Cryptocurrency popularity has grown, and more people continue to invest in it daily. There are numerous types of cryptocurrencies, but Bitcoin is by far the most popular and has the highest value.
Because of its popularity, people have come up with ways to use their Bitcoins easily and conveniently. One of the main ways is the development of Bitcoin ATMs.
However, you may be new to Bitcoins and Bitcoins wallets and may be wondering what they are and how they work, which is why you should read through the end.
What Is A Bitcoin ATM?
Bitcoin ATMs, also referred to as Bitcoin Teller machines (BTMs), act as physical exchange points for Bitcoins, where you can sell and buy Bitcoins using cash. The first Bitcoin ATM in the world was launched on 29th October 2013 in Vancouver, Canada, at Waves Coffee Shop.
When you buy Bitcoins, the machine dispenses them to your Bitcoin wallet through a scanned QR code on your mobile phone. Alternatively, it could send them to a paper wallet that it dispenses when you buy Bitcoins.
Mostly you can only use BTM when you want to buy Bitcoins, but there are some that you can use for both buying and selling. How much you pay to buy the Bitcoin or how much you get after selling your Bitcoin depends on the current exchange rate for the Bitcoin.
The BTM gets the exchange rates in real-time from the internet. In addition to the price of your Bitcoin, you have to pay extra for the service. Averagely, the service fee is normally 8.93%, but that differs from BTM to BTM.
What To Do Before Going To A Bitcoin ATM
Before you use a Bitcoin ATM, the things you need to do to be able to use it are;
Getting a digital wallet
Digital wallets help you store your Bitcoin, just like physical wallets help you store your physical cash. That makes it possible for you to keep track of your Bitcoin balance and know how much you need to sell or buy.
There are different forms of Bitcoin wallets, such as hardware devices, web-based, and desktop software. However, if you want to use the BTM, a web-based digital wallet or mobile app is best.
Setting up the wallet for easy access
Before buying or selling Bitcoin at the BTM, you must get your digital wallet ready. If you are using a mobile application as your wallet, it is easy to set up.
One of the most common and easy-to-use wallets is the Blockchain Wallet that you can use on Android and iPhone gadgets. All you have to do is download the app, use your email to register, and set a password.
All wallets come with “keys,” which are often alphanumeric characters to keep your Bitcoin safe, and you must note your key. Alternatively, you can download a QR code that is much easier to use at the BTM.
Finding BTM locations
Just like cash ATMs, you can find BTMs at gas stations, coffee shops, restaurants, or convenience stores. However, unlike cash ATMs, there are only a few BTMs in every city, which means you might have to travel a distance before getting one.
Fortunately, there are several resources that you can use to find the nearest one. CoinATMRarder is the most popular, but there are others like Bitcoin ATM Map and Coin ATM Finder.
How To Buy Bitcoin At A Bitcoin ATM
- Select the buy option on the machine.
- Enter the Bitcoin amount you want to buy.
- Insert your cash into the BTM
- Scan the QR code of your wallet to ensure the BTM sends the Bitcoin to the right wallet.
- Depending on the jurisdiction and type of BTM, you might have to provide your identification.
- Wait for confirmation of the transaction. This usually doesn’t take long, but again it depends on the type of BTM.
- Check your wallet to ensure the transaction was a success.
How To Sell Bitcoin At A Bitcoin ATM
- Select sell on the BTM.
- Log into your account from the machine and key in the amount of Bitcoin you want to sell.
- Scan the QR code for your wallet.
- You will receive a notification after the transaction is verified on blockchain or Bitcoin Network, then you can withdraw the cash.
After getting your cash, you have to pay the BTM operator the service fee.
How To Transfer Cash To Another Person Using A Bitcoin ATM
You can use the BTM to transfer Bitcoin from your account to someone else’s account by selling your Bitcoin and sending them to their wallet. However, if you do not want to sell your Bitcoin but want to send someone cash from the BTM, use the following process;
- Open an account with the BTM operator.
- Using the BTM, log into your account and enter the amount of money you want to send plus the wallet address of whoever you are sending the money to.
