Bitcoin ATMs, Exchanges & Brokerages: What's the Difference?

Canadians who are new to buying Bitcoin in Canada may feel bombarded with options and new terminology when searching online to find out where to buy Bitcoin in Canada. This guide will help to simplify and explain the difference in aiming to assist those when choosing between Bitcoin Exchanges, Bitcoin ATMs or Bitcoin Brokerages.

A Bitcoin Exchange

Canadians looking to buy Bitcoin online often sign up with an Exchange to convert their Canadian dollars to BTC. Once they’ve converted their CAD to BTC, the customer can then exchange Bitcoin for altcoins such as Ethereum, Ripple or Bitcoin Cash — among many others.

Most Exchanges allow customers to store their Bitcoin in-house within their account wallet so they can exchange Bitcoins when trading if the time is right. Exchanges often use an order book which can provide limit orders, in other words, the ability to buy or sell at a certain price automatically once the live rate reaches a desired level. On the flip side, withdrawal delivery times can be lengthy and storing coins outside of one’s personal wallet always takes on a degree of risk.

The majority of Canadian Bitcoin Exchanges are registered Money Service Businesses (MSBs) and are regulated to comply with FINTRAC; so ID verification is usually required.

A Bitcoin ATM

For Canadians who want to buy using a Bitcoin ATM this option is available in most major cities at various locations. When converting Canadian dollars to Bitcoin at a Bitcoin ATM, the CAD to BTC rate can be much higher as there is a high ‘convenience fee’ baked into the cost of the transaction.

Bitcoin ATMs generally allow customers to buy Bitcoin without ID or anonymously with Canadian dollars in the form of physical cash, although travelling to the nearest Bitcoin ATM location can be viewed as an inconvenience. This can be complicated and unsafe, given the current Covid-19 situation Canadians are facing in these unprecedented times.

A Bitcoin Brokerage

Bitcoin Brokerages tend to simplify the buying process and are ideal for newcomers to the space. Charts, flashy order books and other trading instruments can be useful tools for experienced traders but can also overwhelm those getting started buying Bitcoin.

Most Bitcoin Brokerages cater to those that aren’t buying and selling at a breakneck pace but simply want to get some Bitcoin in their hands quick and easy. The Brokerage model’s simplicity generally leads to faster delivery times than Exchanges.

When selecting a Brokerage to buy Bitcoin from in Canada, it’s worth considering if they are a noncustodial Bitcoin Brokerage. Once Canadians store Bitcoin within an Exchange’s/Brokerage’s provided wallet, the client loses ‘custody’ of the Bitcoin in the sense that they don’t control the private keys to the third party wallet. The client may have access to their account but technically do not have full control of their funds. The release of coins is determined by the company not the client. To incur the least risk, it is recommended to always buy Bitcoin and send it directly to your own personal wallet where you control the private keys.

Bitcoin Brokerages often adhere to an Over-The-Counter (OTC) model of delivery that helps Canadians buy Bitcoin instantly upon funding their account with CAD (Canadian Dollars). Those who are fresh in learning how to buy bitcoin in Canada often prefer this method of buying Bitcoins making the conversion of CAD to BTC easier to navigate.

The majority of Canadian Bitcoin Brokerages are registered Money Service Businesses (MSBs) and are regulated to comply with FINTRAC; so ID verification is usually required.

To get started, or buy again, with an all Canadian favourite bitcoin broker, navigate to the MyBTC.ca Login/Signup page and confirm your phone number via SMS text.

Published: 2020-06-17

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