pretty soon as in 2017?

Bitcoin is a cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto and started in 2009 when its implementation was released as open-source software

Whatever the path you decide to choose, I believe that Bitcoin’s here to stay this time around. As more and more dollars are being pumped into the markets to keep the economy afloat, inflation rates are increasing as well.

Buying a bitcoin is different than buying a stock or bond because it’s not a corporation.

Consequently, there are no corporate balance sheets or Form 10-Ks to review.

Another use case is that – Bitcoin can be used as a store of value and for daily transactions. But, what is the right way to own a BTC?

In 2013, prices started at $13.30 rising to $770 by 1 January 2014

In this article, I will walk you through the process of owning a Bitcoin and storing it securely in a wallet. Let’s begin.

What Is A Cryptocurrency?

According to Dictionary.com Crypto means “crypto – a combining form meaning “hidden,” “secret,” used in the formation of compound words”.

Bitcoin like every other digital currency is called cryptocurrency. It is simply the online version of cash (fiat currency).

Bitcoin is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries

Cryptocurrencies are used by people to send money to any part of the world at a cheap, secure, and faster rate. Others also trade these digital currencies on the volatile market having the hopes to cash out big.

Something very unique about Bitcoin and other digital currencies is the anonymity that comes with it. Even though the ledgers are made public, the identities of those transactions remain anonymous.

Bitcoin and Canada

When it comes to Canada, awareness and the rate of adoption of Bitcoin has always been pretty high.

About 85% of Canadians know about Bitcoin and over 50% have one or two digital currencies at hand.

Do note that, cryptocurrencies such as Bitcoin or Ethereum cannot be held in the registered accounts such as TFSAs or RRSPs and you’ll have to pay taxes on the gains you make (non-registered account).

Meanwhile, If you are willing to invest in the Bitcoin mining stocks, then there are plenty of options to choose from. You have HUT8, HIVE, Bitfarms which are Canadian stocks trading on the TSX stock market. Again, these are Bitcoin mining companies. Some of these trade on the TSX-V.

The price of the above-mentioned stocks directly relates to the movement of the bitcoin price. This makes the investment extremely risky and volatile, but you can always allocate a small portion of your overall portfolio to minimize the risks/rewards involved.

To further foster the growth of cryptocurrencies, there’s an enthusiastic crypto community that promotes the progress of blockchain technology.

However, the government is now involved and has rendered regulations to protect cryptocurrency traders and educate the general public on the risk involved in owning digital currencies.

Bitcoin prices are influenced by the following factors:

1. The supply of bitcoin and market demand for it (Demand/Supply chain)

2. The cost of producing a bitcoin through the mining process (Bitcoin Miners)

3. Bitcoin rewards issued to bitcoin miners for verifying transactions to the blockchain (per block rewards, hash rate and difficulty rate in producing one BTC)

4. The number of competing cryptocurrencies (Litecoin, Etherium etc)

5. The exchanges that Bitcoin trades on

6. Regulations governing the sale of the Bitcoin

7. Bitcoin’s internal governance

Buying Bitcoin Through Exchanges

In Canada, people buy most of their Bitcoin through exchanges as they are deemed safe and very easy to use.

There are quite a number of crypto exchanges in Canada.

A recent report from the Canadian Bitcoin Index suggests that Kraken, Bitvo, and Coinsquare are the most common and preferred platforms Canadians use for trading and buying Bitcoin.

Buying Bitcoin from these exchanges is quite easy as most make use of various payment options such as credit cards, PayPal, and wire transfers. All you have to do is choose the payment option that best suits you.

Let’s now take a look at these three exchanges.

Kraken

Kraken is one of the top cryptocurrency exchanges in Canada.

It’s one of the credible options you should consider whenever you want to buy Bitcoin.

Just like most exchanges, Kraken does not only trade Bitcoin but has more than fifteen other cryptocurrencies listed on its platform.

