Bitcoin and Ethereum Guide for Canadians (2021)

How Canadians should Buy and Sell Bitcoin and Ethereum

HowToBuyBitcoinInCanada

Buying cryptocurrency is complicated, no matter what country you’re from. However, it’s even harder for Canadians, because most of the largest and most reputable exchanges have various limitations on Canadian users. For example, you may not be able to withdraw money to a Canadian account, or certain key trading features are unavailable. Complications like this arise from mainstream exchanges like Coinbase and Binance.

This has led to Canadian exchanges filling the gap. Unfortunately, one of the largest Canadian exchanges had a dramatic incident. Of course, I am referring to the infamous 2018 QuadrigaCX controversy, which resulted in Canadians losing over $190 million dollars. Coinsquare, another Canadian exchange, suffered a data breach and was accused of wash trading. Naturally, Canadians are wary of smaller exchanges.

That’s not to say all Canadian exchanges are bad or dangerous. There are several that have a good reputation and are considered safe, like ShakePay. However, there are certain advantages for using very large and reputable exchanges like Kraken as well. We will get into the process below.

 

THE BEST WAY FOR CANADIANS TO BUY BITCOIN AND ETHEREUM

  1. Open a ShakePay account
  2. Deposit money via Interac e-Transfer or Wire Transfer
  3. Buy Bitcoin or Ethereum using Buy & Sell Feature

Q: Why Shakepay?

A: In our research, there are two viable exchanges for Canadians. Shakepay and Kraken. The reality is that both platforms are equally good for buying cryptocurrency, but we recommended Shakepay for its ease of use. Kraken remains a better solution for selling your coins in exchange for fiat currency due to savings on fees. This will be explained further below.

 

HOW TO SAFELY STORE YOUR BITCOIN AND ETHEREUM

  1. Buy a Ledger Nano S
  2. Follow the setup instructions that come with the device.
  3. Transfer your Crypto coins from Shakepay to your Nano device through the Shakepay App.
  4. Protect your Ledger and your passcode.

Q: Is this mandatory?

A: No. Many people keep their cryptocurrency and their fiat money in their exchange account. However, cold storage (using hardware wallets like the Ledger) is objectively safer. Keep in mind that using such devices does not protect you from phishing attempts.

Q: Does it have to be the Ledger Nano S?

A: No, there are others, but this is the one we’ve been using without issues.

Q: Hasn’t Ledger been hacked?

A: Yes, but it was their servers, and since cryptocurrency is not saved on their servers, this did not put anyone’s holdings at risk.

Q: How does a Ledger store my Cryptocurrency?

A: Your cryptocurrency is not literally saved on your Ledger. Your cryptocurrency is in the blockchain. Think of the Ledger as more of a key than a literal wallet.

Q: What does this have to do with Canadians?

A: Nothing in particular. This is good practice for anyone.

 

HOW CANADIANS SHOULD SELL CRYPTOCURRENCY (LESS THAN 25k)

  1. Open a Kraken Account
  2. Send your Crypto from your Ledger Nano to your Kraken account
  3. Go to Trade. Use the Simple or Intermediate option depending on your comfort level.
  4. Sell in CAD
  5. Withdraw your CAD to your bank account using Bank Frick (SWIFT) to minimize fee. Use EFT if you don’t mind the 0.25% fee. The money will arrive a few days sooner via EFT and this is a slightly simpler process.

 

HOW CANADIANS SHOULD SELL CRYPTOCURRENCY (MORE THAN 25K)

  1. Open a Kraken Account
  2. Send your Crypto from your Ledger Nano to your Kraken account
  3. Go to Trade. Use the Intermediate option and use the Limit order (not market). Familiarize yourself with this process before moving substantial amounts.
  4. Sell in Euro, not CAD or USD.
  5. Open a Euro account at Scotiabank, or another bank that offers Euro accounts.
  6. Transfer your Euros to your Scotiabank account via Bank Frick (SWIFT) option.
  7. Convert Euros using an exchange service such as Knightsbridge FX.

 

FAQ:

Q: Why Kraken? Weren’t we using Shakepay before?

A: You will save more money selling on Kraken. You will receive a worse price on your coin when you sell on Shakepay.

Q: Can I use Kraken for both Buying and Selling?

A: Yes. We recommended using Shakepay for buying because the fees are minimal and it is an easier process.

Q: What is the significance behind 25K?

A: There is none. The distinction is made to highlight the fact that there is a difference between large sums and small sums. The more you invest, the more important this becomes.

The reason you are converting into Euros or USD is because there is simply a lot more volume on the exchange trading in these currencies. If you trade in CAD, you risk selling or buying at prices which are not optimal. For example, if you wish to buy 1 Bitcoin for 50k, it is not uncommon on the Canadian side to have many sell orders trying to sell it at a higher price. There is less buying going on, so the prices are further from the true value. In some cases, this can be substantial. If you wish to buy 1 bitcoin, and you place the buy order at the market rate, but the best price available is 51k, then you will overpay using CAD. When you trade in EUR or USD using the limit option, you are getting an accurate price for the going rate of the currency because there is significantly more trade volume. This problem only tends to arise with large sums of money, but is fairly trivial with smaller sums, hence the “25k distinction”.

Q: Should I use Euros or USD?

A: I prefer Euro over USD because the only withdrawal option on Kraken for USD requires the use of a third party service called Etana Custody. I do not know much about Etana, but a quick google shows some red flags.

Q: Should we use Simple or Intermediate trading?

A: We prefer Intermediate trading.  This allows more control over your trade, specifically whether you want a Market or Limit order type. Picking “Market” instead of “Limit” will simplify the transaction, but you can capitalize on lower Maker fees if you use the Limit option. Manually managing your specific buy and sell orders will also help you ensure that you are receiving the best available value for your transaction. If you wish to use the limit option, I suggest studying it, and experimenting with smaller sums.

Q: Why do we need the Bank Frick (SWIFT) option to withdraw the sum?

A: This worked well for us. We never tried the other options.

Q: Why Knightsbridge FX?

A: Banks generally offer much worse exchange rates than exchange services. In doing some research, we compared Knightsbridge with TransferWise and Continental Currency Exchange. Knightsbridge FX had superior rates. When you go the bank, you may ask them to try and match the rate given to you by the exchange service. Anecdotally, Scotiabank surprisingly matched Knightsbridge FX. This was unusual and surprising, but it is worth asking your bank if they are willing to match rates.

 


About James Sterling

James Sterling received both his undergraduate and graduate degrees from the University of Southern California (USC). His Bachelor of Science was completed in Computer Science (Games) and his Master of Science was completed in Game Development. James spends his free time contributing on popular forums such as Tom's Hardware and AnandTech while hanging out with his cat Jonathan. Humorously, his favorite youtube channel is Jimquisition by Jim Sterling.

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments