When talking about Bitcoin ATMs you might imagine a regular ATM where you go and withdraw your crypto in the form of fiat currency. But they are nothing of that sort. They let users purchase cryptos using credit/debit cards and cash. Some even offer services to sell crypto. There are different providers who have Bitcoin ATMs all over the world with each of them operating in different ways.
Bitcoin ATMs allow customers to purchase cryptocurrencies with their credit/debit cards and some even allow cash purchases. The term ATM is kind of misleading as these machines do not dispense cash like normal ATMs. They are kiosks that are connected to different Bitcoin networks and facilitate crypto purchases. These crypto ATMs are rarely connected to big financial institutions or banks.
When you make crypto purchases on big exchanges, usually the crypto you purchased is transferred to exchange-hosted wallets and if we need to transfer them to a personal wallet, we have to pay additional fees. But when purchasing crypto from Bitcoin ATMs, the purchased crypto can be directly deposited to your personal wallet of choice.
Bitcoin ATMs consist of the same components as regular ATMs but with some differences. They have monitors, QR scanners, debit and credit card acceptors, bill dispensers, and in some cases cash dispensers as well. They are operating on specific software that connects them with crypto networks to complete transactions.
When you approach a Bitcoin ATM, usually you have to pass some sort of verification process. This verification is mandatory for US citizens as every Bitcoin ATM provider must register with Financial Crimes Enforcement Network FinCEN and abide by anti-money laundering provisions. This verification process is usually phone verification, where you receive a code in the form of a text message, and only after entering the code, you can use Bitcoin ATM services. The verification process can also be as simple as scanning your ID or driving license. Once a user passes the verification process they will be given the option to buy crypto (some even offer services to sell it). There you will be provided with a list of cryptos that are available from the ATM. Once everything is ready, and you have selected the crypto you want to purchase you just have to scan your wallet QR code. But make sure that the crypto you are buying is supported on the selected wallet. For example, if you are buying a Bitcoin and scan a QR code of an Ethereum-based wallet, it is likely that you will lose the purchased crypto. If you don’t own a crypto wallet for that coin, some ATMs even allow you to make one through their kiosks.
Unfortunately, these crypto ATMs are also used by criminals to launder their dirty money. Cryptocurrencies are really attractive assets for criminals, as they are relatively hard to trace. But with more and more exchanges becoming centralized and controlled by law enforcement, dealing with those exchanges became hard for criminals. These crypto ATMs are usually not connected to any large exchanges and are less regulated. As we mentioned, in the US you have to pass an identification process in order to use Bitcoin ATM services, but these verification procedures differ from state to state, and because of this there are different ways to still use these ATMs anonymously.
Another factor of Bitcoin ATMs that attracts criminals, is the sheer number of them. When making a transaction there are usually limits on how much you can deposit. But criminals have the ability to visit many different Bitcoin ATMs in a short space of time and make big deposits, without turning on the red alarms.
Using a Bitcoin ATM has one disadvantage, and it is the fees that customers have to pay for ATM services. When customers make a purchase of Bitcoin they have to pay fees that are not fixed. These fees usually depend on the purchase volume, as they take a % cut of the transaction. So if you bought $100 worth of Bitcoin, you will get around $93 worth of Bitcoin. The percentage of fees also tends to change and differs from provider to provider. On average this fee is around 7%, but historically it has been as low as 4% and as high as 20%.
Accessibility of Bitcoin ATMs has skyrocketed in recent years, but if we look at it from a global perspective they are still hugely scarce. If you live in the US or Eastern European countries, accessing Bitcoin ATMs might be easy for you.
According to Coin ATM Radar currently, there are more than 32,000 Bitcoin ATMs in the US and around 1,500 Bitcoin ATMs across the EU member countries. This makes them accessible to residents of those countries. But for instance, in India, a country with a population of 1.4 billion, which is almost double of the US and EU populations put together, there are only 2 Bitcoin ATMs, and both of them are located in Delhi.
There are different advantages and disadvantages that come with crypto ATMs and here we will go over some of them.
“If you are looking for more technical experience as a day trader, an exchange may be the place for you. However, if you are looking for a way to buy crypto in a simple and easy way with live phone support, a Bitcoin ATM may be best.” – Brandon Mintz
Decentralization - When purchasing cryptocurrencies decentralized exchanges are less available. Bitcoin ATMs provide this decentralized environment, as you don’t need to have an exchange or bank account in order to use their services.
Ease of use - When people join the crypto world, navigating their way through complicated exchanges and dealing with many different services can be complicated. ATMs are something more common, and most know how to operate them. Bitcoin ATMs give those people the ability to purchase crypto in a more familiar way.
Some level of anonymity - Some Bitcoin ATMs require users to pass the verification process in order to use their services. But these verifications are not regulated tightly and give some sort of anonymity.
High Fees - While Bitcoin ATMs help us avoid the transaction fees we pay when transferring tokens from an exchange wallet to a personal wallet, they take high operating fees for their services. These fees are usually between 5-8%.
Low-quality customer service - Bitcoin ATMs are a new concept that still needs a lot of improvements. Because of this, we might run into some problems when dealing with them. Contacting their customer support when the problem arises might be hard and time-consuming as they are not experienced enough to provide high-quality service.
Is used for fraudulent activities - Cryptocurrencies are actively used by criminals and scammers to defraud unsuspecting victims. Scammers usually only accept payments made through these Bitcoin ATMs. Because blockchain transactions are hard to trace, they then disappear with your money.
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If you are purchasing crypto for your wallet and use a reputable Bitcoin ATM, then yes, it is safe. But making purchases using Bitcoin ATMs can cause you to be a scam victim and lose money.
Around $4000 a month. This number depends on the popularity of your Bitcoin ATM. These ATMs make money from service fees and if your ATM is used frequently you will make more. It also depends on how many ATMs you own. The more you own, the more you make.
Yes. There are Bitcoin ATMs that accept debit and credit cards as a means of payment. There are also some Bitcoin ATMs that accept cash as well. But fees can differ depending on which method of payment you use.
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