Guide For Investing in Bitcoin in Canada
The value of Bitcoin and other cryptocurrencies has risen sharply in the past decade. In July 2010, the price of a single Bitcoin was $0.08. It is now worth more than $29,000.
This means that if you would have bought Bitcoins worth $100 in 2010, your money would have jumped over $48 million today.
However, you must remember that cryptocurrencies are a really volatile asset class. In 2017 Bitcoin reached $1,000 price target at the beginning of the year and reached $ 20,089 on December 17. Its price reached $ 24,000 in December 2020, Bitcoin has jumped between $ 30,000 and $ 65,000 in 2021 with a tremendous increase in Bitcoin history.
Cryptocurrency and Bitcoin
A cryptocurrency is a digital or virtual currency stored by cryptography which makes it almost impossible to counterfeit or double-spend. All cryptocurrencies record transactions by using blockchain technology.
However, there is no governing authority that regulates the working of cryptocurrencies and hence, there is no interference from the government bodies.
Bitcoin is the most popular cryptocurrency and is often touted as the ‘King of Crypto’. It offers the promise of an online currency secured without any central authority, unlike government-issued currencies. There are no physical Bitcoins; they are just associated with a cryptographically secured ledger.
A Bitcoin is similar to a computer file and can be stored on a digital wallet, smartphone, or laptop. You might be surprised to know, but Bitcoin was not the first attempt to use such a currency, it was the most successful in its early endeavors and has now become a precursor to virtually every cryptocurrency invented in the last decade.
How To Buy and Trade Bitcoin in Canada?
You can follow the below-mentioned steps to buy Bitcoin in Canada –
First, open an account with a crypto exchange
Deposit funds in the digital wallet using a fiat currency
Finally, buy your Bitcoin
There are various apps that you can use to buy Bitcoin. Select the best one for yourself by assessing their features and credibility.
Buying Bitcoin Using Over-The-Counter (OTC)
Over-The-Counter or OTC means trading assets like stocks, bonds, and currencies in both the fiat and crypto markets using venues other than exchanges.
Advantages of Buying Bitcoin Using OTC
It offers large liquidity in a short period
It gives you price protection without altering the prices
It provides you with fiat and anonymity support
FAQ
Why Should You Trade Bitcoin?
The first step in buying Bitcoin is to find out how much you want to invest in it. Currently, since cryptocurrency is not a regulated asset class, the risk of investment is on the higher end.
The next step is to find out where to buy Bitcoins. There are several platforms where you trade Bitcoin and other cryptocurrencies. You can also buy them through a Bitcoin ATM or peer-to-peer exchange.
How To Select a Bitcoin Exchange?
There are various crypto exchanges in Canada and around the world where you can buy Bitcoin instantly. Consider the below factors while selecting a Bitcoin exchange:
• Overall liquidity of the exchange
• Exchange’s reputation and security mechanism
Can You Buy Bitcoin Anonymously?
There are a few options that can help you stay anonymous while buying cryptocurrency, these include:
Peer-to-peer exchange
Bitcoin ATMs that do not include your photograph for identity verification purposes
However, keep in mind that being anonymous can come at a high price as both Bitcoin ATMs and peers-to-peer exchange can be relatively expensive as compared to the conventional exchange.
What is Peer-to-Peer Exchange?
Peer-to-Peer Exchange is a platform that allows you to transfer cryptocurrency from one account to another without the involvement of any financial institution.
Some benefits of buying from Peer-to-Peer Exchanges are:
Provides faster trading
Helps you buy Bitcoin anonymously
Can You Exchange Bitcoin With Other Cryptocurrencies?
Yes, you can exchange Bitcoin with other cryptocurrencies by using crypto to crypto exchange method. For this, you can use an exchange option and then sign up for that exchange. After that, all you need to do is deposit your trading crypto.
Where is Bitcoin Stored?
Bitcoin is stored digitally under the Bitcoin wallets. These wallets are online addresses that can be accessed using a private key. It is a type of software that can be downloaded and installed on your device. You can also use a cloud wallet which can be accessed from any device with an internet facility.
If you want storage for the long term then, you can use the Hardware Wallets (also known as Cold Wallets). They offer you high security which protects your assets. Also, these wallets are not connected to the internet and thus there is no risk of online hacking.
How to Cash Out Bitcoin?
You can transfer your Bitcoins to Canadian dollars using either a peer-to-peer exchange or a fiat-to-crypto exchange.
Fiat-crypto investing will allow you to trade your Bitcoin in Canadian dollars based on current profits, while a peer-to-peer exchange will make you more flexible with customization options for setting your price base and payment method.
Is There Any Tax on Bitcoin in Canada?
Bitcoin in Canada is treated as an asset rather than a soft currency. Therefore, it is taxed according to the guidelines of the Canada Revenue Agency.
Following are the taxable crypto transactions in Canada:
• Selling the crypto for fiat
• Crypto to Crypto trading
• Buying and selling goods and services using crypto
Final Thoughts
With Canada becoming the first country to support an ETF at the start of 2021, it is clear that Bitcoin is not going away. There are many ways to buy Bitcoin.
While few exchanges allow you to buy crypto from your credit card, others allow you to use PayPal and other digital wallets. With the rising Bitcoin, there is a very high probability that more people will come up for cryptocurrency investment. We believe we are yet to see some of the greater financial revolutions which Bitcoin is capable of bringing.
