Buying Bitcoin in Canada is very easy and, if you were worried, perfectly legal. Bitcoin and other cryptocurrencies are not considered legal tender by Revenue Canada. Instead, Bitcoin is treated as a valuable asset and can also be used for barter transactions.
All you need in order to buy Bitcoin is:
- Money to pay for the cryptocurrency
- A digital wallet for the transaction address and to pay for the Bitcoin
- And, a willing seller
Methods of Purchase
The original design of Bitcoin was for transactions to be made peer-to-peer.Creator Satoshi Nakamoto wanted the currency to replace cash and fiat currencies. Bitcoin was the first cryptocurrency to prove that secure digital currency is possible when it is built with blockchain technology.
However, Bitcoin is not used as much for peer-to-peer transactions. It is more often held and then bought and sold on exchanges, as it has become a valuable asset.
The three main ways to buy Bitcoin in Canada are:
- With a Centralized Exchange
- Decentralized exchanges
- Peer-to-peer sales/transactions
Choosing a Method of Purchase
The way you buy your Bitcoin is totally up to you and your level of comfort in the world of trading crypto-assets, as well as your comfort with the technology.
If you do not want to use a centralized exchange and want to transact peer-to-peer, then you will need to know a willing buyer with funds. Sellers and buyers can be found on decentralized exchanges, which essentially operate as a digital meet up for interested parties. The benefit to decentralized exchanges is that there are no commission and limited transaction fees.
On the other hand, centralized exchanges that run for profit will offer more products, more security and will adhere to KYC standards in Canada. The benefit to using a managed exchange is that they remove all of the guesswork and uncertainty.
So, if you are new to buying Bitcoin in Canada, then it is a good idea to use a centralized exchange, as it is a lot like any other online shopping, with a few more security procedures in place.
If you are in Canada, then using a Canadain based Bitcoin exchange is just going to make the process a whole lot smoother. Centralized exchanges, such as Coinsmart, offer customer support, have insurance, and eliminate the work of looking to willing sellers.
When you buy from an exchange, you are not transacting with another person. Rather the exchange functions as a third-party to help you make your purchase easily, quickly, and securely.
Whenever you buy or sell Bitcoin, there are always transaction fees, whether peer-to-peer or with an exchange. The transaction fees are for getting your money from one location to the next, and this requires quite a lot of behind the scenes energy to move this size of digital transactions.
So the cost of peer-to-peer transaction fees is very volatile since they are decentralized. As such, they are simply based on what the market can bear.
Alternatively, if you purchase Bitcoin through a Canadian Bitcoin exchange, such as Coinsmart, you will pay $2 to buy $1000 worth of Bitcoin, as they use a commission rate. For more information about commission rates and fees, visit Coinsmart.com.
Most exchanges in operation will comply with the necessary standards of KYC and AML. The increase in popularity of cryptocurrency has brought with it an increase in security measures. So, you will need to give out some personal information so that the exchange can Know Your (their) Customers.
This also means that there are Anti-Money Laundering procedures in place on Canadian based Bitcoin exchanges. This means that transaction records can be obtained in order to ensure that cryptocurrency is being used for legal transactions and is being counted towards taxable income when necessary.
There are many ways to buy Bitcoin in Canada, and they are all quite simple and straightforward. The easiest way to purchase Bitcoin and other cryptocurrencies is through an exchange, where they will give you step-by-step advice and customer support.
Many exchanges can also be connected to Canadian bank accounts, which can be very convenient. However, you can also use digital wallets and credit cards, so using a bank account is not a must. The details are going to vary depending on the exchange you decide to use.
Finally, you can also purchase Bitcoin through more traditional investor groups, as many investing applications and services now include cryptocurrency and Bitcoin as asset options.