Majority of people are familiar with ATMs. Although bitcoin ATMs are different from regular ATMs, they both bear similarities. They are both similar in the sense that you can walk up to an ATM, put money in or take money out. The familiarity of a regular ATM is what attracts people to use a bitcoin ATM. Bitcoin ATM makes it very easy for beginners to buy bitcoin. Okay! bitcoin ATMs are convenient but should you use one? Before we answer that question, you must understand how a bitcoin ATM work.
How A Bitcoin ATM Works
A bitcoin ATM allows people to buy or sell their bitcoin. If you are buying bitcoin, you are able to deposit cash into the ATM and get bitcoin to your wallet. If you are selling bitcoin, you are able to scan their bitcoin address with a QR code and send bitcoin to their address to withdraw cash. Keep in mind that the majority of bitcoin ATMs, only allow buying of bitcoin. 32% of ATMs allow buying and selling.
Finding A Bitcoin ATM
If you want to find the nearest bitcoin ATM, you can use Coin ATM Radar. To this day, they have listed 4322 ATMs in 72 countries. You are able to search ATMs by the cryptocurrency. Modern Tender and CoinMap are similar services. Coin ATM Radar has an iPhone and Android mobile app.
Using A Bitcoin ATM
Although different ATMs have different procedures to buy and sell bitcoin, it is quite similar. The general procedure is as follows:
- Go through identity verification – Majority of bitcoin ATMs require some form of identity verification. It could be your ID, mobile number or both.
- Input your wallet’s address
- Input fiat money to the ATM
Why You Shouldn’t Use a Bitcoin ATM
Bitcoin ATMs charge incredibly high fees. These fees range from 5% to 15% of the total transaction. A regular ATM wouldn’t charge any fee when you deposit or withdraw money from an ATM owned by the same bank. Some ATMs charge fees if you deposit or withdraw money from an ATM owned by a different bank. Compared to a regular ATM, bitcoin ATMs are very expensive.
Bitcoin ATMs are not found everywhere. There is little to no competition. They can afford to charge high fees because of this. This is likely to change in the coming years when bitcoin ATMs become popular.
If you are planning on using a bitcoin ATM to cash-out bitcoin anonymously, you will be disappointed. The majority of ATMs require some form of verification. It could be your ID, mobile number or anything else. Now, this is certainly more anonymous than using an exchange like Coinbase to buy bitcoin; but not completely anonymous. If you want to learn how to cash-out bitcoin anonymously, check here.
Some users report that these ATMs are not working properly. It is crucial to have bitcoin ATMs up and running especially when people drive for hours to use one. And not to mention, the majority of bitcoin ATMs only allow buying bitcoin.
There are so many complaints of bitcoin ATMs suddenly stop working and reported to have bugs in them. Operators of these ATMs have addressed this issue by remotely administering these ATMs.
Some bitcoin ATMs have hot wallets while others are connected to a bitcoin exchange. Whenever a customer completes a transaction, it is reflected in the exchange. Sometimes ATMs that have hot wallets refuse to provide service to customers when the bitcoin price fluctuates. When bitcoin makes a sudden move upwards, operators of these ATMs have the incentive to hold on to bitcoin in order to gain from this movement.
Hard to Find
If you live far away from the city, it is likely that you don’t have a bitcoin ATM nearby. There aren’t many bitcoin ATMs. Although these ATMs are growing in number each year, it is still in its infancy. Unlike regular ATMs, people have no idea where the nearest bitcoin ATM is.
Why You Should Use a Bitcoin ATM
It is no doubt that using a bitcoin ATM to buy bitcoin is quick. When you buy bitcoin from an exchange like Coinbase, it can take up to a week sometimes. It is a tedious process to deposit money from your bank account, wait for funds to clear and wait for Coinbase to deliver your bitcoin. A bitcoin ATM eliminates all theses hassle and delivers your bitcoin within seconds.
When you buy bitcoin from an ATM, it only involves one party. You only deal with a machine. Chances of getting scammed are very low. Whereas, when you buy bitcoin using peer-to-peer exchanges like LocalBitcoins or Paxful, you have a higher chance of getting scammed. Peer-to-peer exchanges involve two parties interacting with each other to make a transaction. There are countless instances of buyers getting robbed and scammed. Besides, dealing with a machine is much more anonymous than peer-to-peer exchanges.
There is no doubt that bitcoin ATMs are convenient. You can walk up to an ATM, deposit money and get your bitcoin or send bitcoin to their address using QR code and withdraw cash. An exchange like Coinbase makes you go through a lot of verification before they deliver your bitcoin, not to mention it is time-consuming. Buying bitcoin using a peer-to-peer exchange is even more tedious. Depending on the seller, you may be required to provide additional verification and wait for hours for the seller to deliver your bitcoin.
Bitcoin ATMs are very straight forward. For first time users, it is very easy to get acquainted with them because they are very similar to regular ATMs. If you are new to digital currencies, you are likely to use a Bitcoin ATM first than using an exchange. People fear what they do not understand. Bitcoin ATMs really lowers the barriers to entry for newcomers.
Surely, bitcoin ATMs are very convenient and anonymize to some extent when buying bitcoin. Unfortunately, the fees are quite high compared to other methods of buying and selling bitcoin. If you live far away from the nearest bitcoin ATM, you might want to consider other means of buying bitcoin. Is it worthwhile to drive a long distance, just to get your bitcoins a few days early? Hopefully, there will be more bitcoin ATMs in the future and fees will be lowered.