What Is a Bitcoin ATM?

3 min, 48 sec READ

A Bitcoin ATM is a machine that allows you to exchange Bitcoins for cash, but they aren´t like traditional ATMs.

Bitcoin ATMs are connected to the internet (rather than one of the global banking networks). The most common among them allow you to deposit cash in exchange for Bitcoins. Deposits are typically provided as a paper receipt or sent to your chosen wallet. These represent 70.68% of all BTC ATMs available. The remaining 29.32% of machines offer bidirectional functionality, meaning you can buy Bitcoins and also sell yours in exchange for cash. Some service providers require users to have an existing account with their service in order to use the ATM. Some of them even provide altcoin support.

As of December 2017, there are a total of 1992 Bitcoin ATMs installed around the world; with an average fee of 9.64%(*). The average Bitcoin buy fee is 10.59% and the average sell fee is 6.87%.

Three companies dominate the Bitcoin ATM business: Genesis Coin (36.19% market share), General Bytes (28.11% market share) and Lamassu (13.70% market share) together own 78% of all Bitcoin ATMs available worldwide.

Where Can I Find a Bitcoin ATM?

Web services like Coinatmradar.com and Coindesk.com have search engines that let you find the nearest Bitcoin ATM.

The United States is the top country in terms of the number of Bitcoin ATMs with 1000 machines, and there are 433 in the next three countries on the list: Canada, the UK, and Austria.

What Are the Advantages and Disadvantages of Bitcoin ATMs?

Some of the advantages of using Bitcoin ATMs are:

Speed

Bitcoin ATM is one of the fastest ways to buy and sell bitcoins. Some providers like Lamassu support a 15-second operation, which consists of scanning the QR code of your Bitcoin address, feeding bank notes into the machine and clicking “Send”.

Security and Anonymity

Users interact directly with the machine, there is no third party involved. Some providers don’t require any form of verification for relatively small transactions.

Ease of Use and Accessibility

Users just beginning in the Bitcoin world benefit especially from physical Bitcoin exchange locations because of their similarity to traditional bank machines. Most Bitcoin ATM providers have implemented easy-to-understand interfaces that anyone could use without special knowledge.

Some Possible Disadvantages of Bitcoin ATMs

High Costs

As of December 2017, there are a total of 1992 Bitcoin ATMs installed around the world; with an average fee of 9.64%(*). The average Bitcoin buy fee is 10.59% and the average sell fee is 6.87%. Some operators are known to charge up to 30% or more via commission or price markup. It is hoped that with growing competition and implementation, average fees will decrease.

Service Reliability and Downtime

Bitcoin ATMs are still an emerging service.  At this stage, reports of non-functional machines are common. There are also instances where users find full services unavailable. This is because many machines store their Bitcoins in a hot wallet, which means the operator bears the risk of losses. While this protects users from unsuspected loss and other risks, it presents an incentive problem for operators when the price of Bitcoin fluctuates. So, when Bitcoin prices are on the rise, operators may not provide selling services, for instance, because there is much more incentive to keep their Bitcoins and make gains from value increases. If an operator sells their coins to customers today, they’ll have to buy more Bitcoin tomorrow at higher prices in order to replenish their wallet.

Hard to Locate

Since Bitcoin ATMs are still new for most people, it might be difficult for them to locate the closest working Bitcoin ATM. Some people are not aware of the online services that allow you to locate them and even these sites may not be updated quickly enough to include the latest ATMs added around the world.

With all of this considered, the ability to walk up to a machine with cash in hand and walk away seconds or minutes later with Bitcoin is still very appealing to a large number of people. The alternative could be waiting for days to get your coins from an exchange, which means that your liquid assets are tied up in “processing” for days. Many people prefer to keep their assets liquid with a stop off at their local Bitcoin ATM. For speed and ease, you really can’t beat a Bitcoin ATM. As the wrinkles get ironed out, we suspect we’ll see a lot more of them in the future.

(*) rate is calculated based on 1199 machines supporting buy operations, and 411 ATMs supporting sell operations Last updated: 2017-12-26.

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