Do they function the same as traditional ATMs?
Since the invention of Bitcoin in 2008 and the subsequent boom of the cryptocurrency industry, countless other lateral businesses and products were created to support the new asset class. Exchanges began to flourish, as well as crypto wallets, mining computers, gadgets, softwares, websites, blog sites, news, and even terms and language. There came a new way of transacting business through smart contracts, distributed technology, and the removal of third-party mediation such as banks, lawyers, agencies, and government. The duration of snail- paced manual transactions shifted to high gear and now we are riding high at dizzying speeds from localized to borderless negotiations. The one feature to come out of the crypto industry was the bitcoin ATM, otherwise known as BTM.
What are BTMs?
Bitcoin ATMs or BTMs, are stand-alone machines that act as internet portals where customers can buy or sell bitcoins with their cash deposits. It is similar to a conventional ATM (automated teller machine), only that it differs in services offered such that you may not deposit, withdraw, or transfer your cash funds. It is where you manage your crypto financials by buying or selling Bitcoin or other coins and tokens using your deposited cash. BTMs typically are not owned or operated by financial institutions and does not connect you as a customer to your bank account. Instead, it connects you directly to a cryptocurrency exchange through the Internet. These exchanges facilitate your buying and selling of Bitcoin and other cryptocurrencies. As such, Bitcoin ATMs function like a physical representation of a crypto exchange, buying and selling bitcoins with cash.
How BTMs Work
Bitcoin ATMs consist of a monitor, a quick response (QR) code scanner, bill acceptor, and a dispenser. An underlying software activates transactions for an easy, quick, and secure operation.
Bitcoin ATMs function like a physical representation of a crypto exchange. The world’s first-ever Bitcoin ATM opened at Waves Coffee Shop in Vancouver, Canada, on October 29, 2013. You will not find it there now but that BTM opened the floodgates for other BTM companies to produce their own best versions introducing innovative features in the process.
Bitcoins can be dispensed either to your own Bitcoin wallet after your QR code is scanned from your mobile device, or to a paper wallet which the BTM prints and generates at the time of your transaction. Regarding the price, the current Bitcoin exchange rate applies at the time of your transaction as it registers on the BTM in real-time. A service fee is charged to you which is computed into the price.
Can It Dispense Cash, Too?
There are some BTMs now that dispense cash in exchange for Bitcoin and can also dispense Bitcoin in exchange for cash. But earlier models that proliferate today are designed for buying Bitcoins only.
Are there Fees to Pay?
Availing the services of BTMs carries a fee which today ranges from 7% to 8.93% depending on the location of the BTM. The Consumer Financial Protection Bureau (CFPB) cautions that BTM fees can be exorbitant and exchange rate purchases can be as high as 7% than the prevailing market price. It is good practice to read first the instructions flashed on the machine before you commence on any transaction.
The immense popularity of Bitcoin is reflected in the nearly 9,000 BTMs installed across the U.S. as of the latest October 2020 count issued by Coin ATM Radar. On a worldwide scale, Statista reveals that as of November 1, 2020, there were 11,497 Bitcoin ATMs existing.
As BTMs direct you to exchanges, it is likely that it is owned and operated by companies that offer their own trading platform, or wallet for that matter. Just like banks, you need to open an account before conducting a transaction.
Simple Steps in using BTMs.
Each BTM is unique from one another, though, the buying process is essentially the same.
- Click the “Buy Bitcoin”
- Scan the QR code of your Bitcoin address using the BTM scanner
- Provide the necessary identification required by the BTM
- Enter the amount you would like to purchase
- Insert the cash into the BTM
- Wait a few minutes as the BTM processes your transaction
- Check your crypto wallet for the confirmation of your transaction.
Selling Bitcoins at a BTM may be a little more complex depending on the BTM. Still, instructions are provided by the machine.
The convenience that Bitcoin ATMs can bring into your buying and selling transactions include speed and anonymity. For precautionary measures, try taking a video while operating a BTM, which can come in handy just in case you need proof if something turns south. If ever, you can also operate your own Bitcoin ATM business subject to regulations.