Why Use Bitcoin ATMs (BTMs)?

Whether you’ve seen one or not, a Bitcoin ATM is coming to your neighborhood. At least, that’s what the recent trend suggests, with over 6 machines currently being installed around the world each day and close to 4 thousand units already in place in the United States alone. Bitcoin ATMs, also known as BTMs or BATMs, have been the subject of heated discussion due to their high fees, the possibility of being completely redundant in the future and for being used as a way to launder money. Nevertheless, they remain exceedingly profitable to run even in this most volatile market, and they attract new users to Bitcoin and cryptocurrency in general.

Let us quickly go over the different types and history of Bitcoin ATMs, where to find one and whether you should in the first place.

Types of Bitcoin ATMs

There are two main types of Bitcoin ATMs: those that are one-way and two-way. The former are typically buy-only, while the latter are considerably more numerous and popular. Moreover, there are different manufacturers and service providers with varying fees, waiting times, verification techniques, and availability of crypto assets other than Bitcoin.

In total, there are over 50 manufacturers, but the biggest by units in service are General Bytes, Genesis Coin, Lamassu, BitAccess, and Coinsource. There are also more than 30 other service providers worldwide that allow the purchase and sale of Bitcoin and other coins and tokens.

As an alternative to building a dedicated machine, some traditional bank ATMs have been integrated with the capability to withdraw or upfill Bitcoin either to the user’s bank account or crypto wallet. These became very popular in South Korea and Philippines where crypto service providers had established partnerships with banks and began operating in thousands of locations at once. Firms in the United States, Spain, Poland, Ukraine, Mexico, and other countries quickly followed suit. Furthermore, there’s yet another place where crypto enthusiasts can find some fiat cash whenever they need to – train ticket machines across Switzerland have been equipped with Bitcoin sale functionality since 2017. In what’s been called the Crypto Valley, adoption of cryptocurrency has been promoted by government and businesses alike.

Brief History

The first Bitcoin ATM was installed by Robocoin and Bitcoiniacs in a Waves coffee shop in the city center of Vancouver, Canada. This happened in October 2013, back when the price of Bitcoin still hovered around 200 USD. Even still, the company reported over 100 thousand USD worth of transactions in little more than a week of operation. Now Bitcoin ATMs can be found in all of the chain’s locations along with over 100 other places in Canada’s Hollywood North, but Robocoin has nearly ceased the production of BTMs due to increasing competition.

The second country to have seen a BTM was surprisingly Slovakia, which has turned to cryptocurrency and other technologies based on blockchain in an attempt to bolster economic growth and innovation. The first ever BTM in Europe was installed in December 2013 by a single individual, Marian Jancuska, and can be found in a passage connecting two commercial buildings in downtown Bratislava. It has since been called the Bitcoin passage. The machine, produced by Lamassu, was in the first batch of 13 units shipped out to cities in Europe, Asia, South America, Australia, New Zealand, and elsewhere.

It had been originally reported that the first BTM service in Europe was launched in Helsinki, Finland, although the company, Bittiraha.fi, had missed the chance by just 6 days. Nevertheless, it was a significant breakthrough, especially considering that the Helsinki Central Station, where it is located, is one of the busiest places in the entire country.

Although Lamassu’s first-ever shipment was to Atlanta, Georgia in early October 2013, Canada’s southern neighbor actually saw its own first Bitcoin ATM only in February 2014, and the machine did not survive a single month. The short-lived BTM had been installed in a cigar lounge in Albuquerque, New Mexico. The first licensed operator Coinme launched in April of the same year in Seattle, after which America very quickly went on to dominate the BTM market.

As to other firsts, the word BTM was coined by BitAccess on January 1st, 2014. The startup now operates in 4 continents with a focus on the North American market. At the same time, some firsts didn’t quite make it – BTMs launched in Dubai and Tehran in 2019 were removed within a just few days. The same occurred in India in 2018 and resulted in the arrest of the service’s founders.

Generally speaking, the market has grown dramatically in less than 6 years of existence. Two years in, there were just around 400 machines in operation, now there are way over 5 thousand. The speed at which they are being installed has also increased – there are now more than 6 new locations opened somewhere in the world each day, compared to one in two days in 2015.

Pros & Cons

Unlike a website or a mobile app, a BTM does not always require special hardware, technical competence, or any understanding of the blockchain technology. Apart from having an intuitive interface, Bitcoin wallets are a lot easier to create and use than bank accounts, thus giving more people access to financial services, i.e. helping out the underbanked. Moreover, they allow for life without banks whatsoever.

The main obstacle to the adoption of cryptocurrency is that people simply don’t know where to start. Bitcoin ATMs expose crypto to an audience that is outside online communities and news portals, as well as encourage those already aware of the phenomenon to get some BTC and try it. Slipping in a dollar bill is much easier for most than choosing a website or app and then submitting one’s billing information.

Many people assume that Bitcoin is anonymous since it is the primary medium of exchange on the darknet markets. It is not, however, as Bitcoin is based on a public ledger where all transaction data is visible to everyone in the network, and thus by linking an account to a person or entity one would be able to monitor their activity. This puts Bitcoin in the middle ground between anarchy and censorship.

The main reason for the negative attitude towards cryptocurrency is it being used by criminals to launder illegal funds into untraceable clean money. This is done with the help of unregulated exchanges and crypto tumblers or mixers, that mix coins around to hide their original sources. As a trade-off between privacy and transparency, some crypto exchanges conduct KYC/AML procedures which should be an industry standard.

Although the growing competition will inevitably lead to lower fees, Bitcoin ATMs are still a long way away from losing their market power. In most countries, the distance between locations is so great that BTMs have been easily retaining the status of a novelty item with high-profit margins. Even the most regulated crypto exchanges such as Coinbase charge no more than 4% per crypto to fiat transaction and the average Bitcoin, while the average Bitcoin ATM fee is around 7-8%.

Five thousand locations may sound like a lot, but the number of bank ATMs worldwide has long surpassed three million. Taking in the geographical distribution of these machines makes the picture even grimmer – only around 4% of crypto ATMs are located outside of Europe and North America. By contrast, the New York area alone has nearly twice as many. On the upside, most bank ATMs can be easily converted or upgraded to support cryptocurrency, and many will undoubtedly be in the near future.

Alternatives

Most countries in Europe, Asia, and the Americas have seen some form of a partnership established between crypto companies and more conventional institutions such as banks and store chains. Chances are you live in a country where you can buy Bitcoin in your bank’s ATM or at a cashier’s desk. Examples of the latter include LibertyX in the US, Coinplug in South Korea, and Chip Chap in Mexico, all of which have thousands of locations to choose from. Moreover, there are agent offices such as MoneyPolo which is present in 130 countries and where you can buy or cash out Bitcoin through the 247 Exchange.

If you can’t find a Bitcoin ATM near you, don’t worry, you might not need one. Using Bitcoin requires having access to the Internet, where there are also hundreds of exchanges striving to give you the best rates for your money. And if you absolutely need to use cash, you can look for exchange directories like Paxful which let you find somebody ready to exchange crypto for physical money. Very likely, that will also be the safest option as there are countries where cryptocurrency is fully or partially outlawed.

Conclusion

If you are a long-time Bitcoin hodler or simply wish to join in on the fun, crypto ATMs are a great way to convert from or into fiat currencies. Although they are still few and far between and you can find better rates online, they connect crypto to the physical world and offer an easy way to dive into this field. Experience the great potential of cryptocurrency and buy some Bitcoin today!