What is & How to Use a Bitcoin ATM?

What is and how to use a Bitcoin ATM? The main purpose of creating Bitcoin by a pseudonymous creator Satoshi Nakamoto was to offer the people with a means to make P2P payments without the need of a traditional banking system.

Now, with the development in technology and with the advent and use of Bitcoin Teller Machines or BTMs it is now even easier to bypass the traditional banking system.

Popularly known as the Bitcoin ATMs, these machines have grown in popularity and over the years more and more people are using them to buy or cash out Bitcoin.

Just as the value and trust on crypto in people has increased over time, so it has these BTMs in them.

You will find a Bitcoin ATM in almost all those places where you will find a traditional ATM.

You can even find one in a convenience store, gas stations, and even in a bar!

However, if you do not know what a Bitcoin ATM is and how to use it, do not fret or be ashamed because you are not the only one out there.

This article is just meant for you. In this article, you will come to know everything about the Bitcoin ATMs, how they work, where to find them, and their pros and cons.

You will also be informed about how to get started to use them and how to sell or send coins through the BTMs along with a brief history of it and lots of other important things.

Therefore, if you want to learn more about the Bitcoin ATMs and have all your questions answered, keep reading.

What is and How to Use a Bitcoin ATM?

What is and How to Use a Bitcoin ATM

If you consider any type of industry, when a product is created and it is doing well, hundreds of other ancillary products start popping to support that product and the industry.

For example, consider the iPhone and the different accessory brands that came up after its launch.

The world of crypto is no different.

When Bitcoin and other crypto coins took the world by storm a lot of other accessories were required and came into existence such as:

To put it in a few simple words, a Bitcoin ATM will allow you to use cash if you want to purchase Bitcoin.

You can also send Bitcoin, and even cash, to any other Bitcoin wallet or account you choose to by using a BTM.

There are several of these Bitcoin kiosks that will also allow you to sell your coins and receive fiat money.

All you need to use a Bitcoin ATM is a smartphone.

Now, to explain things more clearly, a Bitcoin ATM is nothing different from any traditional ATMs or Automated Teller Machines but only in the sense that a Bitcoin ATM and a regular ATM both are physical kiosks.

This means that you can see, feel, and touch them both. Even the design of the Bitcoin ATMs looks pretty similar to a typical ATM.

However, what differentiates a Bitcoin ATM from a typical ATM is, of course, that it allows the users to buy Bitcoin only in lieu of cash or debit.

This means that a traditional ATM will dispense cash only but a Bitcoin ATM is designed to dispense Bitcoin only.

Depending on the features and functionalities of the machine it may also allow you to sell your coins, send cash, and do more.

And, these Bitcoin ATMs typically connect to your Bitcoin wallet and not to your bank account.

This means that the Bitcoin ATMs typically act as a repository rather than your bank card which allows you to send or receive coins from it.

The software installed in these BTMs is essentially customized for Bitcoin.

Typically, there are two types of Bitcoin ATMs.

These are:

  • Unidirectional Bitcoin Teller Machines – These are the machines that support making only one-way transactions. This means that you can either buy or sell coins through these unidirectional BTMs.
  • Bi-directional Bitcoin Teller Machines – Just as the bane indicates, these are two-way machines that support both buying and selling of coins.

Ideally, a Bitcoin ATM comprises:

  • A monitor
  • A QR scanner
  • A bill acceptor and
  • A dispenser.

All these components of the Bitcoin ATM work in tandem in the background and are connected with each other via the customized software.

The main purpose of all of these components is to make buying and selling of Bitcoin on the machine much easier, faster, and more secure through a crypto exchange that it is connected to via the Internet.

History

It is good to take a look at the history of the Bitcoin ATMs before you jump into its other intricacies.

According to records, the first ATM for crypto was launched on October 29, 2013 in a Waves Coffee Shop in Vancouver, Canada.

This was a Robocoin machine that was functional for a short time and was removed from the shop in 2015. The main reason behind it was errors in its operation.

However, it is this machine that is believed to have paved the path for other Bitcoin ATM manufacturing companies to come up and curve their niche in the crypto industry, albeit in a different way.

The biggest manufacturers of the Bitcoin ATMs today among several others are:

  • Genesis Coin and
  • General Bytes.

