How Can I Buy Cryptocurrency In Canada?

How Can I Buy Cryptocurrency In Canada?

Kalkine Media

Buying any cryptocurrency like bitcoin

Question: What are the rules surrounding cryptocurrencies in Canada?

Question: Are cryptocurrency wallets different than exchanges?

Question: Which is the best cryptocurrency to buy?

Question: How can I get cryptocurrency?

Buying any cryptocurrency like bitcoin, ether or dogecoin is easy. One needs to create an account with any exchange like Coinbase or Binance. Money can be added digitally in this account, which is used to purchase cryptocurrencies. But before trading in cryptocurrencies, it is important to have some basic knowledge regarding this highly popular investment option.

Not all trades in cryptocurrencies lead to profits. One can mint a lot of money, but losses also occur. Despite its volatile nature, many are trading cryptos to make quick bucks. Today, let’s discuss frequently asked questions on cryptocurrencies.

Question: How can I get cryptocurrency?

Answer: There are multiple ways of investing. The most common way is to use the services of any crypto exchange. Not one or two, there are nearly a dozen exchanges where Canadians can trade digital currencies.

Coinbase is by far the most popular crypto exchange. Based in the US, the company is listed on Nasdaq under symbol ‘COIN’. The cryptocurrency, Dogecoin, made popular by Elon Musk, surged nearly 20 per cent when Coinbase recently listed it on its exchange. This is popularly referred to as the ‘Coinbase Effect’.

Question: Are cryptocurrency wallets different than exchanges?

Answer: One can either store the digital currency bought on the same exchange or withdraw and store it in a crypto wallet. A couple of months back, some crypto exchanges in Turkey suddenly went out of business. All crypto holdings of users got stuck. To mitigate such risks, one can choose to avail the services of any cryptocurrency wallet.

Crypto wallets can be hot or cold depending on their features. Hot wallet is connected to the internet and can make the stored digital currency vulnerable to online hacks. By contrast, cold wallets are physical wallets like USB device. Cold wallets are comparatively safer but expensive than hot wallets. Trust wallet is a popular hot wallet, while Ledger Nano, Trezor, and Exodus are some popular cold wallets.

Question: Which is the best cryptocurrency to buy?

Answer: It depends. Bitcoin is the most popular, but it is not always the most profitable for investors. In April 2021, bitcoin surged to all-time high of US$64,895. It has since lost nearly 40 per cent of its market cap.

Recently, Samsung confirmed they will use Theta’s blockchain to provide video streaming services to users of its smartphones. Wider endorsement of any blockchain tech can lift prices of its allied cryptocurrency.

Question: What are the rules surrounding cryptocurrencies in Canada?

Answer: Neither bitcoin nor any other cryptocurrency is legal tender in Canada. However, trading digital currencies is not considered illegal. The Canada Revenue Agency (CRA) treats them as commodity. Any person who earns profit on their trade has to show it as business profit or capital gain. Disposition of any cryptocurrency holding attracts tax. Other than trade, even activities like crypto mining and operating crypto exchanges are also considered as cryptocurrency business for the purpose of income tax. Any profit or loss arising from these activities has to be reported to the CRA.

The CRA also mandates that any person acquiring a digital currency or disposing it must maintain records. These records must be preserved for at least six years from the year when they attracted tax provisions.

A Word of Caution

Just like company shares or any other investment instrument, cryptocurrency trading can be risky. The value of holdings can swing any way depending on investors’ sentiments. One has to exercise extreme caution while trading in these highly speculative assets.