“Siri, find a Bitcoin ATM near me.”
In the not-so-distant future, this request might be a common one. The first Bitcoin ATM was set up in 2013. Since then, the machines have been placed all around the world.
Although they are still not common – mostly planted in the world’s largest tech cities – we can expect that cryptocurrency ATM’s will continue to increase in popularity as digital currencies became more widely adopted and practical for everyday use.
Today marks 50 years since the first ATM machine (for fiat) was opened. We figured this would be a convenient occasion to explain the cryptocurrency version of these cash machines.
How does a Bitcoin ATM work?
Traditional ATM machines are tied to a specific bank. They often require you to have an existing account with that bank; otherwise, you are likely to pay an additional service charge.
These cash machines allow customers to participate in financial transactions:
- without having to interact directly with a bank employee, and
- during any time of the day, without worry of being closed outside of business hours
These two benefits remain true for the blockchain version. However, the cryptocurrency machines operate a little differently. Rather than connecting to a financial institution such as a bank, these machines instead work through a cryptocurrency exchange.
Using one of these machines could save you a step if you prefer to keep a significant portion of your personal or business funds stored in Bitcoin. If you sell an item or service in which you receive cash, you can convert the money directly into digital currency without ever depositing it into the bank.
Most cryptocurrency exchanges require 3-5 business days to transfer money into your bank account – one of these cryptocurrency machines allows you to withdraw that cash instantly. If I had an emergency in which I needed to withdraw a sum of money but didn’t have that available in my checking account, I could simply search for a local Bitcoin ATM near me.
Types of Bitcoin ATM’s
There are two main types of machines you can find:
- One-way ATM’s: Deposit cash to receive Bitcoins OR deposit Bitcoins to receive cash
- Two-way ATM’s: Deposit cash to receive Bitcoins AND deposit Bitcoins to receive cash
The majority of these machines are found in the United States and Canada, with several European countries following behind.
The cost of a Bitcoin cash machine typically ranges between$5,000 to $15,000 each. There are three main manufacturers:
- Genesis Coin: based in San Diego, offers a two-way machine with support for users who own a Bitcoin alternative
- General Bytes: a Czech company offering both one- and two-way machines
- Lamassu: a New Hampshire company that will soon offer Ethereum support
These three main companies own a combined 85% of all machines in the world. The first company to enter the market was Robocoin. The company shut down in 2015. While you may still come across Robocoin machines, they have since been updated/modified to run another system’s software.
Bitcoin ATM fees
A word of caution: the convenience of using one of these machines can come at a cost. Almost all of these cash machines demand higher fees that you would normally see on a withdrawal transaction. An average transaction fee will be somewhere between 8-10%.
While these ATM fees are not always exorbitant or exploitative, it would definitely be wise to carefully review the financial terms of the agreement before completing a transaction.
If possible, use the same machine after finding one that you feel offers a fair rate. Bitcoin ATM fees can be different at each machine, depending on which cryptocurrency exchange the machine is attached to, and if there are fees from any state or country regulations that might apply.
Over time, we expect the cost of Bitcoin ATM fees to drop as the supply of these machines increases. I don’t have many Bitcoin ATM’s near me, but in the future, we may just see them on every block!