You might have heard about Bitcoin, but there's so much more to cryptocurrency than that. Our guides make learning about cryptocurrency easy – allowing you to buy, trade, hold and earn crypto in less time than it takes to set up a new bank account.
This is not an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade or use any services.
What is cryptocurrency?
Cryptocurrencies are digital assets that have a value, just like a $10 note is a physical token with 10 dollars of value assigned to it.
The difference is that digital currencies are electronic – they only live on the internet. In order for a cryptocurrency to have value, its coin needs to be unique, verifiable and unreplicable. The
Bitcoin blockchain was the innovation that made this possible.
Crucial to crypto is the principle of decentralisation. There is no single authority or business (such as a bank or government) that controls cryptocurrencies. This idea of sovereignty over your assets and removing reliance on any sort of intermediary is something you'll hear about a lot.
Decentralisation also makes crypto a powerful medium of exchange because it minimises the costs and processing times of transactions.
Thanks to these innovations, legacy companies like Visa, PayPal and several banks have also begun adopting cryptocurrency and blockchain technologies.
Cryptocurrency uses cryptographic technology to secure individual assets on a database called a "blockchain". A blockchain records transactions on a network in a way that cannot be altered.
You can think of a blockchain as hundreds of connected computers sharing information with one another. This builds a ledger of data that can be used to validate that each crypto transaction is legitimate and secure.
Some blockchains use a variation of proof-of-work or proof-of-stake consensus algorithms to execute transactions. Proof of work is where the term " Bitcoin miners" comes from.
Miners operate powerful computers that solve complex mathematical problems, which helps secure the blockchain.
Proof of stake is a bit different. This algorithm
uses staking – the process of locking up cryptocurrency on a specified blockchain wallet in exchange for a reward. Staking protocols use "nodes" – small copies of the blockchain being run on thousands of different computers.
Understanding how a crypto's algorithm works in detail isn't essential – or easy – but it can help explain movements in price.
What are the most traded cryptocurrencies?
You might be surprised to learn that Bitcoin (BTC) is not the most traded cryptocurrency, although it usually sits in the top 3. Instead, it's the dominant crypto by market capitalisation – a metric that shows the circulating supply of a coin, multiplied by its value.
Take a look at today's top 10 cryptos by market cap in the chart below.
How to buy cryptocurrency
Compare crypto exchanges
The easiest way to purchase cryptocurrency is through an exchange or trading platform. Features to look out for are low fees, supported coins and deposit methods. Registering an account with a Canada-based exchange will require you to provide a form of government identification.
To deposit Canadian dollars to your exchange account, first, you'll need to verify your identity in a process known as KYC. Most exchanges accept instant transfers from a bank account, while others also support credit card purchases and sometimes even cash.
Choose a cryptocurrency
There are thousands of cryptos to choose from. Thoroughly research any you're interested in,
check what's trending, and keep on top of the
latest crypto news
before investing any money.
Build your crypto portfolio
Most exchanges allow you to instantly buy cryptocurrency with the funds deposited to your account. Some platforms also have advanced market options and trading pairs which may be useful for more experienced traders.
Store your crypto
You can choose to leave your assets in your exchange wallet, but this does come with some added risks. It's generally recommended that you transfer your crypto to a
hardware wallet for increased security.
Where to buy, sell and store crypto in Canada
Investors can now choose from a number of established and feature-rich crypto exchanges. If you're just starting out, look for exchanges registered with the Financial Transactions and Reports Analysis Centre (FINTRAC) that offer Canadian dollar deposits with your preferred payment method.
Click the Go to Site button when you're ready to create an account with any of the providers.
There are a number of risks associated with buying, storing and using digital currencies. Before jumping in, do plenty of research and make sure you understand how to keep your crypto safe. Some key risks to be aware of include:
Poor regulation. Cryptocurrency is still a largely unregulated market, which means you may not be protected if your funds are lost or stolen. Look for platforms that are registered with FINTRAC and provide an insurance fund.
Volatile prices. Crypto is much more unpredictable than traditional markets and massive price fluctuations within a short window are not uncommon. Because of this, your investment can quickly lose its value.
Vulnerable to hacking. Several million dollars have been lost to successful hacks of crypto exchanges, wallets and blockchains. It's important to understand that without appropriate security measures like
using a hardware wallet, securing your private key and enabling 2-factor authentication, your funds could be stolen.
Steep technical learning curve. Grasping the complex technical foundations of potential crypto investments can quickly become confusing. You'll also need to fully understand concepts like gas fees and wallet addresses before interacting with a blockchain, or else risk total loss of funds.
Scams. As crypto has become popular, so too have
crypto scams. Be extremely wary of deals that seem too good to be true, thoroughly research all platforms or projects before putting your money in, and never disclose your private key.
Cryptocurrency is a type of digital asset secured by a database known as the blockchain. Blockchains are designed to ensure privacy and security using complex cryptographic algorithms.
Cryptocurrencies have a huge number of potential uses. They can be spent like money, ensure contract transparency, manage supply chains and much more.
Cryptocurrency prices rise and fall like any other speculative investment, and can be heavily influenced by public announcements and media sentiment. Some coins, like Bitcoin, have a small supply and high demand, which can also affect its value.
Yes, cryptocurrency can be sold via exchanges and brokers for a local currency like Canadian dollars. In some places, you can even use a crypto ATM to convert digital assets directly into cash, though this does attract high fees.
Unfortunately for investors, there's no such thing. The best cryptocurrency will be whichever you believe has real utility and that suits your personal investment goals.
Bitcoin and Ethereum are widely considered to be the "blue chips" of crypto because of their high market cap and proven use-cases. Check out our guide to which cryptos to buy now for a look at what's trending today.
Cryptocurrency can be a good investment if you've conducted extensive research and understand fundamental trading strategies. Investing in a highly volatile asset comes with the potential to magnify your losses as well as your profits, so only invest what you can afford to lose.
Money spent on cryptocurrency goes to whoever sold the digital asset, similar to any other exchange of value. This is usually an exchange or broker service, but it can also be a stranger if you've used a decentralised finance or P2P platform.
Get started with crypto
If you're just starting out in the world of crypto, it can feel overwhelming. Use our simple guides to research and compare different coins or take a look at our curated list of the best crypto exchanges and wallets to buy and secure your chosen assets.
Learn how to buy Bitcoin, Ethereum and other cryptos
There are now well over 10,000 cryptocurrencies and tokens, with new coins launching all the time. We've cut through the noise and written guides on how to buy some of the most traded cryptos, like Bitcoin and Ethereum, as well as hundreds of others.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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