Investing in Crypto for Canadians

Investing in Crypto for Canadians

By torontomark | Alpha Finance | 15 May 2021


If you're interested in cryptocurrencies and think you might be a bit late in the game, I can assure you that you are certainly not. An old Chinese proverb states, "The best time to plant a tree was 20 years ago. The second best time is now." Like planting a tree, the best time to buy bitcoin or ethereum was years ago and the second best time is today. 

The world of cryptocurrencies has experienced a lot of milestones, development and notable catalysts over the years including exceeding a total market capitalization of $2 Trillion, total wallets exceeding 70 million,  notable entrants in the market including Grayscale, Square, Tesla, and Microstrategy holding over $4.3 billion worth. Even the NBA, Topps, and Playboy has gotten onboard. Retail and institutional investors are buying in droves yet we are still early in the game. Who hasn't bought yet? Apple, social media companies that could benefit from non-fungible tokens (like Snapchat, Spotify, Facebook), online gambling firms that could easily benefit from smart contracts (Bet365, FanDuel) cloud computing firms that might benefit from decentralized storage, banks that can benefit from lower transaction costs and so on. Until they and even Central Banks have bought, we can consider Bitcoin and other cryptocurrencies to still be in its early adoption.

This is a guide for the Canadian crypto noobie and Canadians have a lot to be proud of, being one of the most friendly countries towards crypto adoption with the new Bitcoin and Ethereum ETFs and Trusts primarly being listed on a Canadian-based stock exchange. 

What should I invest in?

First, it's important to know the main different cryptocurrency categories available.

1. Smart contracts - these are self-executing contracts with the terms of agreement between buyer and seller directly written in code in a decentralized fashion and its the code that controls the execution and the transactions are irreversible and trackable. This category has the potential to disrupt the real estate, insurance, gambling and many other industries.

The biggest smart contract cryptocurrency is Ethereum (one of the two most important cryptocurrencies with Bitcoin) though many others have improved on its shortcoming to provide more traffic on the network, lower transaction fees, greater energy efficiency and so on. Others include Cardano, Stellar, and Neo - which can execute up to 10,000 contracts per second.

2. Decentralized Finance - In its simplest form, decentralized finance is a system where finance products (like brokering, savings and borrowing, asset management and more) are handled in a decentralized manner rather than through an intermediary like a bank or broker. 

There are decentralized exchanges (kind of like a NYSE or TSX for crypto markets) like Uniswap, PancakeSwap, Balancer and Curve Finance.  There is also Aave, which seeks to provide interest to savers (that provide their crypto into a liquidity pool) and loans it out to borrowers - just like a traditional bank would.  There are marketplaces for trading non fungible tokens like Ethlance and Opensea and so much more.

3. Non Fungible Tokens - These are nonreplaceable, unique piece of information that can be traded from person to person (like a playing card with a serial number, as it is used on the NBA Top Shot application.  The cryptocurrencies backing these transfers include Flow, Chiliz, Waxx Wallet, Atari Token and many others. 

These are just three of the most common categories but crypto development is constantly advancing and there are surely more to follow that I haven't noted. Of importance to mention is obviously Bitcoin. Bitcoin was created out of the dust of the 2008 financial crisis to provide a currency that is not backed by a Central Bank that can print at will. Bitcoin can be transferred from wallet to wallet without the need for any intermediary to intervene. It has a total supply that will ever exist of 21 million bitcoin, can be broken down and transferred to as little as one satoshi - one hundred millionth of a bitcoin, and it ultimately represents a huge transformation in the world of money and finance and hopefully represents the future of currency. Bitcoin often represents >50% of the value of all cryptocurrencies though is presently at 41% dominance. There are also a ton of memes, some with potential (Dogecoin) and others that are likely just scams created to enrich the owners - be careful what you buy. 

Where can I buy cryptocurrencies?

The easiest places to get started are those that make it very simple to open an account, fund it, and withdraw money - all the while hopefully with minimal fees. A couple notable ones I will mention include the following:

Coinberry - This is a good source to buy some cryptocurrencies and it is very easily to deposit money (e-transfer) and withdraw it. What I like about Coinberry is the simplicity and low fees (0-2.5%) though there are only seven cryptocurrencies you can presently purchase. Open your account here and get $20 when you trade $50 worth.

Coinbase - Coinbase just became the first publicly traded crypto marketplace and has a value of $50billion. I think this cements its reputation as the best place to trade your crypto as ultimately anything shady happening will hurt their reputation, their stock price, and their executive compensation. They are also very easy to use and you can earn free crypto by participating in their cryptocurrency quizzes and their fees are also quite competitive - typically a flat dollar amount and 0.5%.  Fortuntaely they also have a higher number of cryptos to trade - presently over 50 and growing continuously. Open an account and trade $100 to get $10 free from my referral link here..

Shakepay - Shakepay is one of (if not the most) widely used exchanges in Canada with 1% of our population holding an account and for good reason! While they only offer Bitocin and Ethereum, they are easy to use and fund, have no fees though charge a small spread (unclear of the exact amount ) and you can actually earn free bitcoin every day by simply shaking your phone once! To get this added bonus though, you need to be referred. Fortuntately I will do just that so you can earn free crypto and get a referral bonus of $10-30 when you trade your first $100. Click here.

Lastly, it's safest to store your cryptocurrencies off an exchange and in a private wallet (and make sure to write down the 12/24-word seed phrase to protect your money!). Take a look at some great wallets at this link.

A couple tips: do some research and know your crypto, don't ever share your seed phrase with anyone, and make sure to buy early before the next big bull market. There are a lot of gains to be still had in crypto and they offer a great way to diversify your portfolio!

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