The world of cryptocurrency has taken Canada by storm, offering a new avenue for investment and financial exploration. But how do you actually buy, sell, and trade these digital assets? Enter the Canadian crypto exchange, your gateway to the exciting world of crypto. This guide will break down how these platforms work and equip you with the knowledge to choose the right one for your Canadian crypto journey.
Canadian Crypto Exchanges: Your Digital Asset Matchmakers
Imagine a bustling marketplace dedicated solely to cryptocurrencies. That’s the essence of a Canadian crypto exchange. These platforms connect buyers and sellers, facilitating the exchange of digital assets like Bitcoin, Ethereum, and countless others. Unlike traditional stock exchanges, Canadian crypto exchanges operate 24/7, reflecting the global nature of the crypto market and catering to our nation’s diverse time zones.
Here’s a closer look at the key functions of a Canadian crypto exchange:
- Matching Orders: Canadians place buy and sell orders for specific cryptocurrencies at their desired prices. The exchange’s sophisticated matching engine connects buyers and sellers with compatible orders, ensuring a smooth and efficient trade.
- Trading Options: Some exchanges offer basic “spot trading,” where you buy or sell crypto at the current market price. More advanced platforms might provide margin trading (using borrowed funds) or derivatives (contracts based on the future price of crypto), catering to experienced investors.
- Fiat Gateway (Optional): Not all exchanges allow deposits and withdrawals in Canadian dollars (CAD). Some require users to first deposit funds in another cryptocurrency. Look for platforms with a fiat gateway if you want to buy crypto directly with your CAD.
- Security Features: Reputable Canadian exchanges prioritize security with robust measures like two-factor authentication, secure storage for user funds, and regular security audits. This ensures your hard-earned Canadian dollars and digital assets are well-protected.
Choosing the Perfect Canadian Crypto Exchange: Tailoring Your Experience
With a growing number of Canadian crypto exchanges, choosing the right one depends on your individual needs and priorities. Here are some key factors to consider as a Canadian investor:
- Regulation and Security: Peace of mind is paramount. Ensure the exchange is registered with a recognized financial body in Canada, such as the Canadian Securities Administrators (CSA). Look for strong security features and a proven track record of keeping user funds safe.
- Supported Cryptocurrencies: Consider the variety of cryptocurrencies offered by the exchange. If you have your heart set on specific coins, like DeFi tokens or established players like Bitcoin, ensure the platform supports them.
- Trading Fees: Crypto exchanges typically charge fees for various transactions, including deposit/withdrawal fees, trading fees, and maker/taker fees (depending on whether your order adds liquidity to the market). Be a savvy Canadian and compare fee structures across different platforms before making a decision.
- Ease of Use: The platform’s user interface should be intuitive and user-friendly, especially if you’re a crypto newbie. Look for clear navigation and straightforward features to enhance your Canadian crypto experience.
- Customer Support: Reliable and responsive customer support is crucial in case you encounter any issues with your account or trades. Having a dedicated Canadian support team can be a big advantage.
Different types of Bitcoin Exchanges in Canada
Many people may associate an exchange with a traditional platform like Quest Trade or Interactive Brokers. These online exchanges are used to trade traditional Stocks such as Google or Apple. However these platforms do not have the ability for you to purchase and trade Bitcoin directly. For this reason there is a plethora of crypto exchanges. Some, which are similar to the traditional online exchanges, some of them act like a storefront currency exchange, peer to peer platforms and lastly Bitcoin ATM’s.
Which Cryptocurrency Exchange is Right for You
There are several things to take into consideration when choosing the right Bitcoin exchange. Some of these things include security, convenience, customer support, availability, liquidity, and fees.
Online Crypto Exchanges
There are a few options for Canadian who are looking to buy, sell, and trade crypto online. Here are some pro’s and con’s of using an online trading platform
PRO’S
- These exchanges are available 24/7. All that is required is for you to create an account. Most of these exchanges allow you to fund with Canadian dollars or send cryptocurrencies to the exchange for you to trade.
- The fees associated with online exchanges are usually cheaper however this is not always the case and the user would need to confirm
- Relatively simple to use. Most of these platforms have a simple interface with a buy and sell button. Some of the platforms allow a user to switch from a simplified exchange interface to an advanced interface for people who like to look at charts and day trade
- Some more reputable Exchanges include VirgoCX and Coinbase.
CON’S
- Online exchanges carry certain risks and most of the horror stories which are associated with millions of dollars of loss often happen on online crypto exchanges one of the more recent ones is the FTX scandal.
- There is a risk of hacks, your crypto is kept online and on the exchange. Hacks have led to many online exchanges shutting down
- Loss of Funds or Crypto. Since the owner(s) of the online platforms hold your Bitcoins, crypto, or currency, they are able to steal it at anytime. In the past 5 years hundreds of owners have taken peoples money and have either disappeared or have been caught by authorities. For the most part your investment is gone
- There is a lack of customer support sometimes people wait weeks for a simple answer
- The onboarding and withdrawal process can be tedious. Often it takes days if not weeks for you to get verified. Then there is a trial period where limitations are put on your account so you can only purchase and withdraw certain amount. The crypto market is highly volatile and can drop over 50 percent in one day. This can lead to potential losses.
