How to Buy Ethereum in Canada
Ethereum is the second most popular cryptocurrency after Bitcoin. In this article written by Haithem Kefi, we explain everything you need to know about this fascinating coin!
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History of Ethereum
Ethereum was proposed in 2013 by Vitalik Buterin, a Canadian programmer and writer. In 2014, Buterin and its founding team officially announced the development of the Ethereum network, raising US$18.4 million in a crowd sale of ETH. In early 2016, Ethereum became a fully functional network. Vitalik Buterin explained how he came up with the idea of creating Ethereum saying: “This idea of a blockchain with a built-in programming language as, kind of, what I thought was the simplest and kind of most logical way to actually build a platform that can be used for many more kinds of applications.”
What is Ethereum?
Ethereum is a technology for building apps and organizations, holding assets, transacting, and communicating without being controlled by a central authority. It is the second most valuable and popular cryptocurrency after Bitcoin to buy in Canada and worldwide. When using Ethereum, you are not required to give your data, which means that you are in control of your own data and what you share. Ethereum has its cryptocurrency called Ether. It is a transactional token which serves as a form of payment for participants to pay for activities on the Ethereum network.
What is the difference between Ethereum and Bitcoin?
Bitcoin and Ethereum are the two most popular cryptocurrencies in the market and have significantly contributed to the sector’s development. They are the top two cryptocurrencies in terms of market capitalization and trading volume on cryptocurrency exchanges.
Bitcoin was the first cryptocurrency to be created and is seen as digital gold or “gold 2.0,” while Ethereum is perceived as a decentralized computer for the world. Bitcoin is seen as digital gold because it is scarce and durable similarly to the precious metal. On the other hand, Ethereum is seen as a decentralized computer for the world because the network is used to run applications, called decentralized applications (DApps), that are not under the control of a central authority.
Numerous DApps exist today in fields ranging from technology and finance to art and gaming. A few examples of successful applications include:
- Golem: it enables you to access shared computing power or rent your resources.
- Gitcoin Grants: it is a crowdfunding platform for community projects.
- Foundation: it allows you to invest in unique editions of digital artwork and trade with other buyers.
- Decentraland: it is a gaming application where you can explore a virtual world and collect virtual land.
Both Bitcoin and Ethereum are assets based on a publicly displayed distributed ledger called blockchain. However, Bitcoin was designed to be a currency to facilitate monetary transactions, while Ethereum was designed to facilitate software processing using its token system Ether to power the Ethereum network and its applications. The two cryptocurrencies rely on what is called a proof-of-work consensus algorithm. However, Ethereum has recently switched to a proof-of-stake consensus, which according to the network’s website will help reduce energy consumption by about 99.95%. Moreover, the switch is expected to increase the number of nodes (computers that participate in the network), leading to a stronger immunity to centralization.
Ethereum is also the basis for transacting in non-fungible tokens (NFTs) and other collectables online. It is undeniably the most popular cryptocurrency for NFTs. Therefore, if you want to buy an NBA top shot or any other NFT, you will most probably need ETH. It is also worth noting that Ethereum is considerably cheaper than Bitcoin. Bitcoin currently trades for over 26,000 CAD per unit, while Ether trades closer to 2,000 CAD.
Bitcoin and Ethereum networks both suffer from scalability issues. Given that the number of people using both blockchains is constantly rising, they are getting closer to their capacity limitations and are needing to upscale to accommodate more users.
Should you buy Ethereum?
The Ethereum network offers much more than just a crypto coin to buy. Ethereum was made as a decentralized platform, unlike other cryptocurrencies which were made only as digital currencies. Ethereum is more than a currency with its ability to create decentralized applications (DApps) that have real-world use cases from banking to digital ownership.
Let us take a look at the pros and cons that come with investing in the Ethereum network.
- Ethereum is decentralized and independently managed from financial institutions. No government, financial institution, or central entity controls it.
- Anyone worldwide can use ETH as a store of value or a means of payment.
- Easy to buy in Canada (ATMs: bitMachina, Platforms: NDAX and Coinberry).
- Ethereum stands out from other cryptocurrencies in Canada because most NFTs rely on the Ethereum network. It is not possible to buy NFTs with most other cryptocurrencies.
- Ethereum is facing scaling issues due to higher worldwide demand.
- Transactions are final and cannot be returned.
- Ethereum is not regulated which translates to no control over its minimum value.
- Its value is volatile which means you can gain or lose highly daily.
How To Buy Ethereum (ETH) in Canada
Buy via Cryptocurrency Exchanges
Based in Toronto and established in 2017, Coinberry offers Canadians the possibility to buy and sell Bitcoin, Ethereum and other digital currencies. Similarly to NDAX, the company is a highly regulated exchange platform by being FINTRAC-registered for buying and selling cryptocurrency.
How to purchase ETH on Coinberry
The process is simple and comparable to NDAX. You start by creating an account and wait to get verified, which is usually done instantly. Once verified you can start buying ETH with a minimum amount of $50 after funding your account using a bank wire or an Interac e-Transfer. The fees range from 0% to 2.5% per transaction.Go to Coinberry's website
NDAX is a cryptocurrency exchange platform exclusively available to Canadians. The company was launched in 2018, is registered in Canada and runs its operations from Calgary.
NDAX as a crypto service provider is regulated by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). The company is a registered Money Service Business (MSB) in Canada.
NDAX offers assistance to its customers via email support, 24/7 live chat, and phone support.
