Where Should You Keep Your Cryptocurrency? The Best Crypto Wallets & Exchanges In Canada
Today, I bought a Trezor hardware wallet to store my cryptocurrency and I’ll tell you why.
But first, a quick backstory…
Why I’m Writing This Blog
I wouldn’t call myself a veteran in the crypto game by any stretch of the imagination. I pride myself on the fact that I’m still learning. Shoot, I only bought my first bit of Bitcoin a few months back.
Leading up to that fateful moment when I finally decided to hit “buy” for the first time I was both deeply intrigued and considerably ignorant.
Crypto: A Brand New Asset Class
Cryptocurrency isn’t just new to me - It’s new to almost everyone.
The Complete Guide to Bitcoin
Bitcoin, the grandfather of all crypto didn’t even exist until 2009!
So, unless you were an early adopter, we all have some homework to do to get up to speed on navigating the digital assets economy.
Your Self-Education In Crypto
Since December 2020, I’ve spent well over 500 hours listening, reading, and watching every podcast, book, and youtube video on crypto and blockchain that I can find.
😅There is a LOT to cover.
In a way, what I lack in experience I’m trying to make up for in study and experimentation.
From talking to other newcomers in the space, I’ve found that most of us eventually arrive at the same questions:
What is a Bitcoin?
How does a blockchain work?
Is cryptocurrency a safe investment?
What are the best cryptocurrencies out there?
Where can I buy cryptocurrency in Canada?
Do I need a special wallet to store my cryptocurrency?
At first glance, The Crypto Game can be intensely overwhelming! But honestly, there is no “best place to start” - You’ve just gotta jump in it and learn as you go.
In this article, I’m going to demystify one of the most popular questions that people new to the crypto community always ask…
Where Should I Store My Cryptocurrency?
I’m a stock guy. I feel comfortable in the equity markets. I love my Questrade account cuz I know it in and out. The service is A1 and the user experience is top-notch, too. But keeping your crypto in the custody of a centralized exchange, though easiest and most convenient, is actually NOT always the best idea.
Centralized Exchange vs Decentralized Exchanges
If you’ve ever bought shares of a publicly listed company on the stock market - Surprise! You’ve done business on a centralized exchange.
What Is A Centralized Exchange
A centralized exchange (CEX for short) allows users to create an account to trade assets with other users in the market.
📌The part that’s “Centralized” is the data and the assets.
What Is KYC?
When you open an account on a centralized exchange, the bank or brokerage in charge is mandated by law to put you through a process called KYC, short for “Know Your Customer”.
KYC is required at all regulated financial institutions as an Anti-Money Laundering (AML) compliance measure.
The KYC process requires investors to submit their personal information, which may include:
Full name
Date of birth
Address
Proof of address
Government ID
The source of your funds
Occupation
Honey Pot: the Risks Of Storing Your Data In A Central Location
Once you complete your KYC, the financial institution maintains a record of your transactions along with your personal data in a central database.
This is good for AML purposes, but it can also be problematic for security.
If there was ever a data breach at your bank or brokerage all of your personal info would be at risk!
So, federally regulated banks and brokers have take extreme measures to ensure the integrity of their cyber security. In contrast, you can’t always say the same for the security of every centralized crypto exchange (but more on that in a second).
Are Your Assets Insured?
Savings deposits held in Canadian banks are insured up to $100,000 CAD by a company called CDIC. Likewise, if a brokerage where you have registered and non-registered investment accounts (like a margin account, RRSP, or TFSA) were ever to become insolvent, your investments would be CIPF insured up to $1M per account.
However, insurance of this sort is rare in the wild world of crypto.
In other words, if the centralized crypto exchange where you buy your Bitcoin ever went bankrupt, or got hacked, then there’s a good chance that you’ll never get your money back. Nightmare.
In 2014, the largest Bitcoin exchange in the world, Mt. Gox, was hacked & 850,000 BTC was lost.
At the current price of approximately $50,000 per BTC, that’s equal to $42.5B USD😬
This wasn’t the last time that a cryptocurrency exchange was compromised. In fact, there are many other incidents on record.
An article from CoinTelegraph mentioned that In 2019 alone, twelve crypto exchanges were hacked for a grand total of $292,665,886 worth of crypto along with 510,000 user logins.
