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In the age of technology, when everything is changing and developing constantly, it is quite hard to keep up with all the tech news. A virtual currency – known as bitcoin, however, managed to attract mass attention all around the world and is often referred to as the future of finance. Traditionally, ATMs are always helpful when you need to do financial transactions within seconds. Nowadays, Bitcoin ATMs are becoming quite common as well. They look very much like the regular ATMs but work differently. For instance, as bitcoins are digital currencies you are not able to withdraw them, and the ATMs accept only cash.
What is bitcoin ATM?
To make it simple, bitcoin ATM is a machine connected to the Internet, that lets people exchange cash for bitcoins (in form of a paper receipt) or through moving the money to a public key on the blockchain.
In other words, it gives people constant access to fiat currency and bitcoins. It is important to note that not all bitcoin ATMs do a two-way exchange.
The very first bitcoin ATM was introduced in 2013, at a coffee shop in Vancouver, Canada. It operated by bitcoin exchange companies and did transactions after scanning the user’s palm and ID. Interestingly enough, the number of bitcoin ATMs grew up to 1,885 ATMs by December 2017, worldwide.
How to use a bitcoin ATM?
If you want to buy bitcoin from a bitcoin ATM then you need to take these following steps.
- Choose the option “Buy Bitcoins”
- Write your mobile number and receive a message with a verification code
- Enter the verification code on the ATM
- Scan your fingerprint
- Choose “Scan wallet” or “generate new” (some may not have “generate new”)
- Scan QR code if you have an existing wallet
- Insert the cash
- Receive the receipt
In fact, there are several ways of receiving bitcoins after buying them from a bitcoin ATM.
- Receipt paper (as mentioned above)
- Mobile apps
- Storing directly in your hardware wallet
The process can be as fast as 15 seconds.
Meanwhile, if you want to get cash in exchange for bitcoins you need to do the following.
- Double check if the machine is exchanging bitcoins for cash
- Choose the option “withdraw cash”
- Type in the amount of cash you want to withdraw
- Send bitcoins to the address QR code
- Print the receipt for the transaction (optional)
- Take your cash
Pros of using bitcoin ATM
- Very fast
- Support both buying and selling
- In case of small amounts you can do transactions anonymously
Cons of using bitcoin ATM
- High transaction fees
- Not as available as online exchanges (in terms working hours)
- Unreliable services
- Hard to locate (not available everywhere)
How do bitcoin ATMs work?
The majority of bitcoin ATMs generate a paper or offline wallet, in other words, instruments that carry bitcoins. As the machines work under Financial Crimes Enforcement Network (FinCEN) they have to follow Know Your Client (KYC) and Anti Money Laundering (AML) rules. In some countries, the ATMs are required to have appropriate licenses.
So now, let’s understand what is happening inside the machine and what the roles of its major components are.
- The bill acceptor and printer for printing cash
- Resistor and Leads
These are for reducing and adjusting signal levels, divide voltages etc.
- SD Shields and Components
These are for storing data in digital devices.
- QR Codes
Store and digitally present data, URL links etc.
- Bill acceptor
- Touch screen control
Bitcoin ATM fees
Despite the number of advantages that Bitcoin ATMs provide to their users, they are more expensive than online transactions.
The costs are higher because building an ATM can be costly (delivery, customs of the hardware, installation, software set up). There is also a number of regulations that may be enforced (also depends on the country and its restrictions), rent, customer support centers etc.
Average fee for buying bitcoin from a bitcoin ATM – 7%
Average fee for selling bitcoin from a bitcoin ATM – 5%
The difference of exchange rates compared to other ways of getting bitcoin is over $50.
Bitcoin fees also vary depending on the machine manufacturer. Currently, there are four main manufacturers. Below are the names of the major manufacturers and the fees they charge:
- Lamassu – transaction fee 6.5%
- Bitaccess – transaction fee 7.5%
- General Bytes – transaction fee around 6.2%
- Genesis Coin – transaction fee 11%
However, as the number of bitcoin ATMs keeps increasing worldwide, the fees are falling because of competition among the companies.
Bitcoin ATM cards aka bitcoin debit cards
Bitcoin ATM cards, otherwise known as bitcoin debit cards, work very much like regular debit cards when it comes to ATM or sale. The bitcoin debit cards are practical and give the following advantages to their users.
- Freedom to purchase
Thanks to these cards, you can use cryptocurrencies around the world for buying anything you want, without having to worry about exchange rates.
- Easy to use
Just like simple Visa or MasterCard, it is widely accepted and you can withdraw cash just as easily.
- Savor from inflation
Bitcoin debit cards can be a great alternative if your domestic currency is volatile and/or there is inflation. The volatility will not affect you as much this way.
Currently, there are a number of reward systems, which tend to encourage bitcoin debit cardholders to take advantage of making purchases with the debit card rather than spending cash.
Some bitcoin debit cards allow you to stay anonymous while spending small amounts of money.
How do bitcoin debit cards work?
The main difference between regular debit cards and bitcoin debit cards is that bitcoin debit cards draw from cryptocurrency wallet, instead of drawing from a bank account.
When you are making various purchases with a bitcoin ATM card aka bitcoin debit card, the corresponding amount of bitcoin is sold for fiat currency. That fiat currency is going to the merchant’s account.
Otherwise, companies load your card with fiat money, if you send them bitcoin. Another way of interpreting the function of bitcoin debit cards is that those are “wallets” controlled by debit card companies.
When you make purchases, the debit card company covers the fiat currency and sells some of your bitcoins for you.
The future of Bitcoin ATMs
The bitcoin ATMs are a step closer to the future of finance. The disadvantages (see above) that the vast majority of bitcoin ATMs have are issues, which definitely will be solved in the near future.
The more common bitcoin ATMs become and as the competition grows between the bitcoin ATM companies, they will be more incentivized to improve, provide better services and decrease their fees.
The problems with high costs will be solved for many companies due to economies of scale – the increase in demand will increase the quantity and decrease the costs. This will work very well in this sphere as many of the costs are fixed costs, therefore economies of scale will be very effective.
Bitcoin ATM for sale
Satoshi2 Bitcoin ATM from Genesis Coin
The ATM known as Satoshi2 Bitcoin ATM from Genesis Coin is not only for buying and selling bitcoin for fiat money but for other cryptocurrencies such as litecoin and dogecoin. It has some unique feature, such as magnetic card reading, fingerprint reader and so on.
- Price: $8,900
- Accepts 2,000 bill note
- 18” wide, 23” deep, 65” tall
- Lead time: 2 weeks
- Shipping in the US for free
- You can purchase at https://bitcoinatm.com/
- Would recommend asking a professional for assistance while installing.
Lamassu Douro Bitcoin ATM
Lamassu is a type of bitcoin ATM that lets its users only buying a cryptocurrency. The option of selling is available only via a separate Santo Tirso stand.
- Price: $6,000
- Accepts 600 banknote
- Accepts currencies from around 200 countries!
- 481 mm high, 356 mm wide, 289 mm deep
- $100 per month flat rate support fee (per machine)
- Discount for bulk orders
- You can purchase at https://lamassu.is/
- The back-end office is software that has to be installed on a server. There are detailed installation guides offered online by the official website.
General Bytes BATMThreeBitcoin ATM
General Bytes BATMThreeBitcoin ATM is a two-way bitcoin ATM that buys and sells. It can be managed remotely and is multilingual. It supports not only bitcoin but also litecoin and dogecoin.
- Price: $7,499
- Has a bill recycler unit
- 23” full HD screen
- 600 bill inputs
- NFC wallet card dispenser
- Free shipping in Europe
- You can purchase at generalbytes.com
- You can install the server software (BATMServer / CAS) on its own hardware or in the cloud ($20/month).
let’s sum things up
As you see, Bitcoin ATMs are making the use of Bitcoins and other cryptocurrencies much easier and convenient. Bitcoin debit cards make the use of Bitcoin ATMs more common and the fees of the ATMs will hopefully decrease during the time. Thank you for checking out our website. We hope this article was useful for you. You are welcome to learn more about cryptocurrencies by seeing our other informative articles.