What Is a Bitcoin ATM & Is It Safe?

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The development of cryptocurrency seems to have expanded tremendously with the innovativeness in the application of Automated Teller Machines (ATMs) being added as one of its laudable feats.

Recently, cryptocurrency ATMs appeared on the Internet promoting Bitcoin’s ever-increasing acceptance. Coin ATM Radar puts the total number of crypto ATMs at the time of this writing at 5597 and is located in 74 countries.

A Bitcoin ATM is a device, similar to conventional ATMs, through which customers can participate in financial transactions on Bitcoin. With the BTC machines, users can buy and sell Bitcoin using fiat currency- physical cash.
Though it appears to be physically like the conventional ATMs, BTC ATMs carry more functions which make it work more like the crypto exchanges. This is probably because they are made up of some unique components such as:

• A Monitor
• A Bill acceptor
• A QR scanner
• A Dispenser

Bitcoin ATMs are distinct from traditional ATMs because they are not linked to a bank account. Rather, they are connected via the Internet to a digital currency exchange.

These exchanges enable customers to immediately purchase and sell Bitcoins. On the backend, all these parts are connected via software to make Bitcoin’s purchasing and selling fast, simple and safe.

The very first recorded BTC ATM was put at Vancouver, Canada’s Waves coffee store in 2013. That ATM has been faced-out since then, but this machine laid the groundwork for many other BTC machines’ businesses to drive innovation and carve out their market niche in the sector. There are many manufacturers of ATMs today.

Types of Bitcoin ATM

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There are multiple types of ATM machines, but they have been generally subdivided as 1-way or 2-way machines. 1-way machines, or ATMs, permit the insertion of cash and the withdrawal of Bitcoin only from the ATM.

The 2-way machines generally function as a full exchange, enabling conversion from fiat to Bitcoin or from Bitcoin to fiat.

The 1-way Bitcoin ATMs are the most predominant types in the market with about 65% of the entire BTC ATM population while the rest 35% belong to the 2-way category. Most of the ATMs are found in the developed countries with North America having the lion share of the ATM population.

As earlier mentioned, there are many types of Bitcoin ATMs available which are products of different companies. Since September 2018, Genesis Coin has the highest number in the market with over 1000 units.

Other manufacturers including:

  • Satoshi1 Bitcoin ATM
  • Lamassu Bitcoin ATM
  • Robocoin kiosk
  • BitXATM Bitcoin machine
  • BATM2 Bitcoin ATM
  • Satoshi2 Bitcoin ATM
  • BATM3 Bitcoin ATM
  • Skyhook Bitcoin machine
  • Lamassu with Santo Tirso
  • BitAccess Bitcoin ATM

The one-way device is more predictable and easy to use and can be deployed or installed in any location. A two-way ATM is rare and more complicated and expensive (prices range from $7499 to $8299).

How Does It Work?

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Cryptocurrency ATMs are physical machines with an interface that is intuitive and user-friendly. For individuals who don’t have access to the traditional banking system, BTC machines can serve as an alternative means because it has no link to a bank account.

It’s not that hard if you want to use one of these ATM points by yourself. You only have these easy steps to follow:

1. Search online to get a BTC machine in your immediate vicinity

You can use facilities such as CoinATMradar. Simply type in your location in the space provided and you will get one around you immediately.

2. Register and Verify Your Identity

Very few machines can allow you to buy Bitcoins without any ID because most of them require your telephone number and/or any other details. You may have to disclose your private info at various levels of requirement, depending on the device and the operator.

This is to meet the requirements for compliance and to keep your Bitcoins safe. You are ready to go and purchase Bitcoin following a verification using a One Time Password (OTP). Some ATMs could require you to use the scanner to verify your identity using an ID type like a driver’s license.

Cryptocurrency ATMs save, scrutinize and report suspicious activity to the regulatory bodies. They are so designed to be secure and safeguard fraudulent activities.

This is the reason it requests and carries out the Know Your Customer (KYC) or Anti Money Laundering (AMC) policy using your information. The machines enable users to purchase Bitcoin after acquiring this information.

3. Purchasing Bitcoins

The operators purchase Bitcoin from exchanges and enable Bitcoin customers to access Bitcoin. As many coins as the operator has can be purchased. The process of buying or selling Bitcoins differs from one machine to another but not a lot.

To purchase Bitcoins, the dollar sum that you wish to purchase must be entered and slipped into the specified deposit region.

It is either the device prints the offline wallet for you or sends the Bitcoins to your Bitcoin wallet after you have deposited your cash. Some devices may also propose to email your Bitcoins.

Typically, the cost of Bitcoin at these machines is 5% to 10% above the current exchange rate owing to the additional costs such as rental, maintenance of machinery, regulatory requirements, fees, and volatility.

Some of these machines are still preferable because of their easy access or absolute privacy in the case of machines without ID requirements.

4. Selling Bitcoins

Selling Bitcoin on cryptocurrency ATMs is about the same process of buying. Of course, this will be after the verification process is completed.

To sell, you must enter and submit the quantity of Bitcoin you want to sell to the address shown on the screen to sell the coins. After the task is complete, cash is dispensed.

