Back at the end 2013, Robocoin (now gone the way of the Dodo) installed the first Bitcoin ATM in a coffee shop in downtown Vancouver. Since then, hundreds of operators have deployed their own machines in locations around the world, ranging from small diners to bars. As of today there are currently over 4400 crypto ATMs in 77 countries, with the United States leading the pack with over 1500 at last count.
One big advantage of Bitcoin ATMs is the guarantee of privacy. Regardless of whether or not the amount you wish to trade is minuscule and insignificant, the online exchanges require you to verify your identity, usually with state-issued identification. But provided that your transaction is below a certain threshold, Bitcoin ATMs require minimal identification.
But how exactly, do they work?
While you can use Bitcoin ATMs to purchase as well as sell cryptocurrency in exchange for government-issued fiat currency, some locations may only offer one service or the other as the two-way machines are a more expensive investment for them.
You’ll also want to take the time to verify the ATM’s exchange rate and transaction fee. Due to the inherent risks, some owners may insulate themselves by setting the Bitcoin exchange rate higher and you can end up paying some hefty premiums for the service. Additionally, the Consumer Financial Protection Bureau has issued advisories revealing that transaction fees can be as high as 7% for Bitcoin ATMs.
Whether buying or selling Bitcoin through the ATM, the first step in your transaction will be to verify your identity, which generally only requires verification of your phone number. From there, it depends on what you’re wishing to accomplish.
If you’re making a purchase, you’ll be asked for your Bitcoin wallet address. Though there is a keypad for entry, typing that long address can be a bit frustrating at times and you may want to opt for scanning the receiving address QR code instead, which most wallet apps provide. Just simply place the barcode on the scanner and after the machine has what it needs, it will prompt you to insert your cash and confirm that you want to proceed.
Selling your Bitcoin through the ATM isn’t much different. Rather than providing your wallet address or QR code, the machine will display a QR code for you to use in order send your Bitcoin. Upon the required number of verifications being confirmed on the block, the ATM will dispense your fiat currency.
Depending on your country, there may be additional laws or limitations on your Bitcoin ATM usage as well. To prevent money laundering and other illicit activities, some ATMs will not allow you to trade beyond a certain daily limit and for large cryptocurrency transactions, many will require you to complete a simple KYC verification before proceeding.
With convenience, increased anonymity, user-friendliness, and more locations coming online almost constantly, Bitcoin ATMs could be the answer that many enthusiasts are looking for. And now that you know a little more about how they work, go check out one near you in person.