The Disadvantages of Using Crypto in Everyday Financial Activities

First introduced to the public by Bitcoin in 2009, cryptocurrency has shaken up the world of finance and technology. In its essence, cryptocurrency is a digital currency that lacks a central regulator like a bank or government. Being so new, there is still a lot of confusion surrounding cryptocurrency, with many either hesitant to invest, or just flat-out refusing. 

As a note for Canadian investors, using crypto in daily transactions is incredibly limited. The Canadian government were the first in the world to introduce regulations around crypto, but their stance on it was one of fear and aversion. As such, crypto, regardless of company or type, is not considered to be legal tender in Canada. Only back notes and coins issued by The Bank of Canada are considered to be legal tender. Therefore, it is nearly impossible to find businesses who will accept crypto as a form of payment for goods or services.


When one thinks of crypto, they probably think of Bitcoin first. Bitcoin was the first cryptocurrency introduced and is currently the most popular form of cryptocurrency in use. However, investors need to know that Bitcoin was created as a transactional currency. And this is an important distinction because not all cryptocurrencies are intended for transactions. There are also utility tokens, governance tokens, platform tokens and security tokens. When investing in crypto, you need to do a lot of research to understand what it is that you’re buying and how to use it. 


Despite some laws being introduced, crypto still lacks substantial regulation. How you buy it, where you buy it from, how it can be invested and used are all still very murky legal areas. For instance, in Canada, crypto is not considered legal tender, and deposit insurance plans do not cover crypto assets, but crypto can still be subjected to taxation, and crypto is considered a commodity by the Canada Revenue Agency. 

If you invest in crypto, your investment does not have the same protections as a traditional investment, if you lose your investment because you are hacked or scammed, there is a high likelihood that the funds will never be recovered.

You also need to be aware of both federal and provincial/territorial regulations. Not all financial regulations come from the federal level, and in fact, most regulations for crypto don’t come from the federal level. So, depending on the province or territory where you live and hold your crypto investments, you may be subject to different regulations. 

In addition, while governing bodies are working to understand the criminal side of crypto and how it is used in money laundering and other unethical practices, there are few ways in which criminal activity can be detected and prevented. Plus, those who invest in crypto are far more likely to find themselves victims of fraud, hacking, or scams. The government of Canada website is updated frequently to alert those invested in crypto of current scams, but they often can’t fully keep up. 

You can also lose all of your investments, not just to scams, but to user error. Your wallet where you keep your investment is protected by a key. If you lose your key, you will lose access to your wallet, again, with a very good chance that you will never be able to recover your investments. It’s also important to keep in mind that currently, crypto transactions are not reversible. So, if you buy something using crypto and want to make a return, you have to trust that the seller will return your crypto in good faith, which often does not happen.

Crypto Uses 

Since the majority of businesses do not accept crypto as a form of payment, in Canada, crypto is generally mined and used for the purpose of investment and trading. However, these also come with risks. Crypto is considered high risk and extremely volatile as it lacks inherent value. Market demand, competition, and investor sentiment all determine the value of crypto, which means that one day the price of crypto could be very high, followed by a crash not long after, with the price sometimes changing because of a single news story. 

Lauren Schwartz | Staff Writer



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