Bitcoin is a type of digital currency known as a cryptocurrency that operates independently of a central bank. Unlike traditional currencies, Bitcoin operates on a peer-to-peer network, meaning it doesn’t require a central authority to manage transactions. Instead, transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin can be sent and received anywhere in the world with internet access, making it a global currency. It allows for anonymous transactions, although all transactions are publicly recorded on the blockchain.
Bitcoin was created by an individual or group of individuals under the pseudonym Satoshi Nakamoto. The identity of Satoshi Nakamoto has never been confirmed, and the creator(s) remain anonymous to this day. Nakamoto introduced Bitcoin in a 2008 white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” and later released the first Bitcoin software in 2009, launching the network of the decentralized cryptocurrency.
Currently, the total number of Bitcoins in circulation is around 19.3 million (as of May 2024). Bitcoin has a capped supply limit of 21 million coins, which is expected to be reached by approximately 2140.
A crypto wallet is a digital tool that allows users to store, send, and receive cryptocurrencies such as Bitcoin, Ethereum, and many others. It’s essential for handling cryptocurrencies because it provides security for managing and using these digital assets. Unlike a traditional wallet that stores physical currency, a crypto wallet does not store the actual cryptocurrencies. Instead, it keeps the digital credentials—known as keys—needed to access and transact with your cryptocurrency holdings.
Staking in the context of cryptocurrency is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn staking rewards.
Yes, Bitcoin is legal in Canada. Canada recognizes cryptocurrencies such as Bitcoin as a form of money but does not consider them legal tender. Instead, cryptocurrencies are treated more like commodities from a regulatory standpoint.
In Canada, cryptocurrency is taxed under the rules applicable to capital gains and business income. The specific tax rate depends on whether the activities related to cryptocurrencies are considered personal investment or business activity.
If you buy and occasionally sell cryptocurrencies, the profits are generally treated as capital gains. In Canada, only 50% of the capital gain is taxable. The tax rate you pay on that taxable portion depends on your total income and could range from 15% to 33%, based on the progressive tax rates of your provincial and federal tax brackets.
If you frequently trade or mine cryptocurrencies, it may be considered a business activity. In this case, 100% of your profits are taxable as business income at your full personal income tax rate rather than just 50% - 67% as with capital gains. The specific rate again depends on your total annual income and can be substantial if you fall into higher income brackets.
To buy cryptocurrency in Canada using Coinsquare, you can follow these step-by-step instructions:
That’s it! You’re now ready to start buying and trading cryptocurrencies on Coinsquare.