With Kraken, you can trade top cryptocurrencies with up to 50x leverage. Kraken also offers the below features:

Seamless transfers between Kraken Spot and Kraken Futures markets
Flexible and intuitive trading interface
Personal support and educational content

Talking about its platform, Kraken has a very wide reach having users in more than 180 countries. With a user-friendly interface (certainly not the best you can find out there) cryptocurrency pairs can be traded effortlessly.

If you’re looking to register with Kraken, you will be required to upload a means of identification before you’re allowed to buy Bitcoin or trade.

The major drawback with Kraken is the time taken to purchase cryptocurrencies when using fiat.

The process usually takes a few extra days as you will be required to deposit the corresponding amount through bank transfer (wire transfer).

You can always checkout Kraken’s Demo trading platform here.

Unlike investing in traditional currencies, bitcoin is not issued by a central bank or backed by a government.

Therefore the monetary policy, inflation rates, and economic growth measurements that typically influence the value of currency do not apply to bitcoin.

Bitvo

Bitvo is also a cryptocurrency exchange that is quite popular in Canada.

With Bitvo you can buy and sell cryptocurrency for free. The cryptocurrency exchange has zero trade fees, free deposits, 1% withdrawal fees, which is fantastic!

It offers a “same-day guarantee service” which involves access to the crypto account on the same day you register.

You can also transfer funds the same day you make requests.

The “same-day guarantee service” is made possible for all users as long the KYC (Know Your Customer) requirement is met.

A Visa debit card for cryptocurrencies called the Bitvo Cash Card is offered to users which will facilitate immediate access to crypto funds.

Bitvo is designed to alleviate the friction associated with cryptocurrency exchanges.

We’re so confident that we will guarantee you same-day processing on account registration, funding and withdrawal transactions and access to live customer support 24 hours a day, 7 days a week, 365 days a year.

This is our guarantee to you or we will credit your account for our withdrawal fee. – Bitvo

Coinsquare

Coinsquare just like Bitvo and Kraken is a cryptocurrency exchange.

This platform offers users the opportunity to buy Bitcoin, Ethereum, and Litecoin using both cryptocurrency and fiat currency.

One of the primary reasons why Coinsquare is quite popular in Canada is its user-friendly interface and features. Its interface is friendlier than Kraken.

Registration to the platform is very easy but takes some time to do so. This is because you are required to upload means of identification upon registration. (Drivers license or passport usually)

Immediately after the registration is done, you can buy as many Bitcoins as you wish to with just a few clicks on your smartphone, computer, or tablet.

Coinsquare prides itself on being a very secured platform and claims never to have misplaced any of its client’s funds in the course of the transaction.

Apart from cryptocurrency, Coinsquare also allows you to trade silver and gold in the volatility market. (Commodity market).

How To Fund Your Coinsquare account with Bitcoin (BTC)?

1. Log into your Coinsquare account at www.coinsquare.com

2. Select ‘Fund’ in the top menu bar

3. On the left side menu, set the currency to BTC (or Bitcoin)

4. Click on ‘Get Address’

5. Copy the address that is generated (please do not try to write it down and type it out again, as this may lead to typos)

Once you have the address copied, you may use it as the ‘To’ address when you are sending BTC from an external wallet or another exchange, or you may give it to someone who will be sending BTC to your Coinsquare account.

With the high rate of awareness, buying Bitcoin in Canada isn’t difficult at all and there are tons of options for you to pick from.

You can either buy Bitcoin through Bitcoin exchanges, Bitcoin ATMs, or CFDs.

Buying Bitcoin through CFD’s broker is quite different from buying through exchanges and ATMs.

If you’re looking to trade Bitcoin in the volatile market for profit without holding your coin then you will have to buy through CFD.

On the other hand, legal possession of your Bitcoin involved buying through exchanges and ATMs.

Steps To Buy Bitcoin Through Exchange

1. Open a Digital Wallet

Similar to the physical wallet you use to keep fiat currency, a digital wallet is where you keep your digital or cryptocurrencies.

