What Is a Bitcoin ATM?
A Bitcoin ATM looks much like a traditional ATM. It is a stand-alone machine or a kiosk, that is typically found at airports, gas stations, convenience stores, and other busy locations. Essentially, Bitcoin ATMs are simply regular ATMs that employ specialized software to enable your cryptocurrency transactions. The only difference is that instead of a bank card, you need to use a Bitcoin wallet.
How Popular Are Bitcoin ATMs?
Bitcoin ATMs are widely used. Research shows that at present close to 30,000 Bitcoin ATMs operate globally. Interestingly, North America is the home to approximately 90% of this number. The majority of Bitcoin ATMs come from two major providers. However, other companies are competing for a slice of the growing market, too.
As we said, Bitcoin ATMs much resemble traditional ATMs, thus being easy to install and operate. If you are a business owner who wishes to have a Bitcoin ATM installed, you should contact a chosen provider and sign the necessary paperwork. The vendor will then set up the machine within the desired location.
How Did Bitcoin ATMs Originate?
Bitcoin ATMs nowadays are reliable, fast, and secure. However, it was not quite like this in the early days of their existence. The first cryptocurrency ATM was installed on October 29, 2013, in a Vancouver coffee shop. Unfortunately, the software ran into too many operating errors, and the machine ceased to function in 2015. Though short-lived, this became the world’s first crypto ATM.
The US witnessed its first Bitcoin ATM being installed on February 18, 2014, in Albuquerque, New Mexico. Unfortunately, the machine only operated for a month before being pulled out.
Europe’s pioneer crypto ATM was located in Slovakia’s capital Bratislava. It was installed on December 8, 2013, and reportedly has operated more successfully than its North American counterparts.
Regulation of Bitcoin ATMs
Since the early days of cryptocurrency, there has been an ongoing debate about regulation. The discussions did not bypass Bitcoin ATMs either. However, at some point, an agreement was reached that Bitcoin ATMs needed to be regulated just like the regular ATMs.
In the case of the United States, this means that if you operate a Bitcoin ATM, you need to register with the Financial Crimes Enforcement Network (FinCEN). You will also have to adhere to the requirements imposed by the Bank Secrecy Act and the Anti-Money Laundering Act.
However, how does the current Bitcoin ATM regulation affect end users? First, your anonymity is no longer guaranteed. The reason is that the laws require you to verify your identity, especially before large transactions. You may need to provide your cell phone and even scan a government-issued ID. Second, you may be subjected to transaction limitations as per the local legislation. Regardless if you agree with these measures or not, they are in place for your own protection.
How to Use a Bitcoin ATM
Bitcoin ATMs are not complicated to use at all. On the contrary, it is much faster and easier to use BTMs to buy and sell Bitcoin or other cryptocurrency compared to traditional cryptocurrency exchanges. There are two types of Bitcoin ATMs you may encounter. The so-called “Unidirectional BTMs” allow you to perform only one-way transactions, such as either buying or selling Bitcoin. In contrast, the Bi-directional BTMs can be used for both purposes.
To function, Bitcoin ATMs need to be connected to the Internet. They perform transactions by using a public key on the blockchain. Before completing the transfer, you will be asked to go through a verification process, which usually involves scanning a QR code pointing to your Bitcoin wallet address. In some cases, especially when it comes to large transactions, you will be required to provide a valid ID.
Using a Bitcoin ATM to Exchange Fiat Currency for BTC
Provide Your Phone Number
You might not be happy that the Bitcoin ATM will ask you to step out of your privacy by providing your phone number. However, as we explained, BTMs are regulated much like other financial exchange instruments, so you have to undergo certain Anti-Money Laundering and Know Your Customer procedures.
Verify Your Identity
As you might have guessed by Step 1 above, some people have tried to input fake phone numbers to protect their anonymity. To prevent users from cheating and guarantee their security, the BTM will send a code to your phone number, which you will have to use to verify your identity. You can do that by entering it into the machine.
Present Your Bitcoin Wallet Address
To get the Bitcoins you are purchasing, you need to have a Bitcoin wallet. It is represented by a QR code you have to scan for the Bitcoin ATM to know where to send the BTC you bought.
Insert Your Cash
The next step is to simply insert your fiat currency into the BTM. The value of Bitcoin fluctuates daily, so the machine will give you a prompt of how much BTC you can buy with your desired amount of cash.
Confirm the Purchase
Once you complete all of the above steps, you need to simply confirm your transaction. You will receive the BTC you purchased in your Bitcoin wallet within ten to 60 minutes.
Cashing Out BTC via Bitcoin ATMs
Using Bitcoin ATMs to cash out your BTC is quite straightforward. Here is a quick guide on how to do it:
- Make sure the Bitcoin ATM you are using enables you to cash out. If so, go to the “Sell BTC” option.
- Provide your Bitcoin wallet address. You can either scan the QR code or enter it manually.
- Verify your identity depending on the local legislative requirements. You might be asked to present a government-issued ID, leave your fingerprint, take a photo, and so on. This step might not be necessary for smaller-size transactions. However, if you intend to cash out a large amount, you will not be able to escape it.
- Send the BTC you are selling to the respective Bitcoin wallet address. The most common way to do this is to scan a QR code. Prepare to retrieve your cash once the receiver confirms the transaction.
- Confirm the transaction and make sure you keep the receipt issued by the BTM.
Do Bitcoin ATMs Charge Fees?
Yes, they do, and the fees are still relatively high at 10% – 15% on average. However, some Bitcoin ATMs can charge up to 25%, so make sure you are familiar with the fees of the BTMs near you. You can use a variety of Bitcoin ATM locator tools to this end.
Pros and Cons of Using a Bitcoin ATM
- Much faster and more convenient compared to regular cryptocurrency exchanges
- Simple to operate
- Provides a great alternative to the traditional banking system
- Allows easy access to cryptocurrency
- Makes cryptocurrency transactions smooth and effortless
- High transaction fees
- Rigorous transaction limits
- Larger transactions require an ID check, so you cannot remain entirely anonymous
As more people are starting to use Bitcoin and other cryptocurrencies for their daily transactions, the number of Bitcoin ATMs is expected to grow over time. While some aspects of using BTMs, such as identity checks, are impossible to bypass and are in place for your own security, we hope to at least see transaction fees go down soon and have the deposit and withdrawal limits adjusted to accommodate larger transfers.