A special kind of ATM has been sweeping across malls and gas stations all over the US. These unique kiosks look exactly like standard ATMs, except you can use them to purchase and sometimes even sell crypto and bitcoin for cash. There are now over 30,000 Bitcoin ATMs spread all over the US, and it’s never been easier to purchase crypto. What exactly is fuelling the rise of these Bitcoin ATMs, and who’s using them?
What Are Bitcoin ATMs How Do They Work?
Bitcoin ATMs, also known as BTMs, are physical kiosks that allow you to buy and sell Bitcoin using cash or credit/debit cards. These machines provide a convenient way for you to buy and sell crypto offline.
To purchase crypto, you hit the “Buy Bitcoin” option on the ATM, enter the desired amount in fiat currency, and scan the QR code of the Bitcoin wallet address. Users can then insert cash into the machine, and once the transaction is confirmed, the equivalent amount in Bitcoin is transferred to their wallet. Selling Bitcoin at these ATMs follows a similar process. You choose the “Sell Bitcoin” option, scan the QR code from the wallet containing the Bitcoin you want to sell, and then receive cash equivalent to the current exchange rate.
Bitcoin ATMs charge fees for their services, which can include a percentage-based fee on the transaction amount or a fixed fee. Additionally, the exchange rate used by the ATM might differ slightly from the current market rate, leading to some additional costs.
ATM operators make money primarily through these fees. Some operators also generate revenue by offering additional services, such as hosting advertisements on the ATM interface or by providing value-added services like two-way Bitcoin transactions.
Who Uses Bitcoin ATMs?
The largest Bitcoin ATM provider, Bitcoin Depot, recently conducted market research to find out exactly who uses BTMs and why. They surveyed thousands of Bitcoin ATM users and found that 40% of them were using BTMs to take advantage of Bitcoin’s peer-to-peer network. These users were sending money across the country and internationally via BTMs. BTMs were an extremely popular alternative for people trying to send money to high-risk countries where traditional remittance services don’t operate.
Over 27% of BTM users access the kiosks for online purchases. They use the BTMs to purchase crypto and then make crypto purchases online, which range from clothing to electronics to gift cards and virtually everything you can think of.
A large percentage of BTM users are unbanked and use ATMs as an alternative to the traditional financial system. They are drawn to the ease of use, the lack of required verification, and the ability to send and receive cash virtually instantly.
Unfortunately, Bitcoin ATMs have also been targeted by criminals. Criminals have used the ATMs to launder money. Essentially, they feed large amounts of cash through the machines and use it to purchase Bitcoin anonymously. The Bitcoin is then shifted throughout the network and cleaned through a process called tumbling until it becomes untraceable.
What Are the Advantages and Disadvantages of Bitcoin ATMs?
Bitcoin ATMs are one of the few ways you can securely purchase Bitcoin with cash. Typically, if you wanted to swap Bitcoin for cash, you’d have to meet up with a Bitcoin holder and physically exchange the cash, which causes all sorts of security issues.
Another great advantage of BTMs is they allow the unbanked to quickly send money to friends and family who are in different countries. BTMs are a viable competitor to services like MoneyGram and Western Union.
The major downside to using Bitcoin is the sky-high fees, which, on average, are 15%. This is in stark contrast to online exchanges, where fees are as low as 0.10% and are rarely above 1%. Bitcoin ATM operators claim the fees need to be high due to the costs of the equipment, rent, and supplying the machines with cash.
However, the high fees haven’t slowed down the BTM industry, which generates annual revenue in the US and is estimated to be over $3.6 billion, which is only continuing to rise. BTMs provide users the ability to easily send peer-to-peer and cross-country while also giving unbanked users the means to effortlessly make online purchases.
