If you ask, “What is a bitcoin ATM?” you’re in good company. As cryptocurrencies like bitcoin enter mainstream daily life, you may want to find a bitcoin ATM to buy bitcoins and other cryptos by depositing cash.
A bitcoin ATM isn’t exactly the same as other automatic teller machines (ATM) with which you’re familiar. ATMs at your bank allow customers to withdraw cash, deposit checks, and cash, or transfer money between accounts at the bank. In contrast, a bitcoin ATM produces transactions on the blockchain and sends cryptocurrency transactions to a digital wallet, sometimes with the simple to use QR code.
What’s the Blockchain?
You’ve probably heard about blockchain and cryptocurrencies over the last decade, but what exactly is the blockchain? Simply explained, it’s record-keeping technologies that support bitcoin.
The blockchain is a kind of database but it differs from most in the way it stores data. The blockchain stores information in blocks that become linked together. As data arrives into the network, it’s entered into a new block. When a block is “filled,” it’s then chained to the prior block. In other words, data entered is linked in chronological order. Although different kinds of information may be stored in the blockchain, it’s most commonly used as a transactions ledger.
Since blockchain is used to prevent one person or any group from controlling it, blockchain is collectively controlled. Once data is entered into the blockchain, it cannot be muted or reversed. This means that bitcoin transactions are permanent and available for anyone to see.
Bitcoin ATMs are a convenient way to buy or sell cryptocurrencies. They allow the user to bypass traditional bank networks. Cryptocurrencies continue to grow in value as more people use them. Digital assets are considered a viable asset class for investors, too. Increased availability of bitcoin ATMs is expected to continue as more people accept digital currencies.
Bitcoin ATM Fundamentals
Bitcoin is a spendable digital currency. If you own bitcoin or any other cryptocurrency, you may want to liquidate some and convert it to your fiat currency, e.g. the U.S. dollar. Bitcoin ATMs make it convenient to buy and sell cryptocurrencies like bitcoin.
Bitcoin ATMs are either standalone terminals or kiosks that allow you to buy and sell bitcoin (or other cryptocurrency types). The bitcoin ATM connects to the Internet and may use QR (quick response) codes to easily transfer cryptocurrencies to your digital wallet.
There are at least 14,000 bitcoin ATMs in use around the globe. More bitcoin ATMs are expected. Cryptocurrency ATMs are quite popular in some places, e.g. Las Vegas, Nevada, Atlantic City, New Jersey, and throughout the United States. After the U.S., bitcoin ATMs are popular in Canada, the UK, and Austria.
What’s a Bitcoin ATM?
Bitcoin ATMs facilitate a customer’s decision to buy bitcoin and other crypto types. These terminals aren’t technically like bank automatic teller machines. They don’t dispense bitcoin or fiat currencies if the user wants to convert cash to cryptocurrency.
Bitcoin kiosks connect to the bitcoin network and enable the customer’s purchase of cryptotokens after depositing cash. Bitcoin ATMs aren’t usually owned by banks or other financial institutions and don’t connect the buyer or seller of cryptocurrencies with a dollar, euro, or pound-denominated bank account.
How Do Bitcoin ATMs Work?
In most instances, the buyer scans a QR code that corresponds to their digital bitcoin wallet. The bitcoin ATM allows the purchaser to transfer cryptocurrency “coins” to this wallet:
- If the buyer doesn’t have a bitcoin or other cryptocurrency wallet, the ATM may help them generate one.
- After the buyer completes the cryptocurrency purchase, a record of the transaction appears in the digital wallet. (This may require several minutes to appear.)
- Many bitcoin ATMs establish lower and upper limits of the amount of cash that the customer may deposit.
- All bitcoin ATM owner-operators must register with the Financial Crimes Enforcement Network (FinCEN) in the United States.
- Owner-operators of bitcoin ATMs must comply with domestic anti-money laundering rules of the Bank Secrecy Act (BSA).
- Larger transactions may require the customer to provide a mobile phone number in order to receive text verifications.
- The cryptocurrency customer may also be required to scan your driver’s license or other government issued-ID before the transaction is completed.
You don’t receive a bank ATM card to use the bitcoin ATM. Instead, you use a crypto digital wallet from which your digital coins are debited or credited. Although the crypto-tokens themselves are digital, the bitcoin ATM is a physical device that interacts with the blockchain on the Internet.
