itBit Primer: Bitcoin ATM Basics

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Bitcoin ATMs are an increasingly popular solution for acquiring Bitcoins because of their convenience and simplicity. According to Coin ATM Radar, there are nearly 250 operating bitcoin ATMs across the globe.

The U.S. has been behind the curve when it comes to this technology. The first ATM in the states went live in February while it was only earlier this summer that New York City, one of the top digital currency markets, saw its first bitcoin ATM.

 

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                                                                                                                                                              Map of Bitcoin ATMs around the world. (Source: Coin ATM Radar)

 

Bitcoin ATM Basics

Typically, bitcoin ATM users begin by verifying their Bitcoin Wallet. This involves scanning a QR code usually displayed on their smartphone. Once verified, users then insert cash into the ATM and submit to complete the transaction. The machine then deposits the appropriate amount of bitcoins into their digital wallet based on the exchange rate. Bitcoin ATMs are generally connected to digital currency exchanges (where they derive their exchange rates), and charge a fee for the convenience.

A majority of bitcoin ATMs currently only operate in one direction: by accepting fiat currency in and depositing bitcoins out into the user’s digital wallet. However, there are bi-directional ATMs that can accept bitcoin in exchange for fiat currency .  

ATM Manufacturers and Next-Gen Features

There are twenty-seven noted bitcoin ATM manufacturers, but only about half of those have their machines installed and functional. When they are installed in a local business, that business is responsible for keeping the machines stocked with cash and complying with local regulations.

Bitcoin Examiner recently took a closer look at the eight most prominent brands currently operating: Robocoin, Lamassu, Genesis1, Coinplug, Umbrellab, PayMaQ, BTM and BTC-O-MATIC. Some highlights include:

  • