If you stay in Canada and are new to the crypto world, determining how to buy Bitcoin, Ethereum, and other crypto might be difficult at first. Fortunately, learning the ropes is rather straightforward.
You can either buy cryptocurrencies through a crypto exchange or a broker. Follow these five simple steps to begin investing in cryptocurrencies.
1. Choose a Preferred Broker or Crypto Exchange
To purchase crypto, you must first select a broker or a cryptocurrency exchange. While both allow you to buy cryptocurrency, there are a few crucial differences to keep in mind.
What is a cryptocurrency exchange?
A cryptocurrency exchange is an online marketplace where buyers and sellers may swap cryptocurrencies. Exchanges frequently offer minimal fees, but they can have more complicated interfaces with many trading types and detailed performance charts, which can be confusing to inexperienced crypto investors.
Coinbase, Netcoins, Newton, Coinberry, and Binance Canada are some of the most well-known exchanges to buy crypto in Canada. While the normal trading interfaces of these platforms may be intimidating to newbies, particularly those with no prior experience trading stocks, they also provide user-friendly easy buy choices.
The ease comes at a cost since the beginner-friendly alternatives are significantly more expensive than purchasing the same cryptocurrency using each platform’s conventional trading interface. To save money, you may attempt to learn enough to use regular trading platforms before—or shortly after—purchasing your first cryptocurrency.
Important: If you’re new to cryptocurrency, ensure that your preferred exchange or brokerage supports fiat money transfers and purchases in Canadian dollars. Some exchanges only allow you to buy cryptocurrency using another cryptocurrency, which means you’d have to go to another exchange to buy the tokens that your chosen exchange allows before you could start trading cryptocurrency on that platform.
What is a cryptocurrency broker?
Cryptocurrency brokers simplify the process of obtaining cryptocurrency by providing simple interfaces that connect with exchanges on your behalf. Some charge more than exchanges.
Others claim to be “free” while profiting by selling information on what you and other traders are buying and selling to huge brokerages or funds, or by failing to execute your deal at the best available market price. Wealthsimple Crypto is a well-known cryptocurrency broker.
While brokers are certainly handy, you should exercise caution when using them since you may encounter limitations when transferring your crypto assets off the platform. You cannot, for example, move your crypto assets out of your Wealthsimple Crypto account.
Although this may not appear to be a big concern, sophisticated crypto investors prefer to keep their money in crypto wallets for further security. Also, some people opt for hardware crypto wallets that are not linked to the internet.
2. Create an account and verify
Just like in every other country, before you buy crypto in Canada you will have to open an account and verify. You may create an account with a cryptocurrency broker or exchange once you’ve decided on one. Depending on the platform and the amount you want to purchase, you may be required to prove your identity. This is a necessary step in preventing fraud and complying with federal regulatory standards.
You may be unable to buy or trade cryptocurrencies until the verification procedure is completed. The platform may need a copy of your driver’s license or passport, as well as a selfie to confirm your look matches the documentation you provide.
3. Deposit cash
To buy cryptocurrency, you must first ensure that you have funds in your account. You may fund your crypto account by connecting your bank account, approving a wire transfer, or even paying with a debit or credit card. Some Canadian exchanges will also accept an Interac e-Transfer. You may have to wait a few days before you can utilize the money you deposit to acquire cryptocurrencies, depending on the exchange or broker and your funding method.
One word of caution: while some exchanges or brokers enable you to deposit money using a credit card, doing so is exceedingly risky—and costly. Credit card issuers see cryptocurrency transactions as cash advances when made using credit cards.
This implies they will have higher interest rates than conventional purchases, as well as additional cash advance expenses. When you make a cash advance, for example, you may be required to pay 5% of the transaction amount. This is in addition to any fee charged by your cryptocurrency exchange or brokerage, which can range from 5% to 10%, implying that you may lose 10% of your cryptocurrency purchase to fees.
4. Place a cryptocurrency order
You’re ready to place your first crypto order after you have money in your account. There are hundreds of cryptocurrencies to select from, including well-known names like Bitcoin and Ethereum as well as other coins like Cardano, Polygon, and BNB.
When you’ve decided which cryptocurrency to buy, enter its ticker symbol—Bitcoin, for example, is BTC—and the number of coins you want to buy. Most exchanges and brokers enable you to acquire fractional shares of cryptocurrency, allowing you to hold a sliver of high-priced tokens like Bitcoin or Ethereum that would otherwise cost thousands of dollars.
5. Choose a storage method
Cryptocurrency exchanges are not protected by the Canada Deposit Insurance Corporation (CDIC), therefore are vulnerable to theft or hacking.
You might even lose your investment if you forget or lose the passcode to your account, as has happened to millions of dollars with Bitcoin. That is why it is critical to have a safe storage location for your cryptocurrency.
As previously stated, if you purchase cryptocurrencies through a broker, you may have little to no control over how your cryptocurrency is held.
Ways to store your cryptocurrency
Now that you know how to buy crypto in Canada, the next step is to learn how to store it. If you have purchased your cryptocurrency in an exchange, you have the following option to choose from to store your assets.
1. Keep the cryptocurrency on the exchange.
When you purchase crypto, it is often held in a crypto wallet linked to the exchange. If you don’t like the provider with whom your exchange partners, or if you want to relocate it to a more safe place, you may move it away from the exchange and into a separate hot or cold wallet. You may have to pay a little charge depending on the exchange and the quantity of your transfer.
2. Hot wallets.
These are online crypto wallets that operate on internet-connected devices such as tablets, PCs, or phones. Hot wallets are handy, but they are more vulnerable to theft since they are still linked to the internet.
3. Cold wallets
Because cold crypto wallets are not linked to the internet, they are the most secure way to store crypto. They are external devices, such as a USB drive or a hard disk.
However, you must exercise caution while using cold wallets—if you lose the keycode linked with them or the device breaks or malfunctions, you may never be able to recover your money.
While this might happen with certain hot wallets, some are administered by custodians who can assist you in regaining access to your account if you are locked out.