A few years ago I wrote about how you can buy bitcoin, and the landscape changes quickly, but as I’m still asked regularly, I’ve decided to update the details with the current bitcoin landscape in Canada.
NOTE: This article is not investment advice!
A few things to note before jumping in, is that when buying bitcoin from fiat (CAD/USD etc), we call this an on-ramp exchange, just like selling bitcoin, you want an off-ramp exchange. The other important thing to note is custodial vs non-custodial. Custodial is easier to manage, or less friction, but a lot higher risk.
There’s a popular saying in bitcoin which is “not your keys, not your coins”. If your bitcoin is stored on a custodial exchange, and that exchange is hacked or goes out of business, you lose access to your bitcoin, custodial also allows your government to lock you out of access from your bitcoin. Non-custodial also implies self-sovereignty, where only you control the private key to your bitcoin, and no one can take it away from you. However, this comes with a steep learning curve, as numerous people have lost their private keys. Therefore, it’s crucial to manage backups in case of a disaster, ideally in a foreign jurisdiction to safeguard against catastrophes like earthquakes or hurricanes.
Let’s dive-in with the non-custodial exchanges, which are the best ideally, if you’re ready to put in the work for self-soverignty. The two main players in Canada are BitcoinWell and BullBitcoin, with Bitcoin Well having the lowest spread in Canada – in other words, this is the cheapest place to buy bitcoin in Canada as of writing this.
The easiest custodial on-ramp to use is Shakepay if you’re Canadian, otherwise I recommend Kraken and finally Coinsquare. If you’re American, check out Coinbase. There are hundreds of on-ramp exchanges around the world, I recommend using an on-ramp exchange in your own country for a bunch of reasons I won’t detail here.
Once you start to sign up for one of these websites, you’ll notice that once you begin the process there’s something different about these websites than most websites you sign up for, and that’s called the Know Your Customer or KYC process. KYC is needed on all legal on-ramp exchanges as the KYC process is used for anti-money laundering (AML) and counter terrorist financing (CTF) purposes. In order to comply with KYC, they’ll likely ask you to send a picture of your government ID (license/passport) and a recent or live picture or video of yourself. Once you complete this process, it will be sent to them, and they require a human to verify it, so it’s not uncommon to take a few days, although sometimes you’ll be verified in minutes.
I’m going to assume you’ve now been KYC verified on your local on-ramp exchange. If not, go back and start this process now as this is the biggest time delay in getting you started.
Now that you have a verified account, you’ll want to send your local currency from your bank to the exchange. In the case of Shakepay, you can link it to your bank account so you can send or receive money whenever you want. If you’re using Coinsquare, you can send money via Interac e-transfer. Each exchange has its own capabilities in terms of how you can send it money. This is the second biggest delay usually, so go through this process now if you plan on buying bitcoin. With some exchanges, like Coinsquare, they put a 3 day hold when your money arrives. With Shakepay, you can use it right away. I would only send a small amount like $100 your first time, until you’re comfortable putting money in, and taking it back out of the system through the off-ramp process.
But wait, there’s one more thing to learn, and that is that if you leave your cryptocurrency sitting on the exchange, and something happens to that exchange (I lost a lot of money when QuadrigaCX went down while trying to complete a withdrawal), you lose everything you owned there, and that will make you sad. So what you want to do now is create a wallet on a dedicated device, but that’s too much for now, so I’ll just link to Bitcoin.org’s list of Bitcoin Wallets. The one important thing to note about choosing a wallet is that a “hot wallet” is a wallet connected to the internet, convenient for trading, and a “cold wallet” which is a wallet which is offline and can even be written down on a piece of paper. I recommend for any cryptocurrency you don’t plan on actively using over the next month be moved to a cold wallet, also known as cold storage, until you’re ready to do something with it again.
OK OK one more little last thing I’ll note, is you should sign up for 2fa/mfa on your exchange, here’s how to do it on Shakepay. The advantage of 2fa is that even if someone hacks your password to that platform, they still can’t access your account. You can use a popular 2fa authenticator like Google’s or Authy, but I use Airsecure as it allows you to own these one time passwords, and it’s decentralized which is cool – no single source central company involved.
If you have any quick questions, you can always reach out on Twitter. Again, if you want to understand this more in depth reach out, as I regularly run practical buying bitcoin classes where I walk everyone through the entire process and answer any/all questions you have along the way.
Disclosure: For many of the above links, I’ve used a referral code, so I may receive a bonus if you click that link and buy some bitcoin, and you may receive a bonus too, depending on the platform.