Discovering the whereabouts
Interested in learning about Bitcoin ATMs? Discover these electronic kiosks that enable you to buy or sell Bitcoin and other cryptocurrencies.
The popularity and acceptance of Bitcoin (BTC) have been steadily increasing, particularly following the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission on January 10. This milestone has allowed more people to participate in Bitcoin’s price movements without actually owning the cryptocurrency. As a result, Bitcoin’s price has reached record highs, increasing its legitimacy as an investment and a safe way to store money.
Now, the focus is on making Bitcoin more accessible to everyone. This is where Bitcoin ATMs come into play. These machines allow individuals to buy or sell Bitcoin and other popular digital currencies on their own.
In this guide, we will explore these machines, how they operate, where to find them, and how to purchase Bitcoin at an ATM.
Table of Contents:
1. What is a Bitcoin ATM?
2. How does a Bitcoin ATM work?
3. Types of Bitcoin ATMs
4. How to use a Bitcoin ATM
5. Where to find a Bitcoin ATM
6. Bitcoin ATM fees
7. Are Bitcoin ATMs legal?
What is a Bitcoin ATM?
A Bitcoin ATM, also known as a Bitcoin teller machine (BTM) or crypto ATM, is an electronic kiosk that allows users to deposit cash in exchange for Bitcoin or other cryptocurrencies. These machines typically consist of a scanner, a cash dispenser, and an internet connection to facilitate transactions. Withdrawing cash from these ATMs involves selling your cryptocurrency to the ATM operator in exchange for fiat currency.
How does a Bitcoin ATM work?
At first glance, a Bitcoin kiosk may resemble a regular ATM, but do they function the same way? How does a Bitcoin ATM work? Essentially, it utilizes a system that enables various components, including the user, the machine operator, and the broader cryptocurrency network, to communicate with each other.
To meet regulatory standards, a verification system is in place. This system verifies users through ID scanning or SMS verification codes, helping prevent fraud and ensuring traceable transactions.
Next, BTMs connect to your crypto wallet. This connection can be established by scanning a QR code from your mobile wallet app or using a paper wallet provided by the machine.
When a transaction is initiated, the BTM communicates with a cryptocurrency exchange to process the transaction at current market rates. This process involves buying or selling cryptocurrencies.
Security is a top priority, so BTMs employ measures like encryption, secure internet connections, and compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations to safeguard transactions. This may involve verifying your identity through a phone number or ID scan.
Some BTMs are traditional ATMs customized with software for crypto transactions. This software manages the transaction flow, interfaces with the crypto exchange, and connects to your wallet.
To ensure regulatory compliance, the backend includes systems for transaction limits, reporting suspicious activities, and adhering to financial regulations.
Server and database management are also crucial aspects of the machine’s backend. The server handles transaction data, user information, and logs, while databases securely store records for future reference and regulatory audits.
Types of Bitcoin ATMs
There are generally two types of Bitcoin ATMs: one-way or unidirectional BTMs and two-way or bidirectional BTMs.
Unidirectional Bitcoin ATMs only support either the buying or selling of crypto, but not both. They are simpler to operate and are primarily used for buying Bitcoin with cash.
On the other hand, bidirectional BTMs allow users to both buy and sell crypto. They are more complex to operate and offer a wider range of services compared to one-way BTMs.
Each type of machine has its advantages and disadvantages. For beginners, unidirectional ATMs are more accessible and easier to use. They also provide a level of anonymity, as many of them may not require ID verification. Additionally, buying Bitcoin from these ATMs is relatively quick.
However, the limited functionality of one-way ATMs can be a drawback, especially if you want to sell your crypto. Transaction costs may also be higher compared to web-based exchanges.
Bidirectional Bitcoin ATMs are advantageous because they allow users to buy and sell crypto, enabling them to convert their digital assets into cash directly. The process is also relatively quick.
One drawback of bidirectional machines is that many of them only support Bitcoin. If you are interested in other cryptocurrencies, you will have to use an online exchange.
Additionally, two-way Bitcoin ATMs may have higher fees compared to online counterparts, and their availability is limited, especially outside the United States and Canada.
How to use a Bitcoin ATM
As mentioned earlier, some BTMs not only allow users to buy crypto but also enable them to sell their holdings. Below, we will explain how to use a Bitcoin ATM for each process:
How to buy Bitcoin at an ATM:
To buy Bitcoin at an ATM, you will need a crypto wallet to securely store your purchased cryptocurrency. You can use a hardware wallet or install a wallet app on your phone or computer. If you do not have a crypto wallet, some BTMs can generate a printable paper wallet for you.
The paper wallet contains alphanumeric strings of characters and QR codes generated randomly via a key generator. A wallet is necessary to receive and store the cryptocurrency you buy from the BTM.
To find a BTM, you can use online directories, which we will discuss later in this guide.
When you are at the Bitcoin kiosk, the buying process usually involves the following steps:
1. Enter the amount of Bitcoin you want to buy.
2. Verify your identity, which may require providing your phone number or scanning a government-issued ID document, depending on your location and the purchase amount.
3. Provide your crypto wallet address by scanning the QR code of your wallet using the ATM’s camera.
4. Once the ATM recognizes your wallet address, proceed with the payment. Some ATMs may accept cash, credit cards, or payment apps.
5. After making the payment, you will receive the purchased crypto in your wallet. This typically takes a few minutes, and the ATM will provide you with a transaction ID to track the status of your purchase. Your wallet app will confirm when the crypto is successfully added to your wallet.
How to sell Bitcoin at an ATM:
After locating a BTM near you, select the “Sell BTC” option on the screen. The machine will guide you through the process.
The steps for selling Bitcoin at an ATM typically include:
1. Enter the amount of crypto you want to sell.
2. Depending on local rules and the transaction amount, you may need to confirm your identity by scanning an ID document or providing a registered phone number to receive a verification code.
3. The BTM will generate an address for your transaction. Scan this address using your crypto wallet app to securely send the crypto you are selling.
4. Once the ATM receives the crypto, it will dispense cash equivalent to the sold crypto amount minus service fees. This usually happens within a few minutes, and you can track the transaction’s progress using your wallet app.
Where to find a Bitcoin ATM
Bitcoin ATMs can be found in numerous locations worldwide, but their numbers are still relatively low compared to traditional ATMs. Therefore, finding one may not be straightforward.
The easiest way to locate a Bitcoin ATM near you is by using online tools like Bitcoin.com’s ATM map, Digital Mint, and Coin ATM Radar. These platforms provide up-to-date information on the locations of new and existing crypto ATMs.
You can enter your address, city, and state or use your current location to discover nearby BTMs on the Bitcoin.com ATM map. The website features a list of crypto ATM providers, a brief description of how to buy or sell Bitcoin, and an interactive map that automatically logs your location and shows the number of Bitcoin kiosks in your area and their specific locations.
Digital Mint functions similarly to the Bitcoin.com ATM map, with the main difference being that its locator service primarily focuses on Canada and the United States. The platform also sends text message notifications when new locations are launched.
How many Bitcoin ATMs are there?
According to Coin ATM Radar, there are currently 37,109 Bitcoin ATMs in 72 countries worldwide, with the majority located in the United States. The U.S. has over 30,000 machines, followed by Canada with approximately 2,860 machines. El Salvador, which recognizes Bitcoin as legal tender, reportedly has 216 Bitcoin ATMs, 38 more than Germany, and about the same number as France, Turkey, Russia, New Zealand, and Slovakia combined.
Bitcoin ATM fees
Bitcoin ATMs charge two types of fees: the fee you pay at the kiosk for the services provided and the fee for transferring crypto between wallets.
When you use a Bitcoin ATM, you pay an exchange fee to the ATM operator for converting your cash into Bitcoin. This fee covers the costs of maintaining and operating the ATM and is usually a percentage of your transaction amount.
Additionally, when you send crypto from your wallet to another wallet, you pay a transfer fee. This fee is not charged by the ATM but is paid to validators on the cryptocurrency network who confirm and validate transactions. The fee amount can vary depending on network congestion and the speed at which you want your transaction to be processed.
How much does a Bitcoin ATM charge?
When you use a Bitcoin ATM to convert regular currency into cryptocurrency, you will encounter significant exchange fees. According to Crypto Dispensers, these fees can range from 10% to 23%, depending on the specific ATM operator.
In addition to Bitcoin ATM fees, there is also a network fee for the transaction, typically ranging from $1 to $3.
While higher network fees may be mentioned in some cases, they usually remain within the lower end of this range and rarely exceed $6, according to Crypto Dispensers.
Are Bitcoin ATMs legal?
Bitcoin ATM machines are legal in most regions, although regulations may vary. In the United States, for example, these ATMs are overseen by the Financial Crimes Enforcement Network (FinCEN). Operators must register as money services businesses and implement strong AML and KYC measures for transactions exceeding a specific limit.
At the state level, crypto ATM operators often need a money transmitter license, following specific state rules and consumer protection laws. These laws may include requirements for transparent fee disclosure, data protection, and operational standards. Local regulations, such as zoning laws, also impact the operation of crypto ATMs.
State regulators have expressed concerns about the operations of Bitcoin ATMs. While most machines are operated by legitimate companies, there is a risk that crypto ATMs can be exploited by fraudsters and money launderers.
Internationally, laws governing crypto ATMs may vary. In the U.K., for example, the Financial Conduct Authority (FCA) has increased efforts to regulate crypto ATMs.
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