What You Need to Know About Cryptocurrency and Bitcoin Exchanges in Canada
If you haven’t heard of cryptocurrency, then you haven’t been listening. Lately, these new types of digital currency have been all the rage – made famous by Bitcoin when the currency took off to an unprecedented level. Bitcoin allowed those who entered into the game early enough to turn spare change into millions of dollars. The immensely successful digital currency spurred the creation of a lot more – and now users have a lot of options available at their disposal to choose what they want to invest in.
Of course, for such a market of a plethora of digital currencies to function, this makes the necessity of cryptocurrency exchanges prevalent. When you start trading Cryptocurrencies here is everything you need to know about how to buy bitcoin in Canada, and how to choose the best bitcoin exchange in Canada for your needs.
What Are Cryptocurrency Exchanges?
These days, there are a lot of different Canadian options for cryptocurrency that people are interested in investing in. With the help of cryptocurrency exchanges, this is all made much more easy, convenient, and lucrative (there are even crypto auto trading bots that can do most of the heavy lifting for you).
Cryptocurrencies are an emerging industry. Some people know a lot about how this industry works, while others are absolutely clueless as to how to navigate this new world. The basics, however, are simple once you have done a little bit of research. It starts with exchanging your typical currency for the cryptocurrency that you choose. To make this happen, you need to use a cryptocurrency exchange. Start by finding one that best fits your purposes.
Before getting too deep into the research process of finding the right cryptocurrency exchange that you need, you must first understand the different types of exchanges you might encounter, what their benefits are, and the risks that some of them might pose that you need to watch out for.
If you are just getting your feet wet with cryptocurrencies, it is a good idea to understand the different options available when it comes to exchanges. They pose both rewards and risks, depending on how you choose to obtain your coins. It’s also definitely worth doing some research into Cryptocurrency wallets as they will make you feel a lot safer trading long-term. Here is a little insight:Peer to Peer vs Traditional
Peer to peer and traditional are two different types of currency exchanges you might encounter during your search for the right exchanges in Canada.
First, traditional exchanges are organizations that purchase and sell cryptocurrencies as a business. These types of exchanges often offer the best rates to their users. On the other hand, since these organizations are designed to transmit, facilitate, and exchange cryptocurrencies, they impose many procedures and regulations, both to protect themselves from falling victim to fraud and to follow the law.
You will frequently encounter wait times, either to transfer funds or when trying to verify your identity. Once you become an established client, the exchange will lessen the amount of time that passes before you receive your cryptocurrency.
The reason all of this can be so time-consuming is that there are limited payment options available through traditional exchanges. Through them, the only way to make the exchange from your typical currency to a traditional currency is to make a bank transfer of your funds to the exchange. It takes time for this transfer to clear, delaying the amount of time it takes for you to receive the cryptocurrency. If you think a traditional exchange is the right option for you, it’s important to carefully research the requirements that the exchange imposes and make sure it is still able to fit your needs.
Peer to peer exchanges, on the other hand, are platforms that allow you to exchange your typical currency for cryptocurrency through a transaction that takes place between two private individuals. These exchanges have a lot of things in common with traditional exchanges. However, they do come with their own benefits and risks.
With peer to peer exchanges, it is common for the verification steps and wait times to be less than what you would find from a traditional exchange. Using a peer to peer exchange essentially means taking on different risks for increased benefits. As you will be conducting private transactions with other individuals, you will not be afforded the protections that come with trading with a reputable, Canadian (and more traditional) exchange. In most cases, transactions on peer to peer exchanges are completed smoothly, with thousands of successful trades conducted on a daily basis. Centralized vs Decentralized Exchanges
Despite the overwhelming diversity in modern crypto exchanges, there are only two main types of crypto platforms: centralized (CEXs) and decentralized exchanges (DEXs).
The best way to understand how CEXs work is through the analogy of any centralized bank: they’re owned and run by a highly regulated entity, so in order to use its intermediary services, you need to follow the corporate rules. This includes a full ID verification for AML/CFT compliance and predetermined fees per transaction. In return, you’ll be able to complete the transaction in a user-friendly manner with full guidance and support through the entire purchase and sale process.
As the most popular marketplace in the crypto ecosystem, centralized exchanges have been present since the earliest Bitcoin stages, and according to market cap figures, they’re the backbone of the crypto industry.
On the other hand, DEXs transactions are immutable and trustless, executed without any interference of a centralized, human-controlled authority. Instead, DEXs use a P2P protocol that allows direct transactions between the buyer and the seller that are handled by self-executing smart contracts.
As you can see, DEXs are much closer to the original blockchain idea of a decentralized financial system. In fact, DEXs have numerous advantages over CEX in terms of privacy and self-reliance when it comes to coin storage. However, they lack a user-oriented approach and usually come as an alternative to traders after gaining some expertise in crypto trading. Features to Look Out for When Choosing an Exchange
Now that you know a little bit about the two main types of exchanges you will encounter during your time trading with cryptocurrency from Canada, the next step is to start looking at specific exchanges. Before you commit to a certain one, though, it’s important to know what features to look for in the exchange of your choosing – and which ones to avoid.
Here are the things you should consider before settling on an exchange option:
- The location of the trading partner or exchange (If you’re in Australia for example, read our best Australian exchange comparison. If you’re based in the United Kingdom, check our top UK cryptocurrency exchange page, then we’ve got our best NZ crypto exchange comparison for New Zealand, and for the United States we’ve got our best US crypto exchange comparison)
- History and reviews you find online
- Verify the legitimacy of the exchange
- The size and strength of the exchange
The Best Bitcoin Exchanges
Bitcoin is the world’s first and most popular cryptocurrency which makes it super easy to find an exchange that supports and sells this coin. It doesn’t have to be an advanced trading platform or one that lists a variety of altcoins together with Bitcoin – all you need is a straightforward, quick, and cheap Bitcoin exchange.
Most of the time, altcoin exchanges try to compensate for the risk they’ve taken in listing some volatile assets by reducing the number of payment options. On the other hand, Bitcoin exchanges such as Bitbuy, the most popular Canadian crypto exchange, let you fund your account via Bank Wire, Interac eTransfer, or Flexpin.
As a Canadian trader, the best thing about using a local exchange like Bitbuy is the ability to pay in your native currency, i.e. the Canadian Dollar (CAD). The platform is very user-friendly and allows customers to choose between a basic (Express Trade) and an advanced trading system (Pro Trade).
Bitbuy is definitely our number one choice but it isn’t the only Canadian exchange where you can purchase BTC. We recommend checking out Coinberry and NDAX as well. Both of them offer Bitcoin and a couple of other prominent cryptocurrencies at affordable fees. The Best Altcoin Exchanges
The altcoin market is extremely popular with experienced traders who like the thrill that comes from speculating on a lesser-known coin’s price. These coins are a double-edged sword: they have a low market cap and are almost worthless at the start, but if sufficient attention has been drawn to them, it drives their price up, and they turn into a lucrative investment.