Apart from it, a Bitcoin ATM was also found in Europe sometime thereafter. It was installed and operational in Bratislava, Slovakia on December 8, 2013.

And, in the United States, the first Bitcoin ATM was installed in Albuquerque, New Mexico on February 18, 2014.

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However, this was short-lived and was removed within a month after its installation.

Therefore, as you can see that the path of the Bitcoin ATMs was not smooth and there were specific challenges faced by it in terms of regulations, just as it were for cryptocurrency itself.

However, later on a consensus was reached upon and it was agreed that these teller machines will also abide by the same rules and regulations designed for the traditional ATMs. This includes:

  • Limits on the number of deposits for each transaction each day
  • Limits on number of withdrawals and
  • Registration and other requirements.

For example, all Bitcoin ATM operators in the United States essentially have to get themselves registered with the FinCEN or the Financial Crimes Enforcement Network.

In addition to that, these ATMs are also required to abide by the AML or the Anti-Money Laundering regulations of the Bank Secrecy Act or BSA.

The Bitcoin ATMs may often want your mobile phone number in order to send you a text code for verification purpose but that is usually done when the transaction amount is large.

On the other hand, you may also be asked to scan your identification document issued by the government, such as the driver’s license, before the transaction is completed.

Once again, this is usually asked when you make a large transaction.

This means that, due to the regulations imposed on the Bitcoin ATMs, most of the Bitcoin ATMs now do not offer the anonymity that was offered before, much to the dismay of several crypto enthusiasts.

As of now there are about 30,000 of these Bitcoin ATMs installed and are operating all over the world.

However, the majority of them are to be found in the United States, especially in North America that holds almost 90% of the market share of Bitcoin ATMs, the largest in comparison to other countries.

A Bitcoin ATM can be installed anywhere such as in cafes, transport hubs, specialty shops, as well as in airports and rail stations and in other commercial spaces.

However, the business owner will have to enter into an agreement with the Bitcoin ATM provider for it and thereafter the provider will take care of getting the device installed on-site.

Working Process

Now, it is time to know exactly how a Bitcoin ATM works to ensure that you have a more convenient and faster buying and selling experience of Bitcoin.

As said earlier, all Bitcoin ATMs are connected to the exchange via the internet to power it up.

The money is transferred on the blockchain by using the private key. However, there are a few particular Bitcoin ATMs that use paper receipts as well.

These blockchain-based machines usually prompt the users to scan the QR code.

This code typically matches with the Bitcoin wallet address of the user.

It is only after a match the coins bought will be transferred to that particular Bitcoin wallet.

It takes a few minutes to process the transaction and once it is done it is displayed in the wallet of the user.

As for the user, the process involves two simple steps for buying or selling Bitcoin using a BTM such as:

  • Verifying their identity which can be done in different ways and
  • Deciding whether to buy or sell in the case of a bi-directional BTM.

Both these processes are explained in detail later in the article.

Typically, the BTM will take at least six network confirmations before it sends the coins to your confirmed wallet address.

The time taken by the Bitcoin ATM for processing your transactions properly in this way may be anywhere between ten minutes and an hour.

Therefore, do not worry if you do not see the amount of Bitcoin purchased reflected immediately in your digital wallet.

Also, remember that, all ATM operators are not created equal.

While a few of them may take a longer time to process the transaction, others may charge very high hidden fees to complete the transactions as compared to others.

And, a few may not offer reliable and prompt customer support. Therefore, research well.

Getting Started

Before you start using a Bitcoin ATM, there are some prep processes. Assuming that you are unaware of them, here they are for your knowledge.

In general, all users of the Bitcoin ATMs typically need to have an existing account in the first place.

Therefore, first, you will need to get a digital wallet to store your digital currency safely.

These are just like a physical wallet where you store fiat money but it is digital in nature.

These wallets do not hold the Bitcoin per se, since it never leaves the distributed blockchain ledger.

Instead, it contains your Bitcoin balance so that you can keep track of your money.

Digital wallets can be web-based, desktop software or hardware devices but for Bitcoin ATMs it is best to use a web-based digital wallet or a mobile app.

Next, you will have to set up your digital wallet so that you can access it before you use the Bitcoin ATM.

Getting a mobile app ready to use is the simplest of all. However, the wallet type you choose will determine your mobile access.

