What is Bitcoin?
Bitcoin is a decentralized cryptocurrency originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched soon after, in January 2009.
Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created, according to Nakamoto’s own words, to allow “online payments to be sent directly from one party to another without going through a financial institution.”
Some concepts for a similar type of a decentralized electronic currency precede BTC, but Bitcoin holds the distinction of being the first-ever cryptocurrency to come into actual use.
Bitcoin is a non-profit blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a "smart economy" with a distributed network. On the Bitcoin blockchain, users are able to register, trade, and circulate multiple types of assets. Proving the connection between digital and physical assets is possible through digital identity. Assets registered through a validated digital identity are protected by law.
1. Create exchange account
In order to buy Bitcoin in Canada you only need a local exchange account. As all of the local exchanges sell Bitcoin. This is not the case for the majority of the other cryptocurrencies that are offered. Since Bitcoin is the most popular cryptocurrency, you can buy it a number of other ways such as Bitcoin ATMs and even storefronts. However, be prepared for higher fees compared to exchanges if you decide to go thaty route.
Create Local Exchange Account
We currently we recommend Shakepay. Be prepared for a verification delay that can range from a few hours to a few days normally. During peak interest periods delays for verification can take weeks.
If you want to buy Bitcoin right now, and if you want to buy only a small amount ($375 CAD or less) use Coinbase.
For a more comprehensive guide and comparison of the various exchanges, see the Exchanges Guide.
Verify and Fund
In order to fund your local exchange accounts 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 ask for verification on exchanges.
As for verification on global exchanges, the verification is usually faster and less intense. For example on Binance you do not need to verify if you are withdrawing 2 BTC or less.
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. Storing your Bitcoin
If you just bought some Bitcoin you are currently storing it on the exchange you bought it on. This is OK if the value is small. However, if you own a significant amount it is best practice to transfer your cryptocurrencies to a wallet that is not an exchange.
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 a exchange.
Feel free to do a google search to research what wallets are available and know what the options are.
Once you have decided on a wallet, follow the instructions to get it setup 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.
Consider looking at the Ledger line of hardware wallets. They have been in the industry a number of years and offer one of the widest selections of devices.
Leaving it on an Exchange
This is generally not recommended. However, you might want to do this if you are actively trading Bitcoin. Be aware you are taking an extra risk. Exchanges have been known to get hacked or disappear, search QuadrigaCX scandal.
The main advantage of doing this is instant access to your Bitcoin, and saving the fees associated with transactions and withdrawing.
Always consider the reputation and size of the exchange if you are storing a cryptocurrency asset on it.
Generally speaking, I do not keep a balance on any of the local exchanges. If I am going to hold a balance of a cryptocurrency coin/asset on an exchange it will be Binance as they have the most robust platform. However, use this information at your own risk. The safest place for your crypto assets is a hardware wallet like Ledger.
Regardless of the exchange, if you are holding assets on the exchange, make sure you enable two factor authentication and use a separete secure password on the account.
- Create an account on a local exchange
- Place an order for Bitcoin
- Send your Bitcoin to a wallet to keep it safe