Cryptocurrency in Canada: Where to start?

Introduction to cryptocurrency

The past year has seen several major changes in the financial industry. The cryptocurrency sector comes to mind, which has had a year of two halves. First of all, we saw a real surge in Bitcoin and Ethereum, which carried by a massive support of wealthy investors, seemed to be on the way to reach previously unsuspected heights. However, this meteoric rise faded in May, exposing the high volatility of cryptocurrencies. In addition, American giant Elon Musk recently withdrew his support for cryptocurrencies, causing a sharp decline in the value of Bitcoin and Ethereum. Needless to say, the world of cryptocurrency is stirring passions right now. First of all, it is necessary to define the concept of crypto-currency before starting an analysis of its components. Cryptocurrency is a digital currency that is used for peer-to-peer transactions of goods and services, i.e. through exchanges between several computers. Transactions are made from a decentralized system that is completely independent of any banking institution. Exchanges are made through blockchains, more commonly known as “blockchains”. This innovative process is actually very similar to a database. The information is stored chronologically in different blocks. Each transaction between users is found in a specific block, allowing for a quick trace of the history. Finally, each cryptocurrency has its own specific function and identity, based first and foremost on a “public” key, which recognizes the uniqueness and existence of the virtual token, and a “private” key made up of a unique secret code given to the holder of the virtual token. In an effort to better understand this fascinating environment, we will provide a brief overview of the main crypto-currencies, the Canadian platforms where they can be purchased, as well as the options available to you on the Canadian stock market.

The main cryptocurrencies

Ranking of cryptocurrencies by market value

Profile of the main cryptocurrencies

There are currently more than 100 cryptocurrencies in circulation on the various global financial markets. Each of them has specific functions. In fact, here’s a global picture of the top ten crypto currencies as well as their primary function.

1. Bitcoin : Bitcoin is the cryptocurrency with the highest market value with nearly 700 billion assets in circulation. Bitcoin is intended to be the equivalent of gold. It should be noted, however, that this currency, unlike gold, does not exist physically and is only accessible digitally. With this in mind, people often refer to Bitcoin as “digital gold”.
2. Ethereum : Ethereum has seen a major boom over the past year, allowing it to surpass the 300 billion asset mark. Ethereum is first and foremost a creator of smart contracts between two distinct instances. This decentralized process is made possible by the use of a global network of computers which when grouped together constitute a “supercomputer”.
3. Tether : Tether is peaking as the third largest crypto currency after significant gains in 2021, bringing its market value to over 63 billion. Tether’s main role is to act as a currency converter between digital currencies and physical currencies (such as the Canadian and US dollar for example). Tether acts as a kind of exchange office.
4. Binance Coin : This cryptocurrency is attached to the Binance platform. This virtual token is affiliated with Ethereum and pays for transaction fees and currency exchanges on the platform. The Binance platform has gained a lot of popularity over the past year, which has pushed the Binance coin to new heights. The market value of this crypto currency is almost 60 billion.
5. Cardano : This platform has a market value of over 52 billion. Its two main functions are the promotion of blockchain and the production of customized smart contracts. Blockchain is an innovative technique for storing and transmitting data through decentralized modules. This is central and necessary for most crypto currencies to function properly.
6. Dogecoin : Dogecoin is a crypto currency that was created to ridicule other virtual currencies and their popularity. This motto, which was originally intended to act as an empty shell, gained popularity following a speech by Elon Musk. It continues to grow and now has total assets of over $48 billion.
7. Ripple : This decentralized platform enables digitized payments between cryptocurrencies and banking institutions. It also allows for the secure transfer of funds between multiple individuals. Internal transactions can be made with a specific digital token, the XRP. As of today, Ripple has almost 40 billion in assets.
8. Polkadot : Polkadot is inspired by blockchain and promotes a secure exchange of information between private and public bodies. This relatively new initiative is the work of Gavin Wood, co-founder of Ethereum. The Polkadot network is centered around three main concepts: interoperability, scalability and collective security. Polkadot is growing rapidly and now has a market value of over 22 billion.
9. USD coin : This is a crypto currency backed by the US dollar. The platform operates on the same blockchains as Ethereum and Stellar. This is a “stablecoin”, as it replicates and copies the attributes of a fiat currency which reduces volatility and risk. The market value of the USD coin is now close to 17 billion.
10. Uniswap : This platform is attached to Ethereum and allows the exchange of tokens and cryptocurrencies. The use of “smart contracts” is also promoted to facilitate trade and transfers. The total value of Uniswap is over 14 billion.

