What Happens After You Buy Bitcoin in Canada

You’ve bought Bitcoin. Now what?

Many new Bitcoin owners stop at the purchase step without understanding what comes next: withdrawing to your own wallet, securing your private keys, and making decisions about long-term storage and usage. This guide walks through the critical steps after buying Bitcoin to ensure you actually own it, control it, and secure it properly.

You Own Bitcoin — But Do You Control It?

When you buy Bitcoin on a platform, the Bitcoin sits in an account controlled by that platform. You can see your balance, but you don’t yet have full ownership in the technical sense.

Key concept: In Bitcoin, ownership is defined by control of the private keys—the cryptographic codes that allow you to move the Bitcoin.

If the platform controls the private keys, the platform controls the Bitcoin. If you control the private keys, you control the Bitcoin.

This is the distinction between:

• Platform custody: Bitcoin sits on the exchange or broker (they control the keys)
• Self-custody: Bitcoin sits in your own wallet (you control the keys)

The phrase “not your keys, not your Bitcoin” exists for a reason. Until you withdraw Bitcoin to your own wallet, you’re relying on a third party to hold it for you.

Step 1: Understand Wallet Types

Before you withdraw, you need to decide where to send your Bitcoin. There are two main wallet categories:

Platform Custody (Exchange Wallets)

Your Bitcoin remains on the platform where you bought it. The platform manages the wallet and private keys on your behalf.

Pros:

• No setup required
• Easy to sell if you want to convert back to Canadian dollars
• Platform handles all technical aspects

Cons:

• You don’t control the private keys
• Platform could be hacked, freeze your account, or go bankrupt
• You’re trusting a third party with your Bitcoin
• Cannot send Bitcoin outside the platform without withdrawal fees

When it makes sense: Short-term holding (days to weeks) before selling, or very small amounts where self-custody setup isn’t worth the effort.

Self-Custody (Personal Wallets)

You withdraw Bitcoin to a wallet you control. You hold the private keys, which means you have full ownership and responsibility.

Pros:

• You control the Bitcoin completely
• No counterparty risk (no reliance on a platform)
• Can send Bitcoin to anyone, anytime, anywhere
• No one can freeze, confiscate, or restrict your Bitcoin

Cons:

• You’re responsible for securing your private keys
• Losing your private keys means losing your Bitcoin permanently
• Requires setup and basic technical understanding

When it makes sense: Long-term holding (months to years), larger amounts, or when you want full financial sovereignty.

Step 2: Choose a Self-Custody Wallet

If you’ve decided to take self-custody (recommended for any amount you plan to hold long-term), you need to choose a wallet type.

Hot Wallets (Software Wallets)

Software wallets are apps on your phone or computer that store your private keys.

Examples:

• Mobile: BlueWallet, Muun, Blockstream Green
• Desktop: Sparrow, Electrum, Specter

Security level: Medium
Convenience: High
Best for: Amounts under $5,000–$10,000 CAD, or Bitcoin you need regular access to

Risks:

• Vulnerable if your device is hacked or infected with malware
• Vulnerable if someone gains physical access to your unlocked device
• Private keys exist on an internet-connected device

Hot wallets are convenient but carry more risk than hardware wallets. They’re suitable for smaller amounts or Bitcoin you plan to use regularly.

Cold Wallets (Hardware Wallets)

Hardware wallets are physical devices designed specifically to store Bitcoin private keys offline.

Examples:

• Ledger Nano S/X
• Trezor Model One/T
• Coldcard
• Bitbox02

Security level: High
Convenience: Medium (requires physical device for transactions)
Best for: Amounts over $5,000 CAD, long-term holdings, generational wealth

How they work:

• Private keys never leave the device
• You connect the device to your computer only when making transactions
• Even if your computer is compromised, your Bitcoin remains secure

Hardware wallets are the gold standard for long-term Bitcoin storage. The device costs $100–$300 CAD but provides significant security for larger holdings.

Multisig Wallets

Multisignature (multisig) wallets require multiple private keys to authorize a transaction. For example, a 2-of-3 multisig wallet requires any 2 out of 3 keys to move Bitcoin.

Security level: Very high
Complexity: High
Best for: Very large holdings, institutional use, or estate planning

Multisig is advanced and typically not necessary for most individual Bitcoin owners, but it provides additional security and redundancy for significant holdings.

Step 3: Withdraw Bitcoin to Your Wallet

Once you’ve set up a wallet, withdrawing from the platform is straightforward.