NDAX is suitable for beginners where people can quickly learn how to buy and sell cryptocurrencies.
How to purchase ETH on NDAX
First, create an account and get instantly verified. Next, fund your account with Canadian dollars through an Interac e-Transfer, a wire transfer, or a bank draft. Finally, you can start investing in ETH with as little as $1 and a fee of 0.2%.Go to Ndax.io's website
Buy via ATMs and Counters with Cash
A simple and convenient way to buy and sell ETH is to use a Bitcoin ATM. Bitcoin ATMs work similarly to traditional ATMs. However, they do not connect to a personal bank account, making them arguably a safer option than using exchanges. For instance, the Ottawa-based company bitMachina offers Bitcoin ATMs in Ontario and Québec where you can buy ETH and other major cryptocurrencies with cash. Similarly, you can use a Bitcoin Counter, a suitable option for beginners since the transaction is entirely handled by the cashier.See all Bitcoin ATMs and Bitcoin Counters in your area
Buy via Credit Card
A popular alternative to buying ETH with cash at Bitcoin ATMs and Counters is to buy ETH online with your credit card. An Ethereum wallet address will be needed to specify where the ETH will be sent. Additionally, you will be required for your first purchase to provide proof of identity. This will usually take the form of submitting a copy of a government ID (such as a driver’s license or a passport). This measure is used by platforms to prevent fraud and meet regulatory requirements.Buy Ethereum with your credit card
Buy via Decentralized Exchanges (DEX)
A decentralized exchange (also known as a DEX) is a peer-to-peer marketplace where transactions occur directly between crypto traders. When using DEXs, geographical restrictions are fewer than with centralized alternatives. You will be able to buy ETH with other tokens, PayPal or even through in-person cash deliveries. You are good to go as long as the other person is accepting the payment method you are providing; however, you will need a wallet to use a DEX.
How To Store ETH
In order to send funds and manage your ETH, you need an Ethereum wallet. Ethereum wallets are applications that let you interact with your Ethereum account. You can compare it to an internet banking application, but without the bank. The wallet will enable you to check your balance, make transactions and connect to applications on the network.
Physical hardware wallets (Most secure)
Physical hardware wallets are devices that let you keep your crypto offline. They have to be connected to a computer to move funds and are password protected. To access the funds, a malicious party must physically access the device and know the password, thus making it very secure. However, hardware wallets can be expensive for users storing small amounts.
Mobile Wallets are convenient and appealing because they make your funds accessible from anywhere. They are applications that can be installed on mobile devices as easily as any other application from Apple’s App Store or Google Play and can be used to access your funds using a cellular connection. Most popular mobile wallets support Ethereum and are ready to interact with decentralized applications.
However, a disadvantage of a mobile wallet is that it is easy to hack and if you lose your phone, you may lose access to your Ethereum funds. Yet, you can stay safe by having backups.
Web wallets, also known as Browser wallets, are web applications that let you interact with your account directly in the browser. These wallets take advantage of cloud storage and can be accessed from anywhere in the world.
However, using web interface wallets can be risky because users will need to trust a website with their private keys. While some web interfaces are considered trustworthy, users may still be vulnerable to several attacks unrelated to the wallets themselves, such as phishing schemes.
Desktop wallets are a suitable alternative if you prefer to manage your funds via macOS, Windows or Linux. Private keys are kept locally, which means users will need to use their computers to access their Ethereum wallets. However, since desktop wallets are connected to the internet and the private key is stored on the user's computer, they are vulnerable to hacking.
Ethereum has an elaborate and well-structured growth curve. If you are looking to diversify your portfolio using assets beyond Bitcoin, you may want to look at Ether. However, as the crypto market is highly volatile and unregulated, you must invest cautiously. Investing in Ethereum should be done using stringent risk management measures. Remember: you should not invest more than you can afford to lose!
Is Ethereum legal in Canada?
Yes, it is currently legal to buy Ethereum in Canada. Canadian law treats businesses trading in cryptocurrencies as Money Service Businesses (MSBs). If you intend on investing in Ethereum, you should consider speaking to a registered accountant about your options and the related tax implications.
What is the best way to buy Ethereum?
You can buy crypto from several regulated cryptocurrency exchanges such as NDAX and Coinberry. You can also buy crypto from bitMachina’s Bitcoin ATMs and Bitcoin Counters.
How can I buy ETH with a credit card in Canada?
You will need an Ethereum wallet and you will need to get verified when purchasing for the first time. To buy ETH with a credit card, click on this link.
Is Ethereum better than Bitcoin?
Ethereum is different from Bitcoin. Given that the two cryptocurrencies have different purposes, it is not a fair comparison. Bitcoin serves the purpose of being digital gold for the world of cryptocurrency, whereas Ethereum is an application platform for a wide range of use cases.
How many Ethereum coins are there? What is the Ethereum maximum supply?
As of April 2022, over 120 million coins of Ethereum are in circulation. The number of Ethereum is technically unlimited, as no maximum supply limit has been coded into the system. Ether’s supply is constantly increasing as new blocks are generated.
Is Ethereum green?
While Ethereum's energy consumption has historically been substantial, there has been a significant effort into transitioning from an energy-hungry to an energy-efficient mining process. In fact, on September 15, 2022, Ethereum has switched from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus – a move known as the Merge. According to Ethereum’s website, energy consumption will be reduced by nearly 99.95%, resulting not only to a drastic decrease in carbon emissions, but also to a safer and more scalable network with faster transactions.