Advantages of Bitcoin ATMs

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The Speed

Besides, having to carry out the registration and probably the verification process, it doesn’t take much time to carry out transactions.

Bitcoin ATM is one of the quickest methods of selling and buying Bitcoins. The speed of the tool is determined by machine type, but some Bitcoin servers, such as Lamassu, can handle a 15-second procedure and you get your Bitcoin sent to the wallet immediately.

Anonymity

Cryptocurrency ATMs are generally managed by well-known operators, they are managed by individual companies but they obey government regulations. You usually have a company address, telephone, and e-mail on it for assistance.

A user interacts directly with the device. It is much safer and protects your privacy because nobody will get to know you have a significant sum of money with you compared to other online services and traditional banks.

The anonymous privilege though can be given away when the request for full verification is demanded. This is machine-dependent, not all BTC machines ask for that.

You have a choice in other service providers if you feel not to reveal so much about your privacy.

Disadvantages of Bitcoin ATMs

High Fees

Many consumers complain about the ATMs charging a lot, that’s true. There is a reason for that as itemized above; many things come to play to determine this. The average fee for buying/selling Bitcoin is 6.5 percent on the BTC ATM. It is presumed that the fee will reduce with increased competition and maturity in the system.

Reliability of Up-Time

Another problem that has been talked about several times is the unreliability of services. Users report that certain machines are not working as they should or not at all. Because the size of the Bitcoin machine is relatively compact, it might easily be tampered with, this is a security problem.

Manufacturers attempt to track this issue and create custom solutions, for example, remote management and reboot for bugs/hangs without necessarily leaving their current location.

Difficult to Find One

Accessibility is still an issue with Bitcoin ATMs, they are not found in most places, and regions that are lucky to have one still need to travel distances to get to use one.

The fact that these machines are still new in the cryptocurrency arena makes it even scarcer to run in some locations. Not many people are willing to stake their money yet on this newly found technology.

Is Using a Bitcoin ATM Safe?

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Of course, many individuals are asking about the security of BTC ATM machines since they are still fairly new.

One can claim that ATMs for Bitcoin are less accessible than traditional exchanges that work via the Internet. They have a physical place that you must to visit to use them, compared to using the web from just anywhere and on your desktop or mobile phone.

Bitcoin ATMs are normally accessible during company working hours, which is well below 24/7 Internet exchange accessibility. This is still an area of concern. Besides this, other areas of safety seem to favor the BTC machines compared to using exchanges over the Internet.

There are Bitcoin users who will not go on the crypto exchange and wire transfer funds from their bank account for safety concerns. They don’t need that to use a crypto ATM. People know about money, so it’s fairly simple to buy Bitcoins with cash through the ATM.

Although mobile financial services have been improving recently, according to the World Bank’s study, half the world’s adult populations still have no banking system or are under-banked.

It may be a risk on its own for users of these ATM machines.

Fortunately, many policies are in place that assist to guarantee the secure use of Bitcoin ATMs. Although the procedure of using a Bitcoin ATM differs slightly from traditional ATMs, the security measures are similar.

You should have no worries if you feel secure to use a traditional ATM to withdraw cash cryptocurrency ATMs are equally safe.

First, it should be noted that BTC ATM machines are not linked with traditional bank accounts, this protects your bank account. However, the majority of BTC ATM machines are owned and operated by trusted established businesses.

Most customers include their address, e-mail and telephone number on their machines, which makes it simple to contact customers if an issue exists. It is also convenient for users to know that they only communicate with the machine’s interface.

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Everything on the cryptocurrency ATM is done via the Internet, like traditional ATM transactions, so no other persons are involved.

Security steps are also in place when purchasing Bitcoins through a cryptocurrency ATM. You will be asked to scan your QR code to start the process, provided you have a BitcoIn address and a cryptocurrency wallet.

Also, your phone number will be entered on the machine and you will receive an OTP in a text message. This is a strong security measure put in place because no other person can use your BTC address without having access to your phone.

There are a few additional measures for safety purposes if you do not already have a Bitcoin address. You’ll probably be told to identify yourself with your driver’s permit, generally with the machine scanning the two sides.

Some BTC ATMs will also take a photo of you to verify that the driver’s license photo or details tally with the individual before the machine. After your purchase, the Bitcoins are added directly to the digital wallet linked to the QR code that you supplied. You can also print your Bitcoin purchase confirmation or email it to your email address. Whatever you do, you will have evidence and a secure BTC ATM machine transaction.

With a crypto ATMs, the same safety steps as a traditional ATM are in place on the installation. This involves the use of a well-lit machine and an open area. It’s also good, of course, to understand that many crypto ATMs have safety cameras and video analysis capabilities.

It can help to detect loitering or other suspicious moves around the machine. If something unusual takes place near the machine, safety staff should be informed. This is the reason the manufacturers are selective on the locations to place the machine, it must be accessible to them or have technical experts available when any security breach is detected.

This should make it easier for you to use one of the many BTC machines which are increasing by the day all over the world.

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