Where can you get cryptocurrency?

Comparison of major cryptocurrency providers

Profile of the main transactional platforms

Currently, there are more than 20 platforms where it is possible to trade cryptocurrency in Canada. It is therefore difficult to make an informed choice considering the large number of options available to us. So, in order to help you make your choice, we offer you an overview of the 10 best crypto currency exchange platforms available in Canada.

Coinbase

The platform is based in San Francisco and has users in over 100 countries. Benefits

• Simple and easy to use platform; ideal for cryptocurrency beginners
• It is possible to fund your account in several different ways (interac transfer, bank transfer, debit cards and credit cards)
• Diversified choice of cryptocurrencies (over 40)

Disadvantages

• Transaction fees are very high; mostly between 1% and 4.5%.
• Poor customer service; waiting times can be very long which can be frustrating for the customer
• Significant transactional delays for Canadian clients, as the platform is based in the United States

Crypto.com

This platform is based in Hong Kong and supports users in over 30 countries. Benefits

• Very low transaction fees, among the most competitive on the market (0.036 %-0.144 %)
• Innovative rebate system including prepaid cards with cash rebates (in CRO, crypto.com’s currency) and high interest accounts (up to 14% rebates, also posted in CRO)
• Diversified choice of cryptocurrencies (over 100)

Disadvantages

• Complex platform not for people new to crypto currencies
• Poor customer service; response time is slow despite 24-7 service on various platforms
• Significant delays in the delivery of prepaid cards and difficulty in obtaining rewards due to the very high number of RCOs required

Mogo Bitcoin

This platform is based in Vancouver and specializes in Canadian clients. Benefits

• Simple and easy to use platform; ideal for crypto currency beginners
• Quick access to funds through interac transfers in less than 30 minutes
• Frequent promotions to raise money, especially by referring friends

Disadvantages

• Not a wide variety of crypto-currencies offered, only Bitcoin is available
• High transaction fees (1%)
• The bitcoins purchased do not belong to you; they are the property of a third party, the Coinsquare platform, which lends bitcoins to Mogo Crypto for marketing
• Platform currently unavailable in Quebec

Wealthsimple Crypto

This platform is based in Toronto and has recently started offering cryptocurrency accounts. Benefits

• Very simple platform with very fast access to your funds
• Very secure transactional environment; Wealthsimple has a very good reputation in the financial community. Wealthsimple’s crypto-currency trading umbrella company (Gemini) also has a good reputation
• Platform available in all 10 Canadian provinces and 3 territories

Disadvantages

• Uncompetitive transaction fees (1.5 %-2 %)
• Not a wide variety of crypto-currencies offered, only Bitcoin and Ethereum are available
• The bitcoins and Ethereum purchased do not belong to you; they are owned by a third party, the Gemini platform, which lends bitcoins and Ethereum to Wealthsimple Crypto for marketing

Newton

This Canadian platform was started in 2018 and offers cryptocurrencies to Canadians. Benefits

• Several choices of crypto-currencies available (7)
• A simple, clear and very well laid out platform which will appeal to cryptocurrency neophytes
• Relatively low transaction fees (0.69%) and interesting promotions (Get $25 when you buy $100 worth of cryptocurrencies)

Disadvantages

• Poor customer service with long delays in response
• The platform is limited to a few basic functions. It does not offer features for more experienced users
• Very slow preliminary account checks that can take up to two weeks

Bitbuy

This Toronto-based platform offers several crypto currency purchasing options for Canadians. Benefits

• Quick access to your funds from your bank or by instantaneous interac transfer
• Attractive promotions for new users (get $20 after depositing $250 in your account) and affordable transaction fees
• Platform suitable for both new and experienced investors with multiple trading options

Disadvantages

• Presence of fees on the deposit and withdrawal of funds via the platform
• A range of crypto currencies limited to 7
• Transactions can only be made in Canadian funds

Coinsmart

Again, this is a Toronto-based platform that offers a nice variety of crypto-currencies in over 15 countries. Benefits

