The beauty of Bitcoin is that since it launched, it has opened up an array of opportunities for developers to build numerous solutions that would boost the cryptocurrency ecosystem and make life much easier. Bitcoin ATM is one of the inventions spiraling the space and making everyday life with crypto easier.
A Bitcoin ATM (BTM) is a kiosk that allows buying and selling Bitcoin with cash and vice versa. They have some similar characteristics to traditional automated teller machines. However, unlike conventional ATMs, which support the withdrawal of money linked to a bank account, most Bitcoin ATMs are bidirectional, allowing users to withdraw cash for Bitcoin or deposit Bitcoin for cash. Also, BTMs are independent and not affiliated with a bank account or a cryptocurrency exchange. These ATMs operate more like a gateway and remittance platform with physical accessibility.
Understanding A Bitcoin ATM
Bitcoin ATM was first publicly introduced on October 29, 2013, at a popular coffee outlet—Waves Coffee Shop— in Vancouver, Canada.
Since then, it has been seen in other locations, and according to Coin ATM Radar, in 2020 alone, the estimated number of Bitcoin kiosks in the United States was 9,000. In November 2022, it reached nearly 39,000 booths globally, with countries like Spain, Switzerland, Canada, Poland, and the United Kingdom pioneering its adoption.
The main component of a BTM includes multiple screens with different purposes, such as inputting details, a QR code scanner, a cash dispensing outlet, a receipt printer, a cash deposit slot, etc. Depending on the manufacturer, there are variations in the appearance of a Bitcoin ATM. Some popular Bitcoin ATMs manufacturer include Lamassu, General Bytes, and Genesis Coin.
Most Bitcoin ATMs are compliant with the regulatory authorities of the jurisdiction they are located. For example, in the United States, it’s required that Bitcoin ATMs are registered with the Financial Crimes Enforcement Network (FinCEN) and compliant with the Bank Secrecy Act (BSA), preventing illicit acts such as money laundering. With this, some level of know-your-customer (KYC) requirements must be fulfilled by users when performing transactions.
How Does A Bitcoin ATM Work?
The process for buying Bitcoin on any BTM is quick and easy. The format and style may change depending on the machines’ models, manufacturer, and location. However, the process is similar.
First, the user selects the buy Bitcoin option, and then the user must scan a QR code displayed on the screen with their cryptocurrency wallet.
Usually, the amount of BTC a user wants to purchase determines if they pass through any verification step. In addition, some jurisdictions enforce verification regardless of the amount.
Inputting the amount of Bitcoin to be bought is next, followed by inserting cash into the cash deposit slot. Once the transaction is confirmed, which takes a few minutes, the user receives their Bitcoin into their wallet.
Note: it’s advisable to collect and keep the receipt of every transaction on a Bitcoin ATM for future purposes or referencing.
Selling BTC, on the other hand, takes an entirely different pattern. Some key difference separating it from buying is that users must deposit Bitcoin into a crypto wallet through a paper with a QR code that will be printed out of the machine. In some instances, users might be required to input a phone number which would be used to notify them when Bitcoin sent is received and ready for withdrawal to cash.
Once confirmed, users are to scan the QR code on the paper printed earlier through the QR scanner on the Bitcoin ATM to finalize the transaction. Afterward, the user gets a payout.
Advantages of Bitcoin ATMs
Bitcoin ATMs have several advantages, from the convenience they offer users to fast transactions, privacy, and security, down to increasing Bitcoin adoption.
Convenience and Speed
Bitcoin ATMs are one of the easiest ways to buy and sell Bitcoin for cash without restrictions or hassles. Unlike crypto exchanges that can take up to days to process sales or purchases, Bitcoin ATM removes that barrier. Beyond that, users are allowed to reserve cash at a BTM ahead of use; all they need to do is provide proof of transaction when they need to withdraw their Bitcoin for cash.
Another important component of the Bitcoin ATM is transaction privacy. Using a BTM is a great way to stay anonymous; users are not required to input personal details such as a government-issued ID card, or provide an individual picture, usually needed for some online crypto exchanges; also, users don’t have to provide any form of banking details to initiate a transaction. All transactions have a degree of anonymity which is a refreshing experience for many crypto users.
Bitcoin ATMs are generally suitable for adoption. People using BTM in shopping malls and other outlets for purchases will intrigue more people into knowing what Bitcoin is about and trying it out. Also, some Bitcoin ATMs can create virtual wallets for users who don’t have one, making the process easier and smooth for first-time users.
Good User Experience
Using a BTM is straightforward, and there are no complications attached. The experience is very similar to those of using traditional ATMs, and this gets users quickly familiar with the interface and able to communicate their transactions easily with no-huddle.