Get Your Wallet Address

Open your wallet app or hardware wallet and navigate to the “Receive” section. Your wallet will display a Bitcoin address—a long string of letters and numbers starting with “1”, “3”, or “bc1”.

Example address:
bc1qxy2kgdygjrsqtzq2n0yrf2493p83kkfjhx0wlh

Critical: Always copy the address directly from your wallet. Never type it manually. A single character error means Bitcoin is sent to the wrong address and lost permanently.

Initiate Withdrawal on the Platform

1. Log into the platform where you bought Bitcoin
2. Navigate to the withdrawal or send section
3. Paste your wallet address
4. Enter the amount of Bitcoin to withdraw
5. Review the network fee (typically $1–$10 CAD)
6. Confirm the withdrawal

Double-check the address. Bitcoin transactions are irreversible. Sending to the wrong address means permanent loss.

Wait for Confirmation

Bitcoin transactions are confirmed by miners on the blockchain. Confirmation times vary:

• First confirmation: 10–60 minutes (average ~10 minutes)
• Full security: 3–6 confirmations (30–60 minutes)

The platform will typically show the transaction as “pending” until the first confirmation, then “complete” after 1–3 confirmations.

Your Bitcoin is now in your wallet, under your control.

Step 4: Secure Your Wallet Backup

This is the most critical step and where many Bitcoin owners make fatal mistakes.

The Seed Phrase (Recovery Phrase)

When you set up a self-custody wallet, it generates a seed phrase—a list of 12 or 24 words that can regenerate your private keys.

Example seed phrase (12 words):
army van defense carry jealous true garbage claim echo media make crunch

Critical facts about seed phrases:

• The seed phrase IS your Bitcoin. Anyone with the seed phrase controls your Bitcoin.
• If you lose your seed phrase and your wallet, your Bitcoin is gone forever. No recovery is possible.
• Seed phrases should NEVER be stored digitally (no photos, no cloud storage, no password managers).

How to Store Your Seed Phrase Securely

Best practice:

1. Write the seed phrase on paper or metal (for fire/water resistance)
2. Store it in a secure location (safe, safety deposit box, fireproof safe)
3. Never photograph it or type it into any device
4. Consider storing copies in multiple secure locations (in case of fire, flood, or theft)

For large holdings:

• Use metal seed phrase storage (e.g., Billfodl, CryptoSteel)
• Store copies in geographically separate locations
• Consider a multisig setup for redundancy

Never:

• Store your seed phrase in email, cloud storage, or password managers
• Share your seed phrase with anyone (legitimate services never ask for it)
• Enter your seed phrase on websites or apps (except when recovering a lost wallet on trusted software)

What If You Lose Your Seed Phrase?

If you lose your seed phrase but still have access to your wallet, immediately:

1. Set up a new wallet with a new seed phrase
2. Transfer all Bitcoin from the old wallet to the new wallet
3. Secure the new seed phrase properly

If you lose both your wallet access AND your seed phrase, your Bitcoin is permanently lost. There is no customer service, no password reset, no recovery process.

Step 5: Understand What You Can Do with Bitcoin

Now that you own and control Bitcoin, you have several options:

Hold Long-Term (The Most Common Approach)

Many Bitcoin owners buy and hold for years, viewing Bitcoin as a savings technology or long-term store of value. This strategy is sometimes called “HODLing” in Bitcoin culture.

Why people hold:

• Hedge against currency debasement or inflation
• Savings outside the traditional banking system
• Generational wealth transfer
• Conviction in Bitcoin’s long-term value proposition

If you’re holding long-term, cold storage (hardware wallet) is strongly recommended.

Spend Bitcoin (Where Accepted)

Some Canadian businesses accept Bitcoin for goods and services, though this is still relatively uncommon.

Where Bitcoin is accepted:

• Some online retailers (Microsoft, Newegg, Overstock historically; acceptance varies)
• Some local businesses (cafes, restaurants, service providers)
• Gift card platforms (Bitrefill, CoinCards for indirect spending)

Tax implication: Using Bitcoin to buy goods or services is a taxable event in Canada. You must calculate and report capital gains based on the Bitcoin’s value at the time of the transaction versus your purchase price.

Send Bitcoin Internationally

Bitcoin can be sent to anyone, anywhere in the world, without relying on banks or payment processors.

Use cases:

• Sending money to family abroad (cheaper than wire transfers or remittance services)
• Paying international contractors or suppliers
• Moving wealth across borders without intermediaries

Transactions settle in 10–60 minutes and typically cost $1–$10 in network fees, regardless of amount.

