How I’d Buy Ethereum in 2018 from Canada 🇨🇦 or USA 🇺🇸
Update: As I gather more experience in dealing with cryptocurrencies in general and Ethereum in particular, I will be updating this post. The latest update was about a “bug” Sam and I got in Jaxx Wallet that made our funds disappear. You can read about it here.
It’s a follow-up on the other post I wrote in June 2016 about how I started investing in cryptocurrencies. Since then, I received several emails and comments asking me how I would buy Ethereum today. After being tired of replying each of them individually, I decided to write one post where I can reply to all your questions!
But first, a bit of history.
Head-spinning rise of Ethereum
Here is the historical cart of the Ethereum vs USD exchange rate that is taken from www.worldcoinindex.com:
The red mark shows an approximate date when I bought Ethereum. At that time, I did hope it would grow with time (that’s why I bought it!) However, I had no idea, not a single clue it would grow that fast that high! It came as a total surprise.
Meanwhile, I have been holding ethers for about 1.5 years already. How do I store my ethers? Would I change the way I did it if I were to buy Ethereum now?
Jaxx Wallet solutions
For the Ethereum wallet, I went with a solution from Decentral, a Canadian cryptocurrency startup. I chose it because back then, there were few popular wallets that supported Ethereum and were compatible with trade platforms that were available back then. I read some reviews and decided to choose Jaxx. It was also supported by ShapeShift, the platform I chose to trade bitcoins to ethers.
Nowadays, I would still probably choose Jaxx despite its cons ➡ bugs. After all, it is quite solid and made in Canada 🇨🇦 ❤
The Jaxx solution comes in a form of two tools: A mobile app and a Chrome plugin.
It seems to be a decent wallet app. One of the main concerns with cryptocurrencies is security. No one wants to wake up one day and see that hackers emptied their wallet. I have been using Jaxx wallet for storing crypto-currency for more than a year now and so far so good. All my crypto-money is still there 🤑
However, the Jaxx wallet is buggy. Sam and I, we both experienced some nerve-wracking bugs in it 😰
Several months ago, Sam updated the wallet on his smartphone… and his wallet stopped showing the number 😱😱😱 It showed the transactions but not the amount. Sam was sure hackers cracked down his wallet and stole everything… and then we remembered about the Chrome plugin!
Sam installed the plugin on his laptop, initialized the wallet…
and voila, the numbers were up untouched! Turns out there was a bug in the mobile wallet that prevented the amount from showing up. I did not update my app so on my side, everything was fine…
…until recently when I did update the app. This time, the wallet simply got stuck in the initialization mode. I still cannot see the number but at least, it does not look like the wallet was hacked.
Given Sam’s history, I did not freak out. Still, the feelings were not great 😰 After having a nightmare about losing my fortune, I also installed the Chrome plugin and set up my wallet there. And my wallet is totally fine with all the ethers still being stored there.
Speaking of the plugin…
You can get it in Chrome webstore.
When installing and setting up the plugin wallet, I was a cautious kitty and followed these steps:
- Add the plugin to Chrome
- Disable the network to prevent all-mighty hackers from seeing your private key (it might be too much but whatever)
- Pair your existing wallet by typing your phrase exactly how it appears in your wallet (or better on a backup device aka a piece of paper)
- Turn on the network back 📡
- The wallet gets initialized and you see the amount and the transaction history the same way you see it in the mobile app
The wallet info is stored locally on the computer where you set it up. If you want to see your wallet on some other machine, you would need to set up the wallet once again – or do some magic in the settings. This is good for security meaning that by default, your wallet data does not get transferred over the network.
Speaking of security…
Keeping it safe
While I was writing an article, I kept discussing it with Sam. At some point of our discussion, he dropped a bomb 💣 by saying he does not have his wallet attached to his Jaxx mobile app anymore 😲😲😲
This is a brilliant move from the point of view of security 😏🤓
If the wallet is not set up on any of wifi / network-enabled devices, hackers cannot access it. Because of that, they cannot steal you crypto-coins 💸🛑 I followed the example and deleted the wallet data from my Jaxx mobile app and plugin. I definitely do not need to look at these numbers on a daily basis since it affects my sleep too much.
Ah and before deleting the wallet, I made sure I did a physical backup and wrote down the private key on a piece of paper. The paper is stored with my other documents such as the passports, etc in a special place. Sam and I, we are actually thinking of renting a bank cell and keeping the backup papers there 🏦
If I were to buy Ethereum today, I would follow the above steps immediately. I would not wait for 1.5 years before cleaning up data thus giving nasty hackers a slight chance to hack me 👊
Apart from security 🔐, many cryptocurrency investors worry about taxes.
Should you declare your gains when you sell cryptocurrency? Why would you do that if the technology seems to allow a full anonymity while trading?
That’s true but…
But your accounts may not be that anonymous and tax agencies can easily subpoena the info. In fact, they already do. The IRS is now well aware of bitcoins and already “[a] U.S. court has ordered Coinbase to turn over identifying information on 14,000 accounts“.
I am in Canada 🇨🇦 BTW. Still, Canada Revenue Agency also recognizes cryptocurrency trades and taxes it accordingly. How exactly CRA classifies it depends on whether you actively trade it or not:
- it’s capital gains (or losses) if you do not actively trade it;
- it’s business income if you do actively trade it.