Digital wallets are offered by many providers (or exchanges) so it is best for you to research and choose the one that’s best for your needs.

In the crypto world, a very reliable information provider is Blockchain.info.

2. Register an account with the exchange

After consideration and once you’ve made the choice of exchange, all you have to do is open and register an account with them to buy bitcoin or cryptocurrencies.

3. Protect your Account

Apart from the password to your exchange account, you’ll also get the authentication which will help protect your account further. (to avoid bitcoin stealing in the first place)

Authentication code is usually created by an application.

4. Buy Bitcoin

After completing the above steps, it’s time for you to buy the first bitcoin.

You can now buy any quantity of Bitcoin you want. The Bitcoin equivalence of the amount you want to pay will be deposited in your digital wallet.

Depending on the exchange you choose, you will be asked to confirm your identity before the purchase is completed.

To pay for crypto purchases always choose the most suitable payment option available. The options are usually debit card, wire transfer or PayPal. Pick the one you most prefer and see if any limitations from the financial institution.

How To Buy Bitcoin Through ATMs?

Bitcoin ATMs do not work exactly like the conventional bank ATMs that are connected to a network of the banking system that enables individuals to withdraw their funds and make other transactions.

Bitcoin ATMs are connected directly to the internet with the sole purpose of providing a platform for crypto traders to buy and sell Bitcoin at their own convenience.

With the high rate of Bitcoin adoption in Canada, the world’s first Bitcoin ATM opened in Vancouver Canada in 2013.

Today, there are more than 600 Bitcoin ATMs all over Canada with most in Toronto (about 188), Vancouver and Montreal (47), and Calgary (30).

With Bitcoin ATMs, a true sense of anonymity is achieved which is one of the reasons people trade Bitcoin. The anonymity is achieved with Bitcoin ATMs because of the minimum verification process involved in transacting with Bitcoin ATMs.

A major drawback of using the Bitcoin ATMs is the high transaction fees involved in buying and selling Bitcoin from ATMs.

Bitcoin ATM fees are usually between 10 – 17% which is 8% more expensive than buying through the exchange/s.

Apart from Bitcoin ATMs, you can also buy Bitcoins from licensed brokers in Canada.

All you have to do is find a broker and make an over the counter (OTC) purchase to invest.

Locating Bitcoin ATMs closest to you can sometimes be a headache but there is a decent website Coin ATM Radar that allows you to search for Bitcoin ATMs closest to you.

How To Buy Bitcoin Through CFD?

If you’re not comfortable buying Bitcoin through exchanges or Bitcoin ATMs, then you might want to consider the CFD alternative.

Buying and selling Bitcoin through CFD allows trading the price of Bitcoin in the volatility market without actually having legal possession of the digital currency.

This implies that trading through CFD requires no digital wallet.

With trading platforms looking to evolve and beat the volatility market, leverages are offered to traders to enable them to buy and sell Bitcoin through investments in CFDs.

Bitcoin Taxation Policies in Canada

In Canada, cryptocurrency is considered a commodity by the Canada Revenue Agency (CRA) for taxes.

What this means is that all gains or losses incurred from crypto trading is evaluated as a business/capital gain or loss. So you must maintain proper records of all transactions made during your day to day trading.

To determine the value of your cryptocurrency for tax purposes, market cap price is usually used to make such calculations.

With cryptocurrencies (like Bitcoin and Ethereum), each digital coin is a distinct digital asset.

Other options to buy Bitcoin or Ethereum in Canada

Shakepay – Shakepay has by far the easiest registration process and allows Interac e-Transfer as well. The service is very fast and excellent. You will also get a referral bonus of $30 when you refer someone to the platform. (of course when they deposit the first $100 or fund their account) Using the Shakepay platform you can buy Bitcoin through your smartphone in a matter of a few minutes.
Gemini Crypto Currency Exchange.
Wealthsimple Trade – With the $0 commission structure at Wealthsimple Trade, you can buy and sell Bitcoin or Ethereum with ease. However, do note that money transfers can take up to 5 business days and there is a spread for buying and selling the digital coin.