At first, I didn’t see much harm in keeping my crypto on a centralized exchange because I’d always traded stocks on a centralized exchange. But, sometimes when you’re playing a new game you have to learn new rules.
The Best Centralized Exchanges
Centralized exchanges are the gateway for most new people to enter the crypto economy cuz a CEX has a more familiar feeling and is much easier to use than a DEX.
On a good CEX, you can easily email money transfer cash or punch in your credit card number to buy your first Bitcoin. No wallet or cryptographic keys needed.
But, if you’re going to be using a centralized exchange there are really only 2 that I personally recommend. These are the ones I’ve personally used.
The Best Centralized Crypto Exchanges in Canada
Founded in 2017 in Canada
FINTRAC-registered = Fully compliant with all Canadian anti-money laundering practices.
All customer crypto on the platform is held in cold storage by institutional custodian Gemini Trust. Gemini’s crypto assets have $200M USD insurance coverage. Also, Gemini, owned by Cameron & Tyler Winklevoss, is one of the older companies in the entire crypto economy.
All customer cash that has not been used to buy crypto yet is held with Schedule 1 Canadian banks (which qualifies your cash deposits for CDIC insurance up to $100k).
24/7 live customer support.
6 Cryptocurrencies available to buy: (Bitcoin, Ethereum, Litecoin, XRP, Stellar & Bitcoin Cash.)
Coinberry integrates with the Trezor hardware wallet, so you can buy from Coinberry directly on your personal cold storage device.
If you’re thinking about getting into Crypto & want to support my blog, you can Sign Up for Coinberry using this affiliate link and you’ll get a $20 sign-up bonus when you invest your first $50!
Crypto.com is my second favourite CEX. I used this platform for quite some time when I first started out, so I’m familiar with it.
They offer an awesome user experience and their platform has a ton of great DeFi features to help you get more out of your crypto like staking and crypto loans.
Crypto.com also offers a Visa debit card that allows you to spend CRO, the native coin of their platform, anywhere Visa is accepted.
To unlock access to the Visa, though, you first must deposit & “stake” or lock up a minimum amount of money. For example, if you stake $5,000 worth of CRO on Crypto.com you gain access to their Jade Visa which offers a monthly rebate on Netflix and Spotify, plus 3% cash back & access to airport lounges.
This platform does offer access to many more coins and tokens than Coinberry, which is a huge plus, too. They also have a helpful support team and a handful of built-in security measure to make sure that your investments are safe.
But, in my honest opinion, you will never use 50% of the features in this platform. So, those things don’t really excite me all that much
Plus, the KYC process on Crypto.com takes 10x longer than on Coinberry. So, instead of being up and running within 15 minutes, you may be waiting as long as 7-10 days to be able to send money to your account.
Where Should You Keep Your Crypto
Personally, I still use centralized exchanges as an onramp to swap my fiat dollars for crypto. So far I haven’t found an easier way.
Then, once my Canadian money is converted to cryptocurrency, I store it on my software wallet or my hardware wallet for safekeeping.
Why YOU NEED A CRYPTO WALLET: Software Wallets & Hardware Wallets
A software wallet is an app on your phone or computer that gives you full control over your own crypto. This is also called “hot storage”.
My favourite software wallet to use is Exodus.
Exodus has a super clean interface and it’s dead simple to use - Perfect for beginners.
There’s a mobile app and a companion desktop application, too. Both allow you to trade crypto directly from the app, view your portfolio breakdown, and track changes in the asset values.
Exodus supports over 100+ coins and tokens, so chances are you won’t have any issues with compatibility.
Oh yeah, and it’s FREE.
Exodus also integrates into the Trezor hardware wallet for easy transfer back and forth.
Other popular software wallets include:
A hardware wallet is a physical device, much like a USB drive, that allows you to keep your crypto with you wherever you go. This is also called “cold storage”.
The best cold storage wallets on the market are the Trezor One and the Trazor T.
Hardware wallets allow you to store your digital assets and private keys offline, far out of harm’s way. However, this added layer of security does come with the risk of you losing or breaking your device.
What If You Lose Your Hardware Wallet?
So, every wallet (software or hardware) comes with a 12-20 word “seed phrase” which can be used to recover access to the information that was on your device.