Sell Bitcoin (Convert Back to CAD)

If you decide to sell, you’ll need to send Bitcoin back to a platform that supports fiat withdrawal.

Process:

1. Send Bitcoin from your wallet to the platform’s deposit address
2. Sell Bitcoin for Canadian dollars on the platform
3. Withdraw Canadian dollars to your bank account via Interac, EFT, or wire

Tax implication: Selling Bitcoin is a taxable event. You must report capital gains or losses based on your sale price versus purchase price.

Step 6: Plan for the Unexpected

Bitcoin ownership requires planning for scenarios where you’re unable to access your Bitcoin.

Estate Planning

If you die or become incapacitated without leaving instructions, your Bitcoin may be permanently lost.

What to plan for:

• How will your heirs access your Bitcoin?
• Where is your seed phrase stored?
• Do trusted individuals know how to recover your wallet?

Options:

• Store seed phrase in a safety deposit box with estate documents
• Use a multisig wallet where heirs hold backup keys
• Work with an estate attorney familiar with digital assets
• Leave clear instructions (without revealing the seed phrase in insecure documents)

For high-net-worth individuals managing significant Bitcoin holdings, professional guidance on custody and estate planning is critical. Review Bitcoin for High Net Worth Canadians for specialized support on large holdings and estate structures.

Wallet Recovery Testing

Before storing large amounts, test your wallet recovery process:

1. Write down your seed phrase
2. Delete the wallet app or reset the hardware device
3. Restore the wallet using only the seed phrase
4. Verify your Bitcoin balance appears correctly

This confirms your backup works before you need it in an emergency.

Common Mistakes New Bitcoin Owners Make

1. Leaving Bitcoin on the Platform Long-Term

Platforms are not banks. They can be hacked, freeze accounts, or go bankrupt. If you’re holding for more than a few weeks, withdraw to self-custody.

2. Not Backing Up the Seed Phrase Properly

Storing seed phrases digitally (photos, cloud storage, password managers) exposes you to hacking risk. Always use physical, offline storage.

3. Sending Bitcoin to the Wrong Address

Bitcoin transactions are irreversible. Always double-check the receiving address before confirming a transaction.

4. Forgetting About Taxes

Selling or spending Bitcoin is taxable in Canada. Keep records of purchase dates, amounts, and exchange rates for accurate tax reporting.

5. Panic Selling During Volatility

Bitcoin’s price fluctuates significantly. If you’re holding long-term, short-term price movements shouldn’t trigger emotional decisions. Have a plan and stick to it.

6. Falling for Scams

Common Bitcoin scams include:

• “Send me Bitcoin and I’ll send back double” (guaranteed scam)
• Fake customer support asking for seed phrases (no legitimate service asks for this)
• Investment schemes promising guaranteed returns (Bitcoin ownership is not a get-rich-quick scheme)

If something sounds too good to be true, it is.

When to Consider Professional Guidance

For large holdings or complex situations, professional guidance can prevent costly mistakes:

• Amounts over $50,000 CAD: Consider working with a Bitcoin-focused advisor on custody setup
• Corporate holdings: Businesses holding Bitcoin on their balance sheet face different accounting and regulatory requirements—see Corporate Treasury Bitcoin Canada for structured support
• Estate planning: Consult an estate attorney familiar with digital assets
• Tax reporting: Work with an accountant experienced in cryptocurrency taxation

Summary: Your Post-Purchase Checklist

After buying Bitcoin in Canada, follow these steps:

• Decide between platform custody (short-term) or self-custody (long-term)
• If self-custody: choose a wallet (hot wallet for <$5K, hardware wallet for >$5K)
• Withdraw Bitcoin from the platform to your wallet
• Write down and securely store your seed phrase (never digitally)
• Test wallet recovery to confirm backup works
• Plan for estate transfer and emergency access
• Keep records for tax reporting (purchase date, amount, exchange rate)
• Avoid common mistakes (wrong addresses, poor seed phrase storage, scams)

Bitcoin ownership requires responsibility, but the trade-off is complete financial sovereignty. No intermediary controls your Bitcoin. No third party can freeze or confiscate it. You have full ownership and full control.

The key is securing your private keys properly and understanding that Bitcoin ownership is fundamentally different from holding assets in traditional financial accounts.

Once you’ve completed these steps, you own Bitcoin in the truest sense—and you’re positioned to hold it securely for as long as you choose.