My case is clearly #1 but I would still hit a high tax bracket if I sell the ethers. I already have a high income with 6 digits (too bad it’s just in CAD… but still) and my tax sheltering accounts (RRSP and TFSA) are pretty much maxed out. If I sell Ethereum now, I would face steep taxes, something about 30% or more (did not look into it frankly speaking).
That’s said I do plan to declare my future transactions with Ethereum. However, I do not plan to trade it anytime soon.
Other questions from Mailbag and comments
I received many questions from the ones of you who read my previous post about investing in cryptocurrency in general and Ethereum in particular. Here are my answers.
(The questions were edited for clarity and to remove any sensitive information)
Q1 – Jaxx wallet bug Sam (and eventually me as well) got
Did your bf really lose all his ethers because of the Jaxx wallet or did he just lose it temporarily and managed to show up properly eventually?
This happened to both of us actually in January 2018. It was not a bug in the wallet; in fact, it was a combination of multiple things that seems to be pretty unique. I wrote a detailed post why it happened and you can read it here.
Q2 – Exchange platform to recommend
What exchange did you use and which do you recommend? I have signed up for QuadrigaCX and Coinsquare but I can’t decide which one to use
In 2016, I used ShapeShift. I do not remember why exactly I chose it, probably because of the convenience. If I am not mistaken, we used it because it was an easy solution that is integrated with Jaxx wallet and we were newbies.
Do not expect me to recommend to buy Ethereum with any of the exchange platforms in question. I did not use any of them. However, some of my readers may have opinions about these services and they may share it in the comments. For example, one of the commentators on the previous post wrote about their experience Coinsquare. It seems to me that the experience was not the best.
Q3 – The other end of a conversion transaction
Tried using Jaxx… Who am I sending my money to? Jaxx seems to be a neat platform to “trade” but you need to make a connection somewhere in the equation
In my case, I just used Jaxx wallet to store Ethereum I bought. This is the “other” side where you send the money to.
Essentially, a trading platform allows sending crypto-money from one account to another, exactly like a regular money transfer. When I bought Ethereum, I exchanged bitcoins that came from my Bitcoin wallet to ethers that went to my Jaxx wallet. That’s it.
Q4 – Buying from Canada with a US bank
In 2016, the method you had used was from CAD -> BTC -> ETH. You mentioned you could have used your US bank to purchase ETH directly. Were you referring to a USD wire transfer to an exchange or another method?
I was referring to one of many cryptocurrency trade platforms available in the US. While I was doing my research back then, I stumbled upon many. At the time, it was a disappointment since I needed to use CAD not USD.
In the end, I did not go on with a deep research so I cannot suggest any. I am sure that now if you google, you would find plenty of reviews since the topic is very hot now.
Q4 – Starting playing with the market
Do you have any up to date info to give me on how I can start and play with <under $1000> in the market?
No, unfortunately, I do not have any up to date info apart from what I wrote here. For now, I just sit tight on my ethers observing the craze and waiting for the time when my regular income drops to a point when it will make sense to sell my stash.
If I were to buy Ethereum or some other cryptocurrency again, I would go with my US account in BMO Harris and use one of the US trade platforms. I think it would save me some money (smaller fees) and time (researching cryptocurrency trade platforms that work with CAD). It seems like Coinbase, one of trading platforms that used to work in Canada, does not support CAD anymore… but I do believe there must be others who do.
Q5 – Coinbase for Canadians
I’m a fellow Canadian as well and found we can buy ether from Coinbase. Did you consider buying ethers from Coinbase?
Coinbase name does sound familiar and I think I did consider them. I probably compared the fees at the Bitcoin Embassy (a physical store in Montreal that is now closed) and their fees and chose the former. Another reason could be that Sam and I, we were not quite sure what we were doing so we wanted first to talk to real humans who seemed to have more experience in this business.
However, I see that Coinbase no longer supports CAD 🙁 So I am not sure you can use them from Canada. If I were to buy Ethereum or some other cryptocurrency again, I would go with my US account and use one of the US based trade platforms.
What are my plans for ethers I have? Well, the plans did not change since I bought Ethereum. I still plan to keep it as long as I can.
Seeing it goes up, up, up 📈 and it is really nerve-wracking. I did not expect it to grow so fast so high. For me, this is an unwanted attention that may well mess up with my plans.
First of all, I am afraid it will crash hard and will never get up again. I do not know what is Ethereum price prediction. In this case, I would probably regret for the rest of my life that I did not cash out “in time”.
Another bad thing is that the cryptocurrency boom is attracting even more hackers. A possible bad outcome could be that they would eventually crack down my wallet and steal all my ethers. Scary… but at least, I know how to mitigate it. I simply deleted all the data from tools I used to check my Ethereum wallet on the phone and computer. I keep my private key in a secure offline storage, i.e. a piece of paper 📝 that is impossible to read without being physically present next to it 😏🤓
These are two possible bad outcomes for me. Despite all this, I still do not want to sell the ethers now due to high taxes I would be paying. So I will hold on it and hope for the best! After all, the gain I got from Ethereum came out of nowhere… and it wouldn’t be a real loss if Ethereum crashes 📉 Easy come easy go.
Anyway, wish me good luck 😉
And in my turn, I wish you a good luck with buying Ethereum! And other cryptocurrency investments