This string of random words is like the ultimate password, so it’s important that you write it down (twice) and keep it somewhere extremely safe and private.
Where Should You Buy Your Cold Storage Wallet?
Please support my blog by using this link to buy your Trezor Wallet! 😁Thank You!
And another thing… NEVER buy your hardware wallet from a reseller online! Always go directly to the original manufacturer.
One of the most popular scams involves crypto crooks opening brand new hardware wallets, stealing the seed phrase, resealing the wallet into a box, and selling it on Amazon or eBay. Then, once you deposit your crypto onto the device, they take over control using your secret recovery code and send the funds from your wallet to theirs. Ouch.
Always buy your cold storage directly from the company that makes them.
Other popular hardware wallets include:
Ledger Nano S
Ledger Nano X
Not Your Keys, Not Your Coins!
Wallets are necessary cuz when you leave your crypto on a CEX it isn’t truly in your possession.
In actuality, your assets are being held by the company running the CEX and all you have is the rights to those assets. This can lead to a number of potentially sticky situations depending on which CEX you are working with.
Minor issues including temporarily restricted access to your assets are not unheard of. Even with Coinberry, you need to wait 24 hours after your first deposit to be able to send your crypto off of the platform.
Even worse, you could get locked out of your account completely if legal regulations around crypto change where you live or if the CEX you are using decides not to serve customers in your country anymore.
Though they didn’t prevent users from withdrawing their funds, in 2020, the popular CEX Binance gave US customers 14 days to withdraw all of their assets before getting locked out of the app.
This was due to a tightening regulatory environment that was going to make it risky for Binance to continue doing business in the US as it was. So, Binance launched another platform called Binance.us specifically for Americans.
So, what’s my point?
If one of the most popular exchanges in the world decided to lock out users cuz of regulatory fears, then anything can happen.
That’s why I choose to use a wallet.
Once your digital assets are securely stored in there, then and only then is your crypto truly safe.
What Else Can You Do With A Crypto Wallet
First of all, your wallet allows you to send and receive crypto. So, if you ever want to pay for something, you can do it using your wallet.
You can also use your wallet to access a variety of decentralized applications (dApps) on the blockchain, like NFT marketplaces, DeFi protocols, and decentralized exchanges.
Most wallets, like Exodus, Trezor, and MetaMask allow you to swap coins without leaving the wallet. This is super convenient!
You may start with some Bitcoin, but you can exchange your BTC (Bitcoin) for other coins and tokens within the wallet app. This is made possible by software within the app that’s connected to different decentralized exchanges.
What Is A Decentralized Exchange
A decentralized exchange, or DEX, is the antithesis of a CEX.
The big difference is the way that it connects buyers and sellers.
Believe it or not, a DEX is 100% automated and run by a special type of computer program called a “Smart Contract”.
In other words, a DEX allows people to swap their cryptocurrencies without the need for any middleman matching buy & sell orders.
No human intervention whatsoever!
However, since a DEX is completely automated there is no one to call if you ever need tech support. You’re on your own.
Popular DEXs include:
A DEX requires no sign-up, no personal info, no KYC, no nothing. It only requires that you have the Public & Private Keys to your personal cryptocurrency wallet.
What Are Public and Private Keys
Your public key is like the address of your crypto wallet. It’s the alphanumeric string of characters that is used to identify your wallet on the blockchain. Without the public key, no one would know where to send your Bitcoin.
Actually, each different cryptocurrency in your wallet will have its own public address. This is an important fact to point out early which can potentially save you an expensive lesson down the road.
In other words, if you want to receive BTC, you will need to use your Bitcoin address. Likewise, if you want to receive ADA, you will need to use your ADA address. If you try to deposit the crypto using a non-compatible public address in your wallet it will be gone, forever.
Don’t mess this up.
Since your public key is like your address, that would make your private keys akin to your password. In order to send any crypto, you will have to authorize the transaction by “signing” with your private key.
Never, ever in life share your private key with anyone. It is the key to the kingdom.
The Last Word
There’s a lot to wrap your head around when it comes to The Crypto Game, but once you get set up with a good wallet you’re more than halfway there.
If you’re going to trade on a centralized exchange, just make sure that you do your homework on them first.
Then, once you build up a big enough portfolio make sure you get yourself a wallet. Cuz you’d rather be safe than sorry.