Because many cryptocurrencies were originally intended to protect the owner’s identity, many bitcoin ATMs maintain smaller purchase limits. Others use a verification process to complete your transaction.
In summary, the bitcoin ATM is a physical exchange on which you may virtually buy or sell cryptocurrencies for cash.
How Do I Use a Bitcoin ATM?
Although using a bitcoin ATM is similar to using your bank’s automatic tellers, there are significant differences between them. Not all bitcoin ATMs (BTMs) are the same. In some, you may buy only cryptocurrency. In others, you may sell cryptocurrencies from a digital wallet. Still other BTMs allow you to do both types of transactions.
However, the process of buying and selling cryptocurrencies is generally the same. In this example, you decide to buy or sell (cash out) bitcoin (BTC):
- Select Buy BTC or select Sell BTC to cash out your digital wallet.
- Scan a QR code sent to your wallet and print it out beforehand.
- Alternatively, enter the QR information manually. Note that these information strings can be long, so it’s essential to avoid making a mistake if you manually enter the QR code. If you make a mistake, you won’t be able to cancel the bitcoin ATM transaction. If you don’t already have a digital wallet, the bitcoin ATM creates a new one.
- You may be asked to present identification by the BTM. You may also be asked to enter a specific identifier, e.g. your mobile phone number, your fingerprints, or your passport. The larger your purchase or sale amount, the greater likelihood that you will be asked for information about yourself.
- User identification requests are required by anti-money laundering laws. It’s much more difficult today for criminals to launder funds or to avoid taxes.
- You must accept the payment of fees or commissions.
- You deposit cash into the BTM next. If you’re buying cryptocurrency or sending cryptocurrency to the wallet address (e.g., scanning the QR code) or cashing out your digital crypto wallet, your cash may be instantly issued from some terminals. In others, you must wait to confirm the transaction.
- You’re asked to confirm the request. You will wait for the BTM to complete your transaction. If you’re buying crytpos, they will be in your digital wallet. If you’re selling cryptocurrency, you receive cash in hand.
- Save your printed confirmation from the BTM. You may need to confirm where you received cryptos or where you received cash from the sale.
After you buy cryptos, they won’t instantly appear in your digital wallet. Six network confirmations are required first. The bitcoin ATM will instruct you about each step of the cash-out sales process.
How Much Are Bitcoin ATM Costs and Fees
You pay service fees to use a bitcoin cryptocurrency ATM. The fee is usually charged as a percentage of your purchase or sale instead of a fixed fee amount:
- The Consumer Financial Protection Bureau (CFPB) warns that bitcoin ATM fees may be high.
- Exchange rates, e.g. USDBTC, may not be as competitive as your bank or foreign exchange dealer’s rates.
The cost to use a bitcoin ATM depends on the type of machine and its owner. If the bitcoin ATM doesn’t require the identification of the user, fees are typically higher than average (from 10-20 percent). On average, the user pays average fees of five to 10 percent to use a bitcoin ATM.
Where Do I Find a Bitcoin ATM Location?
Bitcoin ATM kiosks are more popular in the United States as cryptocurrencies enter the mainstream. As of October 2020, more than 9,000 bitcoin ATMs have been installed in the U.S.
Bitcoin ATMs are often owned and operated by businesses in the cryptocurrency sector. Crypto trading platforms or digital wallet providers may also offer bitcoin ATM access. In some cases, the bitcoin ATM owner may require the customer to open an account in order to facilitate their transactions—as banks do.
How Do I Invest in Bitcoin ATMs?
Bitcoin is perhaps the most widely used cryptocurrency in the world. Years ago, traditional bankers may have considered bitcoin and later cryptos as a kind of fad. Clearly, cryptocurrencies are here to stay.
Some cryptocurrencies have a finite number of outstanding tokens. As more people use, trade, buy or sell these crypto-tokens, their value goes up. It’s very easy to use bitcoin to purchase goods and services online or at the retail level in some markets.
That’s why bitcoin ATMs are an excellent business opportunity. Hosting a bitcoin ATM may be a great way to earn extra income for your business. Contact us to learn more about our compensation program for bitcoin ATM hosts-partners.
- How to Use a Bitcoin ATM
- How to Get Your Business Ready for the Bitcoin Surge?
- Guide to Bitcoin ATMs
- Saving Time When Using a Bitcoin ATM
- Bitcoin ATM Regulations, Requirements, and Compliance