When you set up your wallet you will be given a ‘key’ to it which is ideally a string of alphanumeric characters that secure your coins.

You may need to keep a note of his private key or, if needed, you may also have to download a QR code.

Now, all you have to do is find the nearest Bitcoin ATM in your location. You may find it on the internet with their addresses.

How to Use?

These are the specific steps to follow if you want to use a Bitcoin ATM to buy Bitcoin in exchange of fiat currency.

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Step 1

You have to insert your mobile phone number in the first place because the Bitcoin ATMs usually need to verify your identity.

A verification code will be sent on your mobile before you can proceed with the transaction.

This is done in accordance with the Know Your Customer or KYC and Anti-Money Laundering or AML regulations that all Bitcoin ATMs today should comply with.

You may also be asked at times to scan any ID issued by the government.

Step 2

When you have submitted your phone number, you will then need to verify your identity.

For this, you have to wait for the verification code sent as a text message by the Bitcoin ATM to your mobile phone number and input the same in its exactness onto the Bitcoin ATM that you are using.

This step is actually required to deter people from entering fake phone numbers.

Step 3

The QR code is important since it represents your Bitcoin wallet address.

In this step, you will have to scan it for the machine to know where exactly the coins are to be sent.

Step 4

In this step, you will need to enter the amount. Then you will need to place that specific amount of cash into the designated receptacle of the machine.

This is not difficult to find because it is just like any regular ATMs.

The machine will show you the amount of Bitcoin you will get for that specific amount of money.

Step 5

This is the final step of buying Bitcoin from a Bitcoin ATM.

After making sure that you have double checked the amount of money inserted and are satisfied with the value of Bitcoin you will receive in exchange for that, you will need to confirm the amount.

Click on “BUY” or “CONFIRM.” This will complete your transaction. Do not forget to take your receipt.

The coins will be sent to the wallet address you confirmed by the QR code.

How to Sell?

If you want to sell your coins through a Bitcoin ATM, which will depend on the type of the machine and its features, the steps may vary a bit.

However, in general the steps to follow to sell your coin through a BTM is not very difficult as it is pretty much the same as withdrawing cash from a traditional ATM of a bank by using your debit card.

Step 1

In order to cash out Bitcoin, first you have to select the right option. This means that you will have to click “Sell BTC.”

Step 2

You will now need to scan the QR code so that the machine knows your wallet address. You may also enter the address manually.

Step 3

This step involves verifying your identity. The requirements for this step may vary from one country to another but usually it involves scanning a valid ID proof, entering your phone number, or by taking a photo. A few advanced Bitcoin ATMs may also accept fingerprints.

Step 4

In this step you must enter the amount of Bitcoin you want to sell from your wallet to the address specified.

Step 5

When the coins are sent to the address specified, you will get the cash.

Most of the time you will get the cash right away but sometimes you may have to wait till the confirmation of the transaction is received.

Final step

Confirm the transaction and do not forget to take the receipt.

Always pay attention to the on-screen instructions when you cash out Bitcoin and be very intuitive and careful so that you enter the correct information.

Whether you buy or sell Bitcoin through a Bitcoin ATM, the ATM operator will charge you a fee for processing the transaction.

Therefore, never expect to receive the same amount that you have entered. It will always be a bit less since the fee will be deducted from it directly.

Therefore, research well beforehand to know the fees charged by the ATM operator before you choose one that suits you the best.

How to Send Cash?

If you simply want to send cash by using a Bitcoin ATM but do not want to sell your coins for that, here are the steps to follow.

However, for that, you must first make sure that you have an account with the particular Bitcoin ATM operator. Now all you have to do is:

  • Log in to your account through the machine
  • Enter the amount of cash that you want to send
  • Mention the Bitcoin wallet address that you want to send the money to and
  • Insert the cash.

It will be deposited in the Bitcoin wallet address of the recipient but in the form of Bitcoin. The recipient may then cash out.

Pros and Cons

There are some advantages and disadvantages of using a Bitcoin ATM that is also good to know at this point.

Some of the most significant advantages of using a Bitcoin Teller Machine are:

  • Transactions are fast
  • It is very convenient
  • It does not involve any physical card to make a transaction
  • It allows easy access since there are lots of these ATMs all over the globe and
  • People living in areas where ways to buy or sell crypto are limited can also access Bitcoin.

