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Interested in how to buy Bitcoin in Canada?

Cryptocurrencies are, simply put, digitized money based on blockchain technology, which is a transparent ledger of all transactions on the network. The Bitcoin network is based on extremely complicated equations collectively known as cryptography. Bitcoin does not have a central register and its strength is derived from a distributed ledger or a blockchain).

Blocks on the Bitcoin blockchain contain details of every transaction in the cryptocurrency’s history. As a new transaction occurs, that data is placed in “blocks” and added to the “chain” of ledger transactions, creating the blockchain. A new block contains close to two and a half thousand new transactions and for a new block to be considered valid, each one should contain the answer from the cryptographic puzzle to the last block.

Investing in cryptocurrencies can be done in different ways.  In addition, there are some risks that come with investing in cryptocurrencies because of their volatility and there are a lot of other types of investment that might be safer. There is a good return as a reward for the great risk of crypto volatility; people have made tons of money invested in cryptocurrencies over the last few years. Bitcoin and ether have really volatile short-term price movements. 

How to buy Bitcoin in Canada
How to buy Bitcoin in Canada

Why Invest In Cryptocurrency?

In order to better understand cryptocurrency, one needs to have knowledge of what money actually is. Apart from being a store of value, money is an easy medium of exchange since it can be used in different denominations. Bitcoin is often considered better than money as it is likened to digital gold; it is scarce as only 21,000,000 bitcoin will ever be minted and no more than that. It is also portable and divisible.

Investing in cryptocurrency can come across as confusing, however. There are different ways of investing in cryptocurrency and some of them include: 

Buy and Hold: This is buying bitcoin and storing them inside a crypto wallet. This can often be considered the most complex. This method requires registering on a bitcoin exchange, depositing money into it and converting that money into bitcoin saving it to a wallet.  wallet serves as a bank account number for cryptocurrency holdings. This wallet can be kept online or in physical hardware which is known as cold storage in order to avoid the exposure to the risk of hacking or theft. A cryptocurrency wallet has financial value, therefore, it should be handled with caution by loading them offline to safety.

How to Buy Cryptocurrencies

Buying any cryptocurrency usually involves getting a wallet that is compatible and purchasing the actual cryptocurrency. Extended research is required before investing money to avoid hyped coins that have little or no actual value. Cryptocurrencies are stored on something called wallets on a phone or other device. Though each coin requires a wallet, there are wallets that could store up multiple types of cryptocurrencies.

When buying small fractions of cryptocurrency it is more than appropriate to use software wallets. In your plans to accumulate larger bitcoin, it is safer and advisable to store it on a hardware wallet. 

Exchanges can be divided into two categories – there are the brokers and the trading platforms. With brokers, bitcoins are obtained directly but usually with set prices and higher fees. Brokers are simpler to use for beginners while exchange platforms connect the sellers to buyers directly and offer more trading options like limit orders. Exchanges also generally have lower fees which are better suited to experienced users. While exchanges store cryptocurrencies on their platform, it’s important long-term to withdraw them and have them kept in a personal wallet. This means sending them to your bitcoin address in this way you keep full control of the balance.

There are many platforms in existence readily available for bitcoin investing. Examples of some of these platforms are brokers like  Robinhood, exchanges like Coinbase and publicly traded stocks including Cypherpunk Holdings (CSE: HODL). With publicly traded stocks that provide access to crypto, an investor can open up a standard brokerage account to buy them. Then, like any other stock, capital gains are taxed only when realized from subsequent sales. 

 When it comes to what type of cryptocurrency to purchase, it is advisable to look out for ranking cryptocurrencies by market cap; this is to know how much these cryptocurrencies are traded. There is a risk that goes into other cryptocurrencies, especially their volatility. However, to create a crypto portfolio, it is advisable to start with bitcoin, ether and probably one more cryptocurrency.

 

Types of Crypto Investments

Safer Options

  1. Call your bank or investment broker and ask them to invest your TFSA or RRSP in Cypherpunk Holdings (stock ticker: HODL). 

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        ATB

  • Derivative Trading: with the use of derivatives, this is not  buying the actual coin; instead this is  purchasing a contract that mimics a cryptocurrency’s behavior. When the price of the coin goes up, traders can sell the contract for a profit but in times when the price of the coin drops, traders run at a loss. There’s no need for a wallet with derivatives, since there is no ownership of actual bitcoins.. This method allows for leveraged trading which means money could be borrowed to increase the trading amount.. Oftentimes, this option is considered more risky and is suitable for experienced traders and risk takers only.

  • Bitcoin Exchange Traded Funds (ETFs for short): investing in Bitcoin Exchange Traded Funds, which also connotes purchasing a contract and not in actual coin. It is a contract that correlates with actual bitcoin price. Traded ETFs are on regulated stock exchanges and tend to mimic bitcoin price and moves although they may not accurately reflect bitcoin prices. The Exchange Traded Fund is driven towards an average investor who does not want to have to deal with downloading wallets or opening accounts. Investment in Exchange Traded Funds could be done in the same way you invest through a financial investor, trading platform or bank – like stock investments.

Types of Crypto Wallets

Hardware wallet: This is a cryptocurrency storage device that remains offline. edger and Trezor are popular brands of hardware wallets that are secure ways of holding cryptocurrency. 

Desktop wallet: These types of wallets are installed on a computer and they offer a little bit more advanced features and more autonomy.

Paper wallet: This type of wallet is a document that contains keys and a QR code. This can be considered secure as it serves as a gateway to access a wallet. It is advisable to secure a paper wallet in a safe.

Mobile wallet: This type of wallet is basically a mobile app where cryptocurrency is stored. Some examples are Exodus and Atomic.