- Online exchanges make most of their money off of their trading fees. Trading is highly promoted and so are the thousands of garbage coins. Making a steady income off of trading cryptocurrencies is akin to winning the lottery. It is more difficult than trading penny stocks. Many people get sucked in by the online exchanges advertising gimmicks and eventually lose their investment. Like the casino the house wins.
Online Exchange Summary
Online exchanges can be used if a person is cautious or has quite the risk appetite. Or are more technically inclined and motivated. Everyone at Calgary Bitcoin has an account with an online exchange however we use these accounts in different capacities. For instance some of us trade a currency and immediately withdraw it from the exchange and into one of our personal hardware crypto wallets, Therefore significantly reducing any risk of loss or hacks. We have members of our staff that have lost over 6 figures in previous online scams one of them being the QuadrigaCX scandal. Believe us when we say it happens.
Peer to Peer(p2p) Exchanges
Peer to peer exchanges used to be more popular many years ago. However these platforms are still used today. Peer to peer basically means a person buying or selling Bitcoin with another person. This is usually completely done without any middlemen or entities involved. Fees are negotiated by the buyer and seller.
PRO’S
- Can meet face to face and remain anonymous but this could also be a con read further
- Fees can be negotiated accordingly if a fee is not to your liking you can always find someone else
- Some platforms such as the now closed Local Bitcoins used to offer the ability to buy with E-transfer
CON’S
- In order to buy and sell cryptocurrencies in Canada the minimum requirement is to have an MSB and follow the rules set by FINTRAC, therefore making peer to peer Bitcoin transactions technically illegal
- face to face meetings with someone can be scary, they could take off with your cash or crypto
- No customer support
- If loss is incurred there is nothing you can really do
With crypto being regulated more everyday peer to peer exchanges especially in developed countries like Canada will eventually die out. Just like currency exchanges, banks, and places like money mart, licenses are required to deal in crypto hence making it illegal to be involved in these types of transactions in Canada without the correct licenses. There are still platforms available online that accept E-transfers or face to face meetings however i would do so with caution.
Bitcoin ATM
Bitcoin ATM’s offer a pretty convenient way to buy and sell crypto. These machines can be found in all sorts of places throughout most cities. In Edmonton, Calgary, and Vancouver there are over a combined 600 Bitcoin ATM’s. However if its more than convenience you are looking for then these machines may not be the right choice.
PRO’S
- Can be found in a lot of different places
- relatively easy to use
CON’S
- Either than ease of use and there being a lot of ATM’s there aren’t really anymore pro’s to using a Bitcoin ATM in Canada
- The average fees are from 10-20% and sometimes there are hidden fees called spreads within the price of the coin. So the crypto would be higher priced for people buying and lower priced for people selling
- Although conveniently located the locations aren’t always the safest places. Many cases of personal theft have occurred at Bitcoin ATM’s. Many of these ATM’s only take one bill at a time hence people can be watching you insert bill after bill
- They all have a limit. There is only so much cash one of these ATM’s has in them or only so much cryptocurrency you can buy from them
- Customer support is available but depending on the ATM operator this can range from none at all to average suuport
The first Bitcoin purchased by the author is from a Bitcoin ATM but this was over a decade ago. He would not use one anymore since there are other options available. Still if convenience and proximity to your location is what you are after nothing beats a Bitcoin ATM.
Bitcoin and Cryptocurrency Brokerages or Retail Storefront Locations
There aren’t many currency exchange type of places for cypto. Most of them are reputable and have been in business a long time. They offer a happy medium between online exchanges and Bitcoin ATM’s.
PRO’S
- safe, secure, and private. Most locations are in a safe building like most retail stores.
- Trust is built. Sort of like going to a bank or a currency exchange, there is human interaction and you get to put a face and a place to associate this interaction
- Self custody of cryptocurrencies. These storefronts usually do not store your crypto. The crypto is sent to a wallet you provide. The crypto is as safe as the person buying or selling it
- Customer support. You can’t beat the customer support of a live person at a storefront or office.
- Fees are not as cheap as an online exchange however they are not as expensive as a Bitcoin ATM.
CON’S
- Not always the most convenient. These are not located everywhere like ATM’s, however for non cash buys and sells they do offer other options such as e-transfer or wire transfer, so transactions can be done completely remotely
- Fees are not as cheap as an online exchange, the business model and clients attract different types of people.
- Like Bitcoin ATM’s these retail storefronts are not 24/7 and close during regular hours, like our store Calgary Bitcoin.
Important Reminders for Canadians:
- Cryptocurrency is a volatile asset class. Invest responsibly and only with what you can afford to lose.
- Store your cryptocurrency securely. Consider using a private hardware wallet for long-term holdings.
By following these steps and keeping the mentioned factors in mind, you, as a Canadian investor, can confidently navigate Canadian crypto exchanges and participate in the exciting world of digital assets. Remember, your research and due diligence are crucial before investing in any cryptocurrency or using any exchange platform. Happy trading, eh!