While it’s not as simple as buying groceries, buying cryptocurrency in Canada is probably easier than you think.
Because cryptocurrency itself is such a new concept, banks and lawmakers are still coming to terms with it, and laws governing its acquisition and trading differ from jurisdiction to jurisdiction.Although cryptocurrency itself was originally designed in part to overcome those kinds of restrictions, some places treat it like a speculative investment, and some more like an actual currency.
The Canadian government has a pretty good explainer page online that you might want to bookmark if you’re getting into cryptocurrency. It clarifies the basics, like the fact that cryptocurrency is not recognized as “CURRENCY-currency” in Canada, but as an investment vehicle like stocks. As such, when your holding goes up and you sell, you will owe capital gains tax on the money you make in that trade, just as if you sold shares that you bought at $10 apiece for $100 apiece. You owe capital gains taxes on $90 for each share. And if you’re paid for goods or services in cryptocurrency, that’s taxable income, just like barter. And the government uses exactly the same rules for it, rules which have been in place for many, many years. There’s even a lawyer who accepts payment in Bitcoin!
To buy, hold, trade, or sell cryptocurrency, you’ll need a wallet, either an online or offline digital account in which to store the cryptocurrency. A “cold” wallet is one that’s in your actual physical possession, like a USB stick or a file stored on a hard drive that you physically own and have access to, that is not connected to the internet. A “hot” wallet is one that’s maintained for you by a cryptocurrency exchange (like the stock exchange, but just for crypto) and has more risks attached to it. When you hear about wallets being drained, those are generally hot wallets. The worst that can happen with a cold wallet is it could get wiped by a magnet or electromagnetic pulse, or you could lose it somewhere. But unless you wander foolishly through the streets holding it up and proclaiming “My Bitcoins are inside! I’m a billionaire!” it’s unlikely your cold wallet will ever be attacked, and just in case that does happen, many cold wallets can usually be recovered with a recovery password.
Now that you’ve got an awareness of the legalities, and a wallet in which to store your cryptocurrency, there are several ways you can get your (metaphorical) hands on cryptocurrency to put in said wallet.
The easiest is a Bitcoin ATM, which is just what it sounds like. Your money goes in, and Bitcoin that you purchase at market price (plus a markup from the ATM company) goes into your wallet. Sweet, simple, and so Canadian. We love our ATMs. But you do pay extra for the convenience, and most Bitcoin ATMs are one-way; you can put cash in and get Bitcoin in your wallet, but few of them allow you to take Bitcoin out of your wallet and spit out some cash for you.
You can also get cryptocurrency by getting involved as a miner. With a specialized mining rig, you can earn income in the cryptocurrency you mine, although nowadays to generate substantial income this way you’ll need significant numbers of machines working 24/7.
There are several online payment systems that allow you to accept online payments in cryptocurrency instead of dollars, and this can be useful when your clients are abroad and you don’t want to deal with international money transfers.
The most common way to obtain cryptocurrency is simply to buy it on a cryptocurrency exchange. There are over a hundred different cryptocurrency exchanges, with the largest ones, like Coinbase or Canadian based Coinsquare.io, dealing in multiple different cryptocurrencies. Thus, if you need to exchange your Dogecoin for Litecoin, they can make that deal happen, for a small fee. Many exchanges will help you create a wallet, and even store it for you online if you wish, to make it easier for you to invest. You can generally buy in using money from online payment systems like Paypal, credit cards, or direct transfers from your bank.
As the market gets hotter and hotter, big banks like Goldman Sachs are looking into cryptocurrencies and particularly asking, when they create and run markets all the time, why they’re not bigfooting their way into this business as well. Until they do, fees are generally low, and the upside potential is immense. Getting started may get easier and thanks to simplifications driven by major cryptocurrency exchanges, it shouldn’t take you more than ten minutes to get started in this exciting new world of cryptocurrency!
disclaimer: buying cryptocurrencies can be risky. We are not making any recommendation to buy or sell cryptocurrencies.