You can also watch the below YouTube Video from “Andrei Jikh”. He explains the process of buying the Bitcoin from Gemini and securely storing it.

Frequently Asked Questions About Bitcoins

How will I receive my Bitcoin purchased?

Bitcoins purchased through exchanges or Bitcoin ATMs are sent into your digital wallet.

Upon the bitcoin purchase, you will be required to provide your wallet address which is 32 characters long.

Bitcoin wallet address example – “18XTtbb7A1B2Ni4VBRFybQSDDuBTpMkEiL”.

Be sure to input the right wallet address as transactions are irreversible and you can lose the bitcoin in the process.

Are Bitcoins accessible to people through my wallet address?

No, it is not. Your funds are not accessible to people through your wallet address.

The wallet address is just used for transaction purposes. For safety concerns, these addresses are randomized each time you make a new request to receive Bitcoin.

However, it is recommended not to disclose your private keys to anybody.

Your private keys give access to your wallet address so by giving that to someone, you are practically giving the individual access to your funds.

Why is it essential to provide a means of identification when making transactions through exchanges?

To provide more security to traders, exchanges took it upon themselves to request means of identification to curb fraud and there.

What is the period involved in receiving Bitcoin into my wallet?

Receiving Bitcoin to your wallet is totally dependent on your wallet provider.

But generally, on average, it should take anywhere between 30-60 minutes except in cases where there is a delay due to a high volume of transactions.

Why does the price of Bitcoin fluctuate?

Too many factors are responsible for the fluctuation in the price of Bitcoin.

As always with any trade or stocks, it is the supply and demand. With a lot more institutional investors looking to buy and hold the bitcoin, the price can only increase. Supply is limited whereas demand has skyrocketed.

Simply put, the forces of demand and supply, changes in regulations, political tone, and so on influence the price of the bitcoin.

What is the ideal payment method to use in buying Bitcoin?

There isn’t an ideal payment method to buy bitcoin.

However, when buying Bitcoin just make sure you make payments using the payment methods that best suits you at the time (transaction fees). Banks do not like cryptocurrencies and have huge fees so make sure to look into that before the transactions.

Has Bitcoin been legalized in Canada?

The Answer is Yes.

All forms of trading Bitcoin is legal in Canada.

However, the Canadian government does not recognize Bitcoin as a legal tender. This implies that your taxes can’t be paid using any cryptocurrency.

When is it best to purchase Bitcoin?

When it comes to cryptocurrency, there isn’t the best time to purchase as prices fluctuate.

Remember that Bitcoin trades 24/7 and 365 days every year. That’s unlike stocks which trade 5 days a week and off on holidays. The cryptocurrency markets never sleep. It’s always volatile and trading.

But if you are looking to hold your Bitcoin, it is advised you buy bitcoin whenever there’s a major dip in price. I mean the red days or during the market correction.

Is Bitcoin accepted in Canadian banks?

You cannot transact Bitcoins through Canadian banks. I mean buy/sell bitcoin through banks.

So your Bitcoins cannot be converted directly to fiat currency and vice versa through them.

However, you can always send money from your account to exchanges when you need to buy additional Bitcoin.

Final Words

Bitcoin is here to stay. With the increase in Bitcoin addresses over time, it’s only a matter of time before the digital currency reaches more masses.

From buying the bitcoin through credit to exchanging Bitcoin for cash, the flexibility keeps increasing every day.

However, it is important to note that despite the government’s effort to keep the market regulated, the risks involved in the crypto market is pretty high.

So always protect yourself against scams and fraud by investing in a secure Bitcoin wallet and not disclosing your private key to anyone.

Thanks for reading! Please let me know your thoughts and comments below.