It’s finally 2020 and there are so many exciting things to look forward to in the world of crypto. A trend we have been noticing lately across social media has been the increasing appearances and popularity of Bitcoin ATM’s. There are now over 6,000 crypto ATM’s worldwide according to Coin ATM Radar and the number continues to rise. While these machines do have some redeeming qualities about them, they aren’t without their own caveats and risks. With security and peace of mind being a top priority for us here at CoolBitX, we would like to briefly go over some general information about these ATM’s, along with some of the pros and cons associated with them.
What is a Bitcoin ATM?
A Bitcoin ATM is exactly what its name implies. Much like a traditional bank ATM, it is an automated teller machine where users can make financial transactions. The biggest difference between the two would be that unlike a traditional ATM, a Bitcoin ATM is not tied to any personal bank accounts (or centralized institution) and is instead, connected directly to the cryptocurrency exchange that placed the machine. Otherwise, their looks may be somewhat indistinguishable from what we know and see everyday. We actually think they are more akin to a change machine that you’d find in an arcade.
The typical Bitcoin ATM will include a touch-screen, a QR code scanner, and a slot to deposit and withdraw cash. Some machines may even have a debit/credit card reader and a fingerprint scanner. Every machine is also connected directly to the Internet in order to access the online exchange that placed it. Some earlier versions only had the ability to purchase Bitcoin with cash, however, many current versions of these machines now also support debit/credit card transactions along with converting your Bitcoin into cold hard cash. The first public Bitcoin ATM was put in a coffee shop in Vancouver, Canada, by Robocoin.
How does a Bitcoin ATM Work?
Bitcoin ATM’s are designed to be convenient, very intuitive and user-friendly. Assuming that you know how a traditional ATM operates, performing a transaction on a Bitcoin ATM should be fairly straightforward. All you need is a wallet and a QR code to get started. Purchasing Bitcoin normally goes as follows:
- Select buy/purchase.
- Select the coin you would like to purchase.
- Use the machine’s scanner to scan your wallet’s QR code.
- Insert your cash or swipe your debit/credit card.
- You are now part of the crypto community!
Purchasing Bitcoin is perhaps the easiest of the transactions you can perform. Some ATM’s may require you to enter some personal information, however, units that don’t require such information can also be found. On the other hand, selling Bitcoin using an ATM almost always requires a verification step which may include your phone number or even your fingerprint. Each transaction will also carry some sort of transaction fee that varies between each machine.
What are the advantages of a Bitcoin ATM?
The first and foremost advantage of using a Bitcoin ATM is convenience and accessibility. The well-designed user interfaces of these ATM’s make trading Bitcoin all the more easier for the average consumer. These ATM’s essentially deliver a new experience in a familiar form factor, much like the CoolWallet S.
Bitcoin ATM’s are also a great way to attract more users to the crypto community. Making cryptocurrency more accessible to the public will increase awareness and help normalize the technology. Seeing others successfully trading their digital assets out in broad daylight will hopefully lead to a higher adoption rate.
What are the disadvantages of a Bitcoin ATM?
Convenience does come at a cost. What turns many users away from Bitcoin ATM’s are the aggressive transaction fees that are associated with them. Fees can range anywhere from 5% to almost 40%. On average though, the typical machine will charge around 8-10% per transaction.
While they are mostly secure, Bitcoin ATM’s are not completely immune to malware attacks and scams. They can also be tampered with, similar to how traditional ATM’s or credit card scanners can be modified. Many scam artists will use Bitcoin ATM’s as a way to extort their victims. Some may even go through great lengths to create fake Bitcoin ATM’s. Multiple scams involving the use of these ATM’s have painted them in a bad light. Other concerns also revolve around the general security and location of the machines. Since cash is often the medium used when exchanging, thefts may occur at the machine itself.
Many users are also wary of some of the KYC tactics that many of these machines use. With anonymity and privacy being features that crypto is based on, Bitcoin ATM’s are often accused of going against the core value of the community.
Stay safe out there.
Keeping your digital assets safe and secure should always be a top priority. If you are interested in using a Bitcoin ATM, here is a list of things to look out for and be cautious of:
- Make sure the exchange that placed the ATM is reputable and more importantly, real.
- Make sure the machine hasn’t been tampered with.
- Make sure you are in a safe and secure environment.
- Do not exchange large sums of cash.
- Do not use a Bitcoin ATM at the request or threat of anyone.
- Only make transactions to and from your personal wallet/QR code.
- Read carefully the terms and conditions.
- Read carefully and double-check all transaction fees.
- If something sounds too good to be true, it most likely is.
While Bitcoin ATM’s have vastly improved since their infancy, there are still many concerns associated with them. There is a lot of room for growth and we are excited to see how they can be improved in both convenience and more importantly, security. With the growing popularity of cryptocurrency, the rising amount of Bitcoin ATM’s is definitely a step in the right direction, however, we must stress that you exercise caution when trading your hard-earned assets on them.