- Insert the cash into the machine and ensure that the transaction is complete before leaving the machine.
The other person will receive Bitcoin in their digital wallet equivalent to the amount of money you send them.
Regulations Before Launching A Bitcoin ATM
If you want to launch your BTM, you have to follow some regulations like other people starting other businesses. These regulations include;
Research requirements for money transmitters in your state
You have to understand that some states are friendly to Bitcoin and Bitcoin ATMs and others are not. This could cause a difference in the cost of the licensure process, the length of the licensure process, and exceptions under the state law of money transmitter.
Those differences are ever-changing as Bitcoin continues to become popular. From September 2020, 49 states had similar regulations for all cryptocurrency firms, which accommodated Bitcoin companies.
Because of those differences, you must research and understand all the requirements of your state to ensure you are on the right side of the law.
Register with FinCEN as a money service business
This is one of the easiest and fastest compliance tasks because instead of going through the permission-based licensure process of your state, you can register with FinCEN through an online portal. The process takes around an hour to complete.
Implement an AML (anti-money laundering) program
If you register with FinCEN, one of their requirements is that you implement a written AML program. Effective AML programs are designed to prevent you or other people from using your Bitcoin account to facilitate any money laundering activities.
Every AML program must be written and address the following four pillars;
- Reasonably incorporate procedures, policies, and internal controls developed to guarantee you comply with the BSA (bank Security Act).
- Elect a compliance officer to oversee day-to-day compliance with the AML program and BSA.
- Provide ongoing and targeted training to your employees about their responsibilities as stated in the AML program.
- Provide an independent audit or review of your AML program annually.
Test the AML program
For this, run sample transactions from your digital wallet via the BTM. Test your threshold to trigger proper KYC (know your customer) and red flags.
When you start operating the BTM, always obtain and properly record information about the customer and transaction.
As a person looking to start operating a BTM, some of the best BTMs you can buy include General Bytes, BATMTHREE, BATMTWO, BATMFOUR, Genesis 1, Genesis Coin, Finney 3, Satoshi1, Gaia, Lamassu, Sintra Forte, Sintra, and BitAccess.
Benefits Of Using BTMs
- Fast and easy to use – Unlike online transactions, BTMs are fast in creating and verifying your account and processing transactions.
- You can use them 24/7- You don’t have to wait for business days to complete a transaction or get coins in your wallet.
Frequently Asked Questions
Can I use my credit card to buy Bitcoin at a BTM?
No. BTMs only work if you use cash. However, if you want to use your credit card, you can buy Bitcoins from safe peer-to-peer platforms.
How much money can I deposit at the BTM?
This depends on the BTM operators. Some set upper limits between $1,000 and $3,500, while others can be as high as $25,000.
How long do Bitcoin transactions take?
Some people wonder whether Bitcoin transactions are instant like those on the cash ATMs. The answer is yes, especially if you are buying Bitcoin. This is because account verification is fast and takes minutes, unlike crypto exchanges that may take days.
However, if you are selling Bitcoin at a BTM, it may take longer because the blockchain must confirm the transaction.
Are BTMs anonymous?
Yes, all transactions you make through a BTM are anonymous. This is one of the reasons why many people trade and transact using Bitcoin. You must know that all the Bitcoins transactions are recorded in the blockchain, but no identities are attached to the transaction records.
If you value the anonymity that this brings, using cash at a BTM is your best answer instead of using credit cards on other platforms because those are easy to trace.
Are BTMs safe?
There are two ways to answer this question;
Are my finances safe?
Yes. BTMs use state-of-the-art software and have security features in place to prevent theft against your cash and Bitcoin.
Am I safe using BTMs?
Most BTMs don’t have large amounts of money, and that makes them low targets for thieves. Also, most of them, just like cash ATMs, are located in highly visible and busy areas.
- What Is a Bitcoin ATM?
- How to Use a Bitcoin ATM
- How Do Bitcoin ATMs Work?
- How to Buy Bitcoin Using a Bitcoin ATM
- Pros & Cons of Using Bitcoin ATMs