There’s a dirty little secret among Canadian crypto investors: they love switching BTC to CAD again. Why? Because switching cryptocurrency back to fiat is equivalent to cashing chips out at a casino. It means you’re probably making a return on investment and ready to spend some money the good old fashioned way.
It’s one of my own personal pet peeves about the bitcoin space. People talk about cryptocurrency as if it’s going to help bring over two billion people around the world who don’t have a bank account out of poverty. But the majority of people getting into bitcoin who say they’re into the technology actually aren’t. If you’ve been into bitcoin for a while, tell me you’re not meeting people who remind you of this guy:
Bitcoin is a great technology and it is going to change the world, but most of us are in it for the money, at least to some degree. A blockchain can certainly cut out the middle man and liberate the world from sketchy financial systems. However, human beings themselves aren’t altruistic enough to give up all of their wealth for the greater good. As investors, we want to turn a profit for ourselves too.
So let’s go over the way Canadians deal with bitcoin and the best ways to go from btc to cad.
Canadian Bitcoin Exchanges Offer Plenty of Options
There are at least 70 different exchanges that Canadians can use to trade cash for Bitcoin and vice versa. Choosing an exchange always comes down to personal preference. There are several factors to consider, including:
- The need to remain anonymous
- The cryptocurrency of choice
Let’s breakdown each factor.
The Most Convenient Ways to Change BTC to CAD
The easiest and most convenient way to get Canadian dollars back depends on whether you want cash in hand, cash in your bank account, or still want the ability to have access to liquidity in the crypto market.
The Canadian Stablecoin is Coming
Canadian bitcoin veterans might think there’s no way to hold a Canadian dollar cryptocurrency. There is however a Canadian stablecoin in the works that will be on the market soon. It’s called eCad and Canadian bitcoin exchange Coinsquare is its creator.
CEO Cole Diamond promises it will be the first transparent way to transfer value in Canadian dollars and avoid the instability of the cryptocurrency market. That announcement came out in April. The company promises every dollar of eCad tokens will be backed by real money in a reserve, just like other stablecoins promise. Now of course, some of those stablecoins have had to deal with controversy.
.U.S. Tether Tokens and Bitfinex Clash
Namely the .U.S. Dollar Tether token. Tether claims to have every dollar of its token backed by a real asset, but no third-party audit has ever been completed To make matters worse, the team behind Tether got into a legal battle with Hong Kong based cryptocurrency exchange Bitfinex, claiming that the exchange used Tether tokens to cover the company’s financial shortfalls. Eventually it was revealed that only 74% of Tether tokens were ever backed by actual assets.
Controversy aside however, the new eCad token will allow Canadians to convert btc to cad without having to leave the market completely. Other cryptocurrency companies are racing to do the same thing in Britain and Europe as well. Developing the next stablecoin dedicated to a country near you is one of the hottest trends in the industry right now.
Stablecoins allow traders to avoid the volatility of the market when times get rough, and there’s finally a Canadian option. That’s good news considering the way the market is performing at the moment.
Other Convenient Ways to Go Back to CAD
Now you’re armed with the knowledge that there’s a stablecoin coming, but in case you still feel more comfortable holding actual Canadian dollars, you have several other options. The main option is to deal with a cryptocurrency exchange that allows you to use your bank account as a withdrawal option. It takes several days to complete a transfer and there will be fees involved.
Bitcoin Trading Fees in Canada
All crypto exchanges charge a fee to facilitate the transaction of course. Some do it by charging a percentage. Others by charging a flat amount in Canadian dollars, and others still charge it by embedding the fee in the exchange rate. In other words, you’re not getting the exact market rate that might be possible if you’re just on an in-person trading floor exchanging value face-to-face. Even then, somebody is taking a cut. It’s just a cost of doing business.
For the most part, cryptocurrency exchanges make more money selling cryptocurrency for fiat than they do the other way around. This is because more people are likely to buy into bitcoin when the price is skyrocketing upward. So not only is the demand higher, but people are rushing to try to get into the market before the price peaks. Remember that the cryptocurrency space is only 11 years old. In such a young upstart market, many investors are just pretenders looking to earn a quick buck. They don’t really care about the technology or the fundamental potential of blockchains.
Now consider the reverse. An exchange is buying your bitcoin and giving you back cash. They know that you’re willing to wait, because the Canadian dollar doesn’t move 40% in one day. That’s why unless you are trading a very small amount of bitcoin for cash, you’re likely going to have to wait a few business days to make it happen. It’s just the way the traditional banking system works.
It’s also why as soon as a Canadian dollar stablecoin launches, people day trading digital currencies will flock to it.