• Platform suitable for both novices and experienced investors; Multiple advanced features very accessible and easy to use
• Excellent customer service 24-7; Quick verification of your account after registration; Very competitive transaction fees (between 0.2% and 1.0% depending on the transaction)
• Great promotions (get $15 when you deposit $100) and the ability to fund your account with your credit card

Disadvantages

• Presence of fees on the deposit and withdrawal of certain funds using the platform
• Variety of crypto currencies offered that could be bigger (still 10 in all)

Binance

The platform is headquartered in Shanghai and operates in more than 180 countries. Benefits

• Very low transaction fees (maximum 0.1%)
• Huge selection of crypto currencies (230+)
• Many options to fund your account such as Interac, e-transfer, debit card, credit card, third party payment and bank deposit among others

Disadvantages

• Poor customer service; No phone line
• It’s hard to get Canadian money into your account. A third party is required to complete this transaction
• The platform’s security has been put to the test in recent years as Binance has been hacked on several occasions

NDAX

The Calgary-based platform was started in 2017 and is currently growing rapidly in Canada. It is possible to fund your account quickly by means of interac transfer and bank transfer Advantages

• Low transaction fees (0.2%) and fast verification after account creation
• Excellent customer service and interesting referral program
• Simple platform with several buying options such as stop orders and stop limit orders among others

Disadvantages

• Limited selection of cryptocurrencies (10)
• Presence of fees on the deposit and withdrawal of certain funds using the platform
• Transactions can only be made in Canadian funds

Shakepay

This platform is based in Montreal and offers the purchase of Bitcoin and Ethereum to all Canadian citizens. Benefits

• Simple and easy to use platform; ideal for cryptocurrency beginners
• Efficient customer service

Disadvantages

• Limited selection of crypto-currencies (2: are Bitcoin and Ethereum) Relatively high transaction fees (1.43%)
• The cryptocurrency held in the account is owned by Shakepay and not by the user

Cryptocurrency on the Canadian Stock Exchange

Bitcoin and Ethereum have entered the stock market over the past year through Exchange Traded Funds, more commonly known as ETFs. The ETFs track the evolution of Bitcoin and Ethereum through mathematical logarithms and offer investors exposure to these virtual tokens for a management fee of between 0. %.and %.. Here is a brief description of the main Canadian ETFs listed on the exchange.

The Bitcoin

Comparison of the top Bitcoin ETFs

Top Bitcoin ETFs

1. BTCC.B: This ETF is attached to the investment firm Purpose and offers a %.management fee. This fund does not have a currency hedge that protects against market fluctuations, including the conversion of U.S. currency into Canadian currency. The current unit price is $6.76.
2. BTCC: This ETF is also attached to the investment firm Purpose and the management fee is also %.. The big difference with the previous ETF is in the currency hedging. This ETF provides protection against market fluctuations. Currently the unit price is $7.74.
3. EBIT: This is an ETF affiliated with Evolve Financial Group. The management fee is 0.75% and the unit price is $17.45. Like BTCC.B, this fund does not have currency hedging. This company obtained bitcoins through the US platform Gemini. She will track their progress each day with the help of mathematical logarithms
4. BTCX.B: This ETF is part of the CI Financial Group and offers a management fee of 0. %.. This fund does not have currency hedging. The current unit price is $6.87

Ethereum

Comparison of the main Ethereum ETFs

The main Ethereum ETFs

1. ETHX.B: This ETF specializing in Ethereum is overseen by CI Financial Group. It is not hedged. The management fee is 0. %.. The current unit price is $10.77.
2. ETHH.B: This fund is managed by Purpose, a major financial institution in Canada. Currently, the unit price is $10.59. The management fee is 1.00%. Currency hedging is not included in this ETF.
3. ETHR: This ETF is owned by Evolve Financial. The management fee is 0.75% and the current unit price is $10.61. This background does not have a background cover.
4. ETHH: This is an exchange-traded fund attached to the investment firm Purpose. The management fee is %.. The unit price is currently $10.85. Currency hedging is included in this ETF.

Verdict on cryptocurrency

All in all, this article was meant to be an introduction to the world of cryptocurrency, by presenting the different types of virtual tokens, the platforms where it is possible to get them and of course the ETFs available to Canadian stock market investors. It is now up to you to take action by initiating your first transactions in this most exciting area. Good learning!