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Coinbase Is Trying to Compete In Canada's Crowded Bitcoin Market

Can Coinbase hang with the hosers?
Image: Flickr/Alex Indigo

Coinbase, a popular platform for buying and selling bitcoins using real money, started accepting Canadian dollars yesterday.

But while Coinbase has the distinction of becoming the first licensed Bitcoin exchange in the US just this year, in Canada, the service is entering an already crowded market.

Coinbase has set a high bar in the world of Bitcoin, although until this year users could only use the site conduct transactions using coins. This is because many other Bitcoin exchanges are based overseas, and have a pretty solid track record of totally imploding and losing all their customers' money. Basically, Coinbase has stuck since 2012 around more or less without incident, and that's something.

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Coinbase "took too long and lost a bit by being a me-too in now a very crowded space"

Coinbase is hardly the only Bitcoin player in Canada, however. Coinbase became a fiat-for-coin exchange just recently, but exchanges like Cavirtex, Quadriga, and Cointrader (just to name a few) have been operating in Canada for years. Cavirtex boasts having traded $100 million in Bitcoin since the exchange opened in 2011. These companies also have the advantage—perceived or real—of being founded and based in Canada.

In a Reddit thread about the Canadian expansion, user "flashpunk" wrote that they "likely won't be using Coinbase," because they're happy with Quadriga. On Canadian Bitcoin forum Coinforum, one user wrote that Coinbase "took too long and lost a bit by being a me-too in now a very crowded space."

In the US, states like New York and California are looking to impose regulations on exchanges like Coinbase, which some critics have derided as a hindrance for innovation in the cryptocurrency sphere. In Canada, the Senate has officially recommended that legislators refrain from regulating the still-nascent Bitcoin industry, at least for now. The province of Quebec, which mandated that Bitcoin businesses must obtain a license earlier this year, is an exception.

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One significant advantage Coinbase has over its Canadian competition, noted in a Reddit thread, is its transfer fees. To deposit or withdraw Canadian dollars using Interac or electronic funds transfers, Coinbase charges just $1. Cavirtex charges $25 for an Interac deposit, and $10 for a withdrawal.

Still, far from steamrolling into Canada brandishing a successful—US-based—business model, Coinbase is coming up against a well-entrenched Bitcoin ecosystem in Canada. If the company wants to hang, it'll have to get ready to go out 'fer a rip with the best of them, eh?