Trading Bitcoin for Canadian Dollars Anonymously
In the early days of the digital asset economy, anybody trading bitcoin and other crypto assets likely didn’t willingly turnover identification to the government and go through KYC procedures. It wasn’t necessary. The technology and the economy were both so new that bitcoin wasn’t really on the government’s radar. Today is a different story. Bitcoin isn’t something everyone you know is using every single day, but investing in it is now mainstream.
That means your best hope for remaining anonymous is to either trade bitcoin for Canadian dollars in person, find anonymous marketplaces where goods are sold for cryptocurrency, or trade digital assets on decentralized exchanges that don’t require you to identify yourself. As it refers to the latter, there are several possible exchanges worth exploring.
While it is possible to buy stablecoins on decentralized exchanges that won’t ask you for identification, none of those stablecoins trade in Canadian dollars at the moment. Even then, that still doesn’t mean you have Canadian cash in hand. Unless you can convince a buyer to send you cash through an online transfer, the only way to get cash in hand is to do things in person. That carries a considerable amount of risk with it.
Beyond Bitcoin: Trading Other Cryptocurrencies
Trading bitcoins for Canadian dollars is relatively easy in 2019. It’s not so easy to trade altcoins or stablecoins for Canadian dollars just yet. Coinsquare will likely have the stablecoin part of that covered eventually. Likely sometime this year even. Trading altcoins for Canadian dollars however means selling crypto to an exchange for fiat.
CanadianBitcoins.com is one site that will accept Bitcoin, Ethereum, Ethereum Classic, Litecoin and Dash for cash. Again, you’ll have to go through a bank account to do so because the website doesn’t use a stablecoin.
If you really don’t want to trade Bitcoin for Canadian dollars right away, you can always trade for an American stablecoin. Normally Canadians don’t want to have to go to the bank and trade American dollars for Canadian dollars. After all, the traditional banking system also charges fees for converting foreign currencies. However, the trading fees associated with buying a stablecoin are the same regardless of which stablecoin is involved in the transaction.
This means you can trade bitcoin for the .U.S. Dollar Tether until you’re happy with the Canadian dollar value of Bitcoin. You can then trade Tethers back to bitcoins and sell bitcoins to any exchange that dispenses Canadian dollars through bank accounts. Yes it takes a few extra transactions, but it’s worth it if you’re trying to insulate yourself from a 20% swing in the market.
BTC or CAD: Which One Should You Own in 2019
Make no mistake about it. Bitcoin is a worthwhile long term investment. The price of digital gold is up 300% this year, outpacing stocks and real estate. However, in the short term it might be better to own Canadian dollars. Tensions between China and the United States of America are high. The heat is turning up on the trade war. This is negatively impacting all markets including cryptocurrency. The popular belief that bitcoin is a safe hedge against an economic meltdown hasn’t been proven in real world scenarios yet. So far it’s still just a theory.
In fact, just in the last 48 hours Bitcoin’s price went from $15,000 Canadian to less than $13,000 Canadian. Investors also need to consider that a big reason for bitcoin’s meteoric gains this year is all the publicity and attention cryptocurrencies have received thanks to Facebook Libra. Now that the hoopla surrounding Mark Zuckerberg’s grand vision to take over the world has passed, prices are coming back down to reality.
So for now, it might be best to flip btc to cad. In the long run however, Bitcoin’s price has plenty of room to grow.
Yes, Bitcoin is a Good Investment
Every four years or so, the amount of bitcoin that can be generated through mining activities cuts in half. This is called the halving event. The reason that exists is to prevent inflation. The fact that the bitcoin supply will never be overinflated is one of the biggest selling points of investing in digital assets. This means that the long term price movement of bitcoin will likely be a slow trend upward. When we say slow, we’re talking slow in cryptocurrency terms, which could be just a year from now.
Then of course there’s the very long term consideration. Money will always be tied to technology. It’s always been that way. Even when value was counted by gathering sticks and stones. Sure bitcoin has had some good years and bad years, but over its 11 year lifespan, all the coin is doing is going up in value.
What really matters is why you choose to invest in bitcoin. Is it a matter of philosophy? Are you a hard-core libertarian that wants to see people live free of government? Do you think bitcoin is a legitimate investment? Are you just buying into bitcoin because people are talking about it?
Only the individual investor can answer those questions, and only bitcoin itself can show people what’s really going to happen in the future in terms of whether digital assets are legitimate investments.
All you can control is the present moment, and if the present moment says you should trade some of your Bitcoins for Canadian dollars, at least now you know how to do it.