A Bitcoin ATM allows users to buy and sell Bitcoins for cash.
Bitcoin ATM’s can be more expensive than online transactions as the infrastructure cost is higher – i.e. building an actual ATM and the steps that are actually needed to transfer the money and Bitcoins.
The first step is to scan her identification which the ATM then validates.
Then the user feeds in some cash and generates a QR code from her wallet – a QR code being a large square of black and white pixels. Then the user sends the Bitcoins to the presented address.
Some ATM’s generate a paper wallet – or offline wallet – essentially a bearer instrument of the Bitcoins.
Bitcoin ATM’s are essentially money transmitting tools and as such the businesses come under FinCEN rulings and have to comply with Know Your Client and Anti Money Laundering procedures, or AML and KYC. Registering for money transmitter status can be costly and this means ATM providers have to knudge up fees.
Typically fees are in the range of 5% and quoted prices are taken from large exchanges on a live basis. The company will try to manage its cash and Bitcoin exposure by balancing its inputs and outputs through live trading with its exchange – holding too much Bitcoin without hedging can introduce the possibility of large profits or losses. Other problems come with banking facilities as it has been extremely hard for bitcoin related businesses to get traditional banking facilities – so moving cash in and out can be problematic – hedging using various Bitcoin futures can be one method of mitigating risks involved due to volatile price fluctuations.
Although the initial users of Bitcoin have been aficionados and enthusiasts, there are persuasive arguments for the spread of Bitcoin ATM’s. One major use is for travellers when faced with high fees at traditional bureau de changes – so buy bitcoin before the flight and sell it afterwards – although with 5% fees each way and large volatility this is quite risky.
The other potential use for access is allowing the unbanked to gain access to digital currency and partake in international ecommerce. Essentially giving them the chance to become their own global bank as the spread of Bitcoin and crypto currency reaches all corners of the world. A Kenyan shilling won’t get very far whilst a milli Bitcoin will.
- What Is OmiseGo (OMG)?
- What Is Qtum?
- GeliosTrade, An Easy-To-Use Investment Platform
- CRYPTOTAG Review: Securing Your Crypto Like You’ve Got Something To Lose
- Using Crypto to Bet on Sports with Sportsbet.io
- What Is Dogecoin (DOGE)?
- A Look into fast and secure cryptocurrency betting with BetMatch
- What Is Dai Stablecoin?
- What Is Chainlink?
- What Is Basic Attention Token (BAT)?
This website is only provided for your general information and is not intended to be relied upon by you in making any investment decisions. You should always combine multiple sources of information and analysis before making an investment and seek independent expert financial advice.
Where we list or describe different products and services, we try to give you the information you need to help you compare them and choose the right product or service for you. We may also have tips and more information to help you compare providers.
Some providers pay us for advertisements or promotions on our website or in emails we may send you. Any commercial agreement we have in place with a provider does not affect how we describe them or their products and services. Sponsored companies are clearly labelled.