Here’s a tweet from a user describing their experience using a Bitcoin ATM
Using a Bitcoin ATM\nis an easy option, provided you have a Bitcoin ATM\nnear you.\nAlso remember, some ATMs require you to scan your ID documents and may also ask for your phone number for KYC purposes. But this generally happens when you are purchasing a large number . pic.twitter.com/Ft3FwuQO6B— Mrs William (@MrsWilliamForex) May 28, 2023
Disadvantages of Bitcoin ATMs
Bitcoin ATMs have cons; despite being helpful regarding adoption and usage, one might face certain drawbacks and limitations. This includes transaction limits, high transaction fees, exposure to fraud, zero insurance, and accessibility.
One of the problems users might encounter with BTMs is the daily transaction limits similar to Bank ATMs. Transactions range from $10 to $10,000 on some Bitcoin ATMs, while others are more.
High Transaction Fee
Unlike crypto exchanges that charge low transaction fees, typically charging as low as 0.05% on each transaction, Bitcoin ATM, on the other hand, charges as high as 10% on transactions made via its kiosk. For example, CoinFlip, a popular Bitcoin ATM operator, charges up to 7% on every transaction. As a user, there’s a need to take caution before using any BTM kiosk.
BTM doesn’t offer insurance for transactions made on its platform. Since it primarily acts as a gateway for Bitcoin transactions with no self-custody wallet, there is no insurance to protect your Bitcoin assets. One good approach is to always keep a receipt for every transaction made on the platform.
The Exposure to Fraud
Illicit actors are now taking advantage of Bitcoin ATMs to defraud unknowing victims, according to a report from the FBI. This is how it works: a fraudster sends a phishing email with a QR code linked to their wallet to the unsuspecting user and requests they complete the transaction via a BTM kiosk. This is a convenient method due to the anonymity involved.
The only solution to this trade-off will be for users to be more cautious and have some extra security on BTMs.
Despite the tremendous growth of BTMs across several locations, they’re still no match for online crypto exchanges at users’ fingertips. However, with more adoption of Bitcoin and technological advancements, there will inevitably be more BTMs across multiple places globally.
Review of Different Bitcoin ATM Manufacturers
There are several Bitcoin ATM manufacturers ensuring accessibility to Bitcoin is easier than it has been; some of them are General Bytes, BitAccess, Genesis Coin, Coincloud, Lamassu, Bytefederal, Cambio, and Bitsop with their machine locations across multiple places globally. Here’s a review of some of the top Bitcoin ATM manufacturers
General Byte is one of the leading Bitcoin ATM manufacturers. Since its inception in 2013, the Czech Republic-based company has consistently developed Bitcoin and blockchain technology solutions. It has a variety of models like the BATMTwo, which remains the most popular type the company has released. The BATMTwoPro is the advanced version of BATMTwo with more features and inclusion, and the BATMTwoUltra supports transactions in both ways. So far, General Byte has more than 10,000 locations worldwide.
BitAccess is another prominent Bitcoin manufacturer founded in 2013. The company provides one of the most sophisticated technologies for transacting Bitcoins via ATM with features like cash recyclers, ID scanners, thermal printers, secure cash vaults, cameras, and broad currency support. The company currently provides two models, the BTM C, and BTM SE, which have gained widespread adoption and are found in over 6,900 locations worldwide.
Genesis Coin Inc remains one of the largest Bitcoin ATM manufacturers in the world. It has two popular models: Genesis 1 and Satoshi1. The Genesis 1 is known for its advanced technology, fingerprint scanners, high-definition camera, SMS verification, and more. Genesis 1 is bidirectional, supporting cash for BTC and viceversa. Satoshi1 is a one-way Bitcoin ATM that was introduced in 2014.
Founded a year after the first Bitcoin ATM surfaced, CoinCloud is one the leading manufacturer with its Bitcoin ATMs in 4264 in several locations worldwide—CoincCoud support up to thirty different currencies and a bidirectional transaction system.
Bitcoin ATM is a technological advancement that will raise the bar for adopting Bitcoin globally since it opens the room for new and existing Bitcoin users. And with time passing, there will be more improvement that aids users’ interaction with the Bitcoin kiosk.
How many Bitcoin ATMs are in the world?
As of 2022, the number of Bitcoin ATMs has soared to 39,000, four times the number in the united states in 2020.
How many countries are Bitcoin ATMs in?
A report from Statista shows that Bitcoin ATMs can be found in 84 countries in the world and are found in countries like the United States, Canada, the United Kingdom, Germany, Italy, Mexico, Brazil, Ukraine, and Austria.
How safe are Bitcoin ATMs
Generally, BTMs are safe since transactions can only be initiated with the user’s permission. Without granting access, there isn’t a way for your Bitcoin wallet to be tampered with.