As cryptocurrency continues to gain acceptance in Canada, there has been an influx of consumers looking for ways to participate in this white-hot market. As such, Canadians are being advised to spend wisely and safely as Canadians lost nearly $11 million through digital currency scams alone, second only to wire transfer fraud, in the first eight months of 2020.
Canadians ready to buy their first bitcoin will need to consider the risks in order to do so safely. Through research, working with reputable retailers, exchanges and brokerages, and protecting yourself from mobile phishing scams, consumers need to be aware of how their crypto wallet can and should be used in transactions.
As the Founder and CEO of Bitcoin Well (TSXV: BTCW) and expert in the crypto industry, I have helped bring forward crypto education to Canadians. Bitcoin Well is a strictly non-custodial Canadian crypto company and is the first publicly traded Bitcoin ATM company in the world that provides easy, safe, and secure ways to buy, sell, and use Bitcoin.
Recently, Bitcoin Well launched an educational curriculum to offer relevant and reliable information about Bitcoin to individuals looking for personal or professional development within this growing FinTech sector. In 2014, I set out to bring our third Bitcoin ATM machine to Vancouver and since then, have brought over 20 machines in the Vancouver area.
How to Prepare for the First Purchase and Protect Your Investment
If it sounds too good to be true, it is. If someone is soliciting you to buy into an investment that will “get you rich quick”, chances are – it won’t. Phishing scams are huge in the crypto world, and it’s easy for a first time buyer to get duped into a transaction that will lead them to major financial trouble.
First – Do things with intent. A majority of phishing scams can be prevented from taking a few minutes to explore the email or link in front of you and not clicking the first link you’re presented with.
Second – Double check that your Bitcoin address is safe. Crypto is digital – sending crypto can be as easy as sending an email. Each type of crypto has its own address, so make sure you’re sending Bitcoin to a Bitcoin address. Similarly to when you are sending an email to a new contact, or if you receive a suspected spam email, double check that the address is secure.
Lastly – Education is key to protection. Absorb what the experts are saying, but make your own decisions. By doing research on the market and the specific crypto currency you are interested, you will be able to ensure you are making smart, informed investments
Top Three Safety Tips for Purchasing Crypto
1) Use your own crypto address through self custody
At Bitcoin Well, we know that the non-custodial model is the safest way to buy and sell your bitcoin. Ultimately, the non-custodial model means our customers hold and control their own bitcoin. It’s an essential component of our overarching goal to empower people to take control of their wealth and long-term financial wellbeing.
2) Use a different crypto address every time
A crypto address indicates the source or destination of a crypto payment. Similar to sending an email, if you want to send crypto to your friend, you would send from your address to your friend’s address. Most blockchain experts recommend generating a new address each time you send or receive a payment, though. This can go a long way from preventing hackers finding your stash and avoiding unintended mistakes from being made.
3) Check in with your intent
Safety is in custody and privacy. As mentioned above, make sure you are doing your research. Are you purchasing crypto because your cousin purchased it or saw your favourite influencer promoting the “next best thing”? Or, are you investing because you believe in the technology, have done your research, and are willing to be involved in the industry for the next 6 months – 20 years? Don’t let FOMO (fear of missing out) force you into a situation.
How Canadians Can Prevent Crypto Theft and Hacks
Keep your keys safe
Canadians can access their crypto through the widely used public and private key system (based on cryptographic technology invented during WWII), and one way they can lose money is if they lose those keys. Since there’s no bank, you can’t just call someone and have them reset your password. If someone else gets your keys, they control your wallet.
Get a wallet, preferably cold
Hardware wallets are physical devices that protect your coins from the potential dangers of the internet, while still offering accessibility. They are often referred to as “cold storage”. They cost $50 to $150, and are widely regarded as the safest way to store your crypto. One word of caution: Don’t lose your passwords. There’s currently about $140 billion worth of Bitcoin stuck in wallets people can no longer access.
Set up dual protection
The process of learning about and setting up two-factor can be a little complicated, but the extra layer of security is well worth it. In short, that means you can take a deep breath without having to worry about theft. Hardware wallets often provide dual protection as a nature of how they operate.
Is There Truly a ‘Safest’ Time to Buy Bitcoin?
I often think of the analogy “The best time to plant a tree was 20 years ago. The second best time is now.” In the context of buying bitcoin, this means that if you want success and growth, the best time to act is now.
When’s the best time to buy? Now. When’s the best time to stop? Never.
In terms of the safest time to buy, I truly believe in the accumulation game. Buy frequently and in small amounts. First time buyers and even long term holders need to shift their mind set from bitcoin being an investment to bitcoin being a long term savings account. The concept that we are entering a tough period for crypto is 100% accurate. We are going through a crypto winter, meaning there is a sharp slump, followed by a drop-off in trading and months of market downturn. Yet, the fundamentals don’t change. At Bitcoin Well, we have implemented a “Bitcoin Savings Plan” where we allow our employees to get paid in bitcoin, with as little as 1% of their paycheck can be taken in Bitcoin. We encourage other employers to offer this same benefit to their teams.
Time is on Your Side
Younger Canadians are more likely to be comfortable betting on cryptocurrency in general. In a 2021 study, it was found that more than 49% of millennials polled own cryptocurrency along with 38% of Gen Xers respectively believe they can become millionaires by investing in cryptocurrencies. With the approach of purchasing small increments of Bitcoin specifically, frequently, over a long period of time, given the lifetime performance of Bitcoin, Gen Z and Millennials would be better protected against wealth erosion from their young adulthood into retirement years. It is important to observe the ‘short-term volatility’, but to remember the long-term growth’ potential driven by sound money principles.
What Can Consumers Look for When Buying Crypto for the First Time?
If you are new to the industry, be sure to ask questions and then ask more. The crypto industry is evolving and changing everyday, meaning that no one knows everything. However, through talking to experts and people involved in the space, you will begin to develop a sense of confidence with making the right decisions. Read read read. Set personal goals with an attainable time frame to read a certain number of articles and watch a certain amount of informative videos a week instead of jumping in right away.
Lastly, get hands on experience. Bitcoin works the same if you have $10 or $10 million.
Adam O’Brien is the Founder and CEO of Bitcoin Well (TSXV: BTCW) and expert in the crypto industry.