There are a few specific machines in a few specific countries that do not even require verifying the identity and therefore transactions are kept anonymous.

As for the downsides of using Bitcoin ATM, some of the major ones are:

  • The transaction fees can be very high raging anywhere from 7% to 12% and
  • The transaction limits may not allow making large deposits or withdrawals.
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Also, transactions made through Bitcoin ATMs are usually not anonymous since most of the machines need the users to go through the process of identity verification and submit their valid ID proof issued by the government or their phone numbers, as mentioned earlier.

Where to Find?

Now, if you do not know where exactly you can find these Bitcoin ATMs, here is how.

Typically, it will not be a tedious task because, as said earlier, there are about 30,000 Bitcoin ATMs all over the world.

There are lots of websites available on the internet that will even provide you with a map of these Bitcoin ATMs along with their respective addresses, such as Coin ATM Radar.

All you have to do is enter your city or address in the search bar and hit ‘Enter.’ You will be provided with a list of Bitcoin ATMs near you.

The information disclosed may also include the following:

  • The name of the location or building
  • The operating hours
  • The types of crypto supported
  • The transactions supported
  • The ATM type and
  • The manufacturer.

You may also find other details such as the direction from your specific location to the Bitcoin ATM by using Google Maps if you click on “Get Directions” or “View Details.”

You may even be allowed to filter your search depending on the site you choose.

You can filter your search according to:

  • The type of crypto you want to transact, if you want to use any other coins apart from Bitcoin
  • Whether you want to buy or sell your coins and
  • The type of machine you want.

All these will take just a couple of minutes.

Important Facts

Here are a few important facts about the innovative concept of Bitcoin ATMs which, when known, will make you more knowledgeable and confident.

Speed of adoption

Since this technology is relatively young, even younger than crypto itself, it is continually evolving especially in terms of security aspects and regulations that all BTMs should abide by.

Still, its adoption has increased exponentially in numbers over the years.

This also shows that people are adopting Bitcoin.

According to a report, there has been a huge increase in the launch and use of Bitcoin ATMs to about 177%.

It seems that the number will grow even more in the following years.

Bitcoin ATM fees

If you are interested to know the fees then be informed that it will vary according to the ATM operator.

While a few ATM providers may charge transaction fees ranging anywhere between 7% and 12%, others may charge you at 10% to 15% as transaction fees.

In some cases, it may even go as high as 25%.

Altcoins supported

Few Bitcoin ATMs may also support other Altcoins apart from Bitcoin, although these machines are typically called Bitcoin ATMs.

This means that these machines will allow you to buy and/or sell other types of crypto coins through them as well.

As of now the number of Altcoins supported by a Bitcoin ATM may be low but over time this number is sure to increase considering the fast adoption and use arte of these teller machines.

Cash deposit limits

The maximum amount of cash deposits you can make on a Bitcoin ATM may vary from one machine to another depending on the policies of the ATM operator.

While a few operators may allow depositing only $1,000 others ATM providers may set their upper limit as high up to $20,000. Therefore, research well.

Use of credit card

Typically, you cannot use your credit card in a Bitcoin ATM. You will need to use cash.

You can use a credit card only through a P2P network but then it can be vulnerable to hacking.

Safety

It is safe to make transactions through Bitcoin ATMs due to the state-of-the-art software used in it. A problematic hardware or software will not run a machine.

Moreover, these ATMs typically store low amounts of cash in them and therefore these are not usually targeted for theft.

Future

With all the pros and cons, and other beneficial features of the Bitcoin ATMs, their future seems to be very secure and bright.

With the rise in use and acceptance of Bitcoin all over the world, it is evident that the use of ATMs of Bitcoin will also grow, making these machines all the more useful and popular.

Cloud BTMs

There are some BTMs that operate on the cloud and there are significant benefits of using these specific Bitcoin ATMs.

Convenience is one significant benefit because transactions made on these machines are almost instant.

These machines are more sophisticated and also have a strong and knowledgeable team to support you as and when required.

In addition to that, these machines offer all those benefits that any ordinary Bitcoin ATM would such as privacy, security and trust.

Conclusion

So, that is all about Bitcoin ATMs and their working process. Hope this article has raised your confidence in these machines and you are ready to use them.

Just make sure that you research well while choosing the ATM operator for a better user experience.