How To Buy Bitcoin In Canada (2022 Updated) | Wealthsimple (2024)

The short answer is to sign up to a crypto trading platform, fund your account and start trading.

Cryptocurrencies, like bitcoin, are entirely digital currencies that can be used as online versions of cash. They can be bought and sold using a crypto trading platform or online exchange. Transactions using cryptocurrencies are highly secure and can’t easily be shut down by governments. And though transactions are public—everyone can see that someone sent $10 worth of bitcoin to someone else—the identities of the sender and recipient remain anonymous.

Many people buy bitcoin to send money around the world cheaply, unanimously and securely. Because the whole economy is virtual, cryptocurrency transactions come with very low fees compared to wire or bank transfers. Some people use cryptocurrency for buying narcotics online anonymously. Some invest in bitcoin as a store of value (some investors consider it similar to gold), and others look to take advantage of crypto's volatility with the hopes of winning big.

As with an investment, buying bitcoin comes with risk. And given the volatility of the crypto market, the risk can be very large. Cryptocurrencies, for the most part, aren’t backed byfiat currencies, and their values are almost entirely dependent on market speculation. Interested? Here’s how to get involved.

Buy and Sell Bitcoin, Ethereum, and dozens more cryptocurrencies with Wealthsimple. Sign up and Trade here.

1. Figure out how much bitcoin to buy

The first step is to actually figure out how much you want to invest in bitcoin. (It's probably best if you already have a solidemergency fundandretirement plan too.) One way some folks advise thinking about it is to buy only as much as you’re willing to lose. When you trade bitcoin there’s a chance you could make—or lose—a lot of money. Many people havelost a fortune to bitcoin, and some have becomeovernight millionaires.

When it was first created, bitcoin used to cost just fractions of a penny. But in the intervening years that price has gone way up. Its all-time high was over US$60,000 in late 2021. As of August 23, 2023, it was around $26,000.

2. Decide where to buy bitcoin

Once you've decided you want to buy bitcoin, here are options for where to get your hands on it:

Crypto trading platforms

You can use a crypto trading platform to buy and sell cryptocurrency easily and often cheaply. These providers often bring together multiple exchanges to get their clients the best bitcoin prices. Crypto trading platforms normally don't allow you to transfer your bitcoin to someone else. You generally have to sell your bitcoin to withdraw the money you invested.

Online exchanges

A cryptocurrency exchange is a digital marketplace where cryptocurrencies are bought and sold for other cryptocurrencies. This is where 99% of cryptocurrency trades take place. You can trade hundreds of cryptocurrencies, including stablecoins — coins pegged to fiat currencies, like the US dollar.

There are a few things to watch out for when choosing to trade through exchanges, however: exchanges technically control the crypto that’s held in exchanges—even if it’s in your wallet on the exchange—so, should the owners decide, they could drain the exchanges of user funds.

Bitcoin ATMs

There are a small number of kiosks that allow users to purchase bitcoin using debit or credit cards.Bitcoin ATMsaren’t particularly common yet. They sometimes charge very high fees, and can have less than ideal exchange rates.

Peer-to-peer trading

You can buy your bitcoin directly from other people on marketplaces, trading them for anything you want. But watch out for scammers: On some sites it’s possible to sell bitcoin for Xbox Live gift cards, although sellers frequently receive worthless cards in exchange. Since some systems are not totally secure, use good judgement before handing over a dollar.

Over the counter (OTC)

Over-the-counter trading occurs outside of exchanges, just like peer-to-peer trading. But OTC trading generally refers to brokers that help high-net-worth clients trade millions of dollars worth of cryptocurrencies. This means that their trades probably aren’t registered on the public ledger, making them more discreet.

In person

This is not a very popular option, but it exists. You can find someone in your area who’ll take cash for bitcoin. In France, they’ve formalised this process: it’s possible tobuy vouchers for cryptocurrencies in cornershops.

3. Choose a bitcoin exchange or trading platform

Buying cryptocurrencies from exchanges or trading platforms is perhaps the simplest, safest, and most convenient way to buy. There are many exchanges and platforms out there, and they all come with distinct advantages and disadvantages. Educating yourself about the features of each will make your first bitcoin experience much smoother.

It’s not just the price of bitcoin you’ve got to take into account; fees come in all shapes and sizes. Exchanges will sometimes ask for a fee to deposit or withdraw cryptocurrencies, alongside some additional trading fees.

There are generally two sorts of trading fees: market maker fees — fees that are paid when youaddliquidity to an exchange’s order book, and taker fees — fees paid when you take liquidityawayfrom an order book. Trading fees generally decrease the more bitcoin you trade, encouraging larger investments.

Some exchanges offer lower fees than others, but these often come at the cost of privacy, security, or insurance. As such, it’s important to gain a more rounded opinion of exchanges before you trade on them. Without sufficient expertise, you might end up with a bad deal.

Though there are hundreds of exchanges, first-time buyers are wise to stick to large, reputable exchanges and trading platforms. When trading a volatile, new currency like bitcoin, you’ll need all the information you can get.

4. Select a Bitcoin Wallet

When possible, cryptocurrencies should be stored in wallets, essentially bank accounts for cryptocurrencies. Importantly, if you store your bitcoin on cryptocurrency exchanges, the exchanges technically have control over the crypto. But if you withdraw to a wallet, you have complete control over your digital assets. This is very important: if you keep your funds in exchanges, there’s a chance that the exchange might go bust, or the owners run away with customer funds.

When picking out a bitcoin wallet, make sure that you consider backup and security features. There are generally two forms of wallets: hot and cold wallets.

A hot wallet is one connected to the internet: if a hacker managed to gain control of it via some malicious code, then they’d be able to get to your bitcoin. But it’s more convenient: these wallets are connected to the internet, via mobile, desktop, or web apps, meaning you can use them straight away. They’re also free.

By contrast, a cold wallet is one that’s not connected to the internet. Cold wallets store bitcoin on something physical, like a USB stick, that you can buy from a shop. This makes them incredibly difficult to hack, and a great long-term storage solution.

Think of the hot wallet as the one you carry to the mall: it’s full of cash, but easier to steal. By contrast, a cold wallet is the equivalent of storing your cash in a safe: it’s very secure, but isn’t very convenient to use.

Buy and Sell Bitcoin, Ethereum, and dozens more cryptocurrencies with Wealthsimple. Sign up and Trade here.

5. Decide how to pay for bitcoin

There are endless currencies and payment methods you can use to buy crypto, from PayPal to Spotify subscription gift cards. Most common payment methods include wire or bank transfer, other cryptocurrencies, and credit or debit cards. Some methods, like other cryptocurrencies or payment cards, are faster than bank or wire transfers, which can take a few days. But remember: paying through a bank transfer from your personal bank account isn’t protected by the same insurance products as a credit card purchase, nor is, obviously, swapping 10 months of Xbox Live.

6. Purchase Your bitcoin

Always remember to invest only in the amount of bitcoin that you feel comfortable with losing money on, and start slowly. Accept that you’re unlikely to become an overnight success, and set time aside to learn the market before making any large investment decisions.

Buy and Sell Bitcoin, Ethereum, and dozens more cryptocurrencies with Wealthsimple. Sign up and Trade here.