What is a Bitcoin ATM?
Bitcoin ATMs are automated teller machines that are used for purchasing, selling, and trading Bitcoin only. Traditional ATMs allow people to withdraw money from their bank accounts rapidly without having to wait in lines.
In the same way, cryptocurrency users and any person can now visit a Bitcoin ATM near their location and purchase Bitcoins in an easy and automated manner.
Bitcoin is a decentralized network therefore Bitcoin ATMs are installed by independent companies or individuals. Bitcoin ATMs can also list altcoins such as Bitcoin Cash, Monero, and Dash among others.
How Do Bitcoin ATMs Work?
The basic working principles of a Bitcoin ATM are like their traditional counterparts. However, there are some distinctions based on the operational method that differentiate them from the later.
These are tangible kiosks that people can visit to purchase Bitcoins and other listed digital currencies. However, it is not possible to trade Bitcoin with other cryptocurrencies. At the same time, investors may also not access their bank accounts using a Bitcoin ATM.
Furthermore, investors are unable to withdraw money from Bitcoin ATMs. However, they can connect digital wallets to store their Bitcoin purchases. Or they may also log-in their existing wallet accounts or create a new digital address to purchase Bitcoins and other listed altcoins.
Another method of depositing cash into the Bitcoin ATM is using QR codes. Bitcoin ATMs are easy to operate and they can make fast transactions on these units. The users must keep in mind the maximum and minimum limit for the purchasing Bitcoin in exchange for fiat currencies.
Does Bitcoin ATM Need User Verification?
For big volume transactions, Bitcoin ATMs can ask for mobile number of the user to verify their identities. In other instances, machines also have an official documentation scan feature such as driving license or social security number etc.
The newer versions of Bitcoin ATMs have also introduced finger-print scanning options as a way to ensure the deal wallet user identification.
Bitcoin ATM Fees
Bitcoin ATMs charge a transaction fee per usage. However, the rate of transaction fees is not fixed. It depends on the total amount of transaction value. In some cases, the transaction fee at Bitcoin ATMs is 7% higher in comparison to spot market value of the flagship cryptocurrency.
There are approximately 40,000 Bitcoin ATMs around the world. USA has 26877 installations, Canada has 2842 units, Australia has 634 units, Spain has 287 ATMs, and UK has 95 Bitcoin units in total. El Salvador, the first country to add Bitcoin as a legal tender harbors 212 Bitcoin ATMs.
Advantages of Bitcoin ATMs
- Bitcoin ATMs have a friendly user-interface and they allow people to interact with cryptocurrencies in a familiar format.
- Bitcoin ATMs are automated and operational across the clock. It means that people can access them at any time.
- Bitcoin ATMs increase transaction privacy for investors. When a person conducts transactions on a Bitcoin ATM they can keep their transaction history private.
- Bitcoin ATMs can issue the record of transaction on a receipt. In this manner, Bitcoin investors can keep official track of their transactions in a secure manner.
Disadvantages of Bitcoin ATMs
There are also some risks associated with Bitcoin ATMs mentioned as under:
- Transaction fees on Bitcoin ATMs are more expensive in comparison to the traditional cryptocurrency exchanges.
- Bitcoin ATMs are limited in number and therefore it can be a real problem for a person to locate them. They are not like applications available on the smart phone that a person can open and start trading at any given time.
- Bitcoin ATMs are sometimes subjected to regulatory scrutiny.
- Scammers have used privacy options of Bitcoin ATMs to trick people into giving up their cryptocurrency reserves through fraudulent schemes.
- Bitcoin ATMs may sometime malfunction, get stolen, or disappear that can lead to losses and problems for the investors.
Bitcoin ATMs have made digital currencies more accessible for greater portion of the population. Bitcoin ATMs have also introduced virtual currencies to new investors and worked as a marketing aid for digital currencies while raising awareness and education regarding virtual currencies.