Bitcoin ATMs And How They Work
Bitcoin lives entirely on the internet—or, at least, so we think. The presence of bitcoin ATMs can seem confusing, at first, since bitcoins are not exactly a fiat currency like dollars and cents. So, what are bitcoin ATMs, and how do you use them?
What Are Bitcoin ATMs?
Bitcoin ATMs are, for the most part, about the only location you can physically buy and sell bitcoin. You enter your data into the ATM to verify you are the holder of the coins, use your preferred wallet app to generate a QR code, and that code allows you to either buy or sell bitcoin, right there. You don't need a bank account, per se, to buy and sell bitcoin, just a stake of coins and a wallet app. Some also offer the option of a “paper wallet,” a slip of paper with the code which functions similarly to the long-defunct bearer bond.
They can also be useful sites for converting bitcoin into a local currency, or paying for bitcoin with a fiat currency, although you should check before using any bitcoin ATM whether or not they offer this service. Most do, but local or state laws may require separate steps, or may only allow the ATM to serve as a kiosk for transactions. This is especially true of travelers using bitcoin to convert currency at a better rate than local currency exchanges; this may not be allowed, legally, depending on which country you're in.
The Uses Of Bitcoin ATMs
As you might guess, like any ATM, there are financial fees. Generally, you can expect a fee of 5% on the transaction, although that can depend on the financial company operating the bitcoin ATM and the volatility of bitcoin on any given day. It's not entirely unusual for rates to move substantially from day to day or even hour to hour. You can also generally expect transaction rates to be higher than they are in a purely wallet-based trade, because the ATMs have physical infrastructure to support and are operated by a separate company.
The main benefit of bitcoin ATMs for investors is that they offer a more legally protected method of moving bitcoin. As the ATMs are money transfer devices, they abide by financial regulations about knowing your client (KYC) and help prevent money laundering. The paper wallet feature can also be useful if you want physical documentation beyond the blockchain, although it's highly recommended that whoever you're giving that wallet to be present and make the transaction right away. Lose the slip and you might lose your coins!
That said, the main downside of bitcoin ATMs is simply that there aren't that many of them. While the rise of bitcoin and cryptocurrency, in general, has driven banks and financial institutions to offer new trading methods and tools in the area, it's still relatively niche and viewed less like a currency and more like an investment vehicle. Just like it's rare, although not impossible, to find ATMs that let you trade stocks and bonds, expect bitcoin ATMs, at least for a while, to be hard to find. Need a better financial future? Get started today