Remember when Bitcoin was first introduced to the world in 2009? It was a game-changer in the finance world, and people could suddenly transact without going through banks or other financial institutions. Bitcoin showed us that there was another way to do things and opened up a new world of possibilities.

In the years since Bitcoin’s launch, many other “altcoins” have been created. These are alternative cryptocurrencies that offer different features or advantages over Bitcoin. Some of the most popular altcoins include Ethereum, Litecoin, and Monero.

Not only does cryptocurrency have the potential to revolutionize the financial world, but it also offers investors a unique opportunity to make money. The volatile nature of cryptocurrency prices means that there is always the potential for huge gains, but also for significant losses.

If you’re based in Canada and interested in buying altcoins, then this guide is for you. We’ll take you through the process step-by-step so you can confidently make your first altcoin purchase.

What Is An Altcoin?

In the crypto space, there are Bitcoins, and there are Altcoins. Think of Bitcoin as patient zero; it was the original cryptocurrency built on the original blockchain, and any coins created since then are considered altcoins.

Some people also consider Ethereum to be outside of the altcoin category because it has such a large market capitalization, and because its blockchain is the foundation of so many other projects and tokens. But generally, if a cryptocurrency is not Bitcoin, it is considered an altcoin.

How Are Altcoins Made?

Most altcoins are created through ‘forking’, in which a crypto development team will alter the code of an existing blockchain to create a new one. They will then release the new coin with its own unique features.

Source: Visual Capitalist

In some cases, such as with Litecoin, the fork is simply a clone of Bitcoin with a couple of minor changes. In other cases, such as Ethereum, the fork results in a completely different beast with capabilities that vastly exceed those of Bitcoin. Generally speaking, altcoins are created in an attempt to improve upon Bitcoin in some way.

Now that we’ve got a basic understanding of what altcoins are and how they’re made, let’s take a look at how you can buy them in Canada.

3 Steps to Buying Altcoins in Canada

If you want to buy altcoins in Canada, there are three simple steps that you need to follow. 

1. Register for a Canadian cryptocurrency exchange. 

To trade and invest in crypto, you must be registered with a digital asset exchange. These reputable platforms allow you to buy, sell, and trade cryptocurrencies.

Not all platforms are equal in terms of cost and user experience; some are more expensive to use than others, and some can be quite difficult to navigate if you’re a beginner.

Here are a few of Forbes’ top picks for Canadian exchanges: 

• Binance. As of 2023, Binance is the highest-rated exchange in Canada – and for good reason. Maker and Taker fees are just 0.1% and there are over 600 tradable altcoins to choose from. 
• Coinbase. One of the most popular exchanges available, Coinbase allows you to trade and stake on cryptocurrencies across a range of blockchains (Algorand (ALGO), Cosmos (ATOM), Ethereum (ETH), Tezos (XTM), Cardano, and Solana (SOL)). The exchange has a flat-fee of 1%.
• Crypto.com. There are over 250 tradable coins on this exchange, and Maker and Taker fees are just 0.4%. Crypto.com also has very high security ratings. 

Binance is the most affordable option, and it provides a good selection of altcoins. Keep in mind that it may be complicated for beginners, however. If you’re new to the world of crypto, you may want to consider using Coinbase or Crypto.com instead.

2. Deposit CAD into your account. 

Registering with an exchange will require you to provide some personal information, such as your name and email address, and verify your identity.

Source: Coinbase

Once you’ve completed the registration process, you’ll need to deposit CAD into your account in order to start buying altcoins. The amount that you need to deposit will depend on the specific exchange that you’re using, as well as the altcoins that you want to purchase. 

Some exchanges will have deposit fees, while others (like Binance) keep deposit rates free. Each exchange will also have a minimum deposit and spend amount. For instance, Coinbase has a very low minimum of $2 – but other exchanges will have a much higher minimum, making them more convenient for high-volume traders.

Deposit funds into your account, and you’re ready to start buying altcoins.

3. Buy the altcoins that you want. 

Purchasing your altcoins will be the trickiest part of the process. Why? Because choosing investments takes time, and you need to be comfortable with the risks involved in trading cryptocurrencies. 

There are a few different types of altcoin to choose from:

Source: WallStreetMojo

• Stablecoins are designed specifically to maintain a stable value, and they’re backed by assets like USD or gold. These are good for investors who want to avoid market volatility. Tether (USDT) is an example.
• Mining-based coins are created through a process of mining, and they’re often used to power specific platforms or applications. Ethereum (ETH) is the most popular mining-based coin.
• Utility tokens facilitate network fees and rewards within networks but do not hold equity. 
• Security tokens are much like traditional stocks in that they offer ownership or dividends. For instance, Blockchain Capital (BCAP) is a popular security token.

You’ll need to do your own research to figure out which type of altcoin is right for you. Take into consideration each option’s market cap, stability, history, and future potential.

Once you’ve selected the right altcoin for your needs, it’s time to make your purchase. The process will be different depending on the exchange you’re using; generally, you need to choose the amount you want to buy and place your order.

Invest Via Your Retirement Account

Do you have a TFSA or RRSP account? If so, you may be able to profit from your altcoin investments without having to pay any taxes. 

The process is a bit more complicated than simply buying and selling altcoins, but it could be worth it if you’re looking to maximize your profits. 

Here’s how it works: 

• You set up a self-directed RRSP or TFSA through a provider like Questrade or Virtual Brokers. 
• You use your account to buy the altcoins that you want, just as you would if you were buying stocks or mutual funds. 
• When you sell your altcoins, the money goes into your RRSP or TFSA where it can grow tax-free (or at least deferred). 

The biggest downside to this strategy is that you’ll have to pay taxes when you eventually withdraw the money from your RRSP or TFSA. However, if you don’t need the money right away, you can hold the funds in those accounts until you’re retired and in a lower tax bracket. 

Invest Through an Altcoin ETF

If you want to invest in altcoins but don’t want to go through the hassle of buying and selling them yourself, you can always invest in an altcoin ETF. This type of fund owns a basket of different cryptocurrencies, and it’s traded on stock exchanges. 

Source: BlackRock

The two main benefits of investing in an altcoin ETF are that you don’t have to worry about the price of individual coins, and you don’t have to store them yourself. However, it’s important to remember that these funds tend to be very volatile, so they’re not suitable for everyone. 

Recently, it has become possible to hold some EFTs in RRSPs and TFSAs, so this may be an option worth considering if you’re looking for a way to invest in altcoins through your retirement account. 

In Summary

Buying altcoins in Canada is a great idea for investors who are looking to branch out and potentially profit from the explosive growth of the cryptocurrency market. Investing in gold and crypto at the same time is an excellent foundation for a diverse portfolio.

Once you’ve chosen an exchange, it’s a simple process of setting up an account and buying the altcoins you want. Just remember to keep your coins safe by storing them in a wallet, and don’t forget to pay attention to the tax implications of your investment.