There are now approximately 17,000 Bitcoin ATMs around the world. This has risen from 5000 in 2019 and 7000 in 2020. Cryptocurrency adoption is increasing exponentially, and to meet this market demand, more Bitcoin ATMs are being rolled out every day.
The killer app of Bitcoin ATMs is to enable cryptocurrency ownership for the unbanked and to remove rapacious financial institutions from all our lives. So how do they work and how do we use them?
Types of Bitcoin ATM
There are basic Bitcoin ATMs that allow you to buy Bitcoin and more advanced ATMs that also let you withdraw local currency from your Bitcoin wallet. A great resource for finding ATMs near you is coinatmradar.com. You can also see what fees they charge and the cryptocurrencies they will service.
Here’s How You Can Use a Bitcoin ATM
The process is intuitive, but follow the onscreen directions and you won’t go far wrong. Bitcoin ATMs may vary in their exact process, but you should expect something like this.
- Select ‘Buy Bitcoin.’
- Scan your wallet address QR code.
- Select the amount you want to buy.
- Insert the cash.
- Wait for your confirmation.
- Locate a Bitcoin ATM that allows you to withdraw local fiat currency.
- Select ‘Sell Bitcoin,’ or ‘Withdraw Cash.’
- Scan the QR Code of your wallet address and private key.
- Select the amount of local currency you wish to withdraw.
- Wait for the confirmation and take your cash.
Reasons to Use a Bitcoin ATM
Bitcoin ATMs are great for people who need to buy Bitcoin but have no account at an exchange. Certain major banks refuse transactions with any cryptocurrency-related businesses and have even been known to suspend or close the accounts of people who attempt it.
You can withdraw cash from your fiat bank account and use it to buy Bitcoin directly at a Bitcoin ATM. Nobody is aware of the origin of the transaction, so your privacy is preserved.
If you have no bank account or debit/credit cards, you can’t make an online purchase on platforms like Coinbase or Binance. Bitcoin ATMs give the unbanked a chance to buy and store their assets independently of predatory financial institutions. For me, this is the most important function of the technology.
There are millions of migrant workers around the world who send remittances to their families back home. The fees for these transfers are shocking, and I have paid up to 17% in fees at the best known of these money transfer services. For a hard-working person on low wages, living away from their loved ones while struggling to provide their family with a better life, this always struck me as the worst kind of financial abuse – exactly the type of tyranny that Bitcoin was invented to prevent.
How to Send Cash to Someone Using a Bitcoin ATM
- Buy Bitcoin at the ATM with cash – as per the instructions above.
- Send the wallet address and the private key QR codes to the recipient.
- The recipient scans the codes at their local Bitcoin ATM and withdraws the cash.
Make sure that only the recipient has access to the QR codes. Sending private keys over the internet is always risky, so make sure you are sending them directly to the intended person. The safest way to proceed is for the recipient to withdraw all of the Bitcoin as cash in one go, and for the sender to use a freshly generated wallet for each transfer.
How Much Cash Can I Deposit at a Bitcoin ATM?
It varies, but from my research, the upper purchasing limits are between $1000 and $10,000 per day. I have seen quoted withdrawal limits up to $5,000, but for larger amounts, you will need to provide more extensive proof of identity documents. There are varying limits in different countries, denominated in local fiat currencies.
Can I Buy Bitcoin With a Credit Card at a Bitcoin ATM?
The short answer is no, most Bitcoin ATMs accept cash only. There are two main reasons for this. Firstly, until proper government regulation is imposed on cryptocurrency transactions, they could be retrospectively liable for anything that was deemed illegal or taxable. Chargeback protocols are also problematic when buying cryptocurrency.
The deeper reason is that credit companies and banks work in direct opposition to decentralized cryptocurrency. The last thing the major financial institutions want is to enable the adoption of the technology that is going to put them out of business. All the more reason to use cryptocurrency and spread the word to your friends, I say.
Recently, ATMs that accept crypto-based debit cards have been rolled out. This is great if you’re traveling abroad and you need to access your crypto. We will see in the future whether debit and credit cards will become accepted at Bitcoin ATMs. My feeling is that it’s bound to happen eventually.
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How Long Does a Bitcoin ATM Transaction Take?
One of the foibles of Bitcoin is that transaction times are unpredictable but the average time is from 1 minute to an hour when using a Bitcoin ATM. Some ATMs will make the Bitcoin purchase on an exchange then forward you the Bitcoin. Others have a stash of Bitcoin that is ready to be shipped as soon as you insert your fiat currency.
Are My Finances Secure Using a Bitcoin ATM?
In principle, yes, but the same rules apply to any ATM transaction. Criminals often scam people by placing card-readers over the card slot. If you are using a crypto debit card then make sure the device is ‘clean.’
The other concern I have is that Bitcoin ATMs can print out paper wallets. You should never generate or print out a paper wallet from a device when it is connected to the internet. You never know who is watching or who has access to the device generating the keys. Perhaps that is a little over-cautious, but printing a ‘cold’ paper wallet from a ‘hot’ device is not following best practice. For modest amounts, this is not a problem.
Bitcoin ATM – A Rising Technology Around the World
As Bitcoin’s market capitalization sails past that of silver and heads towards gold, all the associated infrastructure will improve and increase to meet the growing demand. There’s a huge market in worldwide remittances totaling around $1 trillion annually. The commission on these transactions is more than $100 billion and goes directly into the pockets of large financial institutions.
Bitcoin ATMs are capturing ever more of this remittance market, providing poorer members of our society with a way to benefit from the money they earn. I envisage Bitcoin ATMs becoming known simply as ATMs in the future, as we move towards a decentralized financial future.
Competition for these transactions will increase and transaction fees will fall. At present, the average cost of purchasing Bitcoin through an ATM is 8%-15%. This is partly due to the rarity of the actual machines, but the process of the ATM buying crypto from an exchange involves a spread and transaction fees.
The future looks bright for the Bitcoin ATM network. What a time to be alive.
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com