What is Bitcoin?
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009. It is the most famous crypto currency and the leader in terms of marketshare. However, the increased usage makes Bitcoin not a good crypto currency for small transactions. However, this may change as the much anticipated Lightning Network is phased in this year.
1. Create account on an exchange
The best way to buy Bitcoin in Canada is with a cryptocurrency exchange that accepts CAD. However, since Bitcoin is the most popular cryptocurrency, you can buy it a number of ways such as Bitcoin ATMs and even storefronts.
Create an exchange Account
In comparison to other cryptocurrencies buying Bitcoin with an exchange is pretty easy.
We recommend QuadrigaCX.
However, if you want to buy Bitcoin, without a account verification delay, and if you want to buy only a small amount ($250 CAD or less) consider using Coinbase. It will be the fastest method, however, you will pay a slightly higher fee in comparison to QuadrigaCX.
For a comparison of the Canadian exchanges and a more comprehensive guide on how to pick one, see the Exchanges Guide.
Verify and Fund
In order to fund your exchange account you will need to verify your identity. This often involves sending in copies of your drivers license, a utility bill, and in many cases a selfie of you holding your ID. This is normal for Canadian exchanges.
2. Buy your Bitcoin
Once your account is funded all you need to do is place an order to buy. You have two options, a market order or a limit order.
Place an order for Bitcoin on the Exchange
The next step is to actually buy Bitcoin. This should be fairly obvious once you have access to your account.
For small or quick-fill orders, where setting a limit price may not be of great importance, you can buy using a market order. For larger trades we recommend using a limit order and wait for it to fill at a specific price you desire.
If you prefer, you could buy Bitcoins at a Bitcoin ATM. Just make sure you are prepared with a wallet address before you go. Here is a listing of Bitcoin ATMs.
Coin ATM Radar - Canada
Be aware rates and fees of Bitcoin ATMs make it one of the most expensive ways to buy Bitcoin.
3. Store your Bitcoin in a wallet
It is best practice to store your cryptocurrencies in a wallet that is not hosted with a exchange. If you have more then $1000 in cryptocurrencies, you should strongly consider storing the funds in a wallet that is not connected to the internet, a cold wallet (hardware). Each cryptocurrency has it's own wallet.
If you are just getting started you will probably want to use a software wallet. They are typically free and are considered more secure than leaving Bitcoin on an exchange.
A software wallet we have used in the past is Blockchain. It was easy to use and also supports Ethereum and Bitcoin Cash.
Feel free to do a google search to research what wallets are available and know what the options are.
Download and install whatever wallet you decide on using. Then withdraw your Bitcoin from your exchange account. It is common for a small fee to be associted with the withdrawal.
The safest way to store Bitcoin, or any cryptocurrency, is with a hardware wallet that is not connected to the internet. This is to prevent it being stolen or hacked from a exchange or a wallet connected to the internet.
A common hardware wallet for Bitcoin is the Ledger Nano S.
Leaving it on an Exchange
This is generally not recommended. However, you might want to do this if you are actively trading and need access to Bitcoin. Be aware you are taking an extra risk. Exchanges have been known to get hacked or disappear.
The advantage of doing this, is instant access to your Bitcoin, and saving the fees associated with transactions and withdrawing.
If you are going to be doing this, make sure you have 2 factor authentication enabled and that you are using a reputable exchange.
- Create an account on a Canadian exchange
- Place an order for Bitcoin
- Send your Bitcoin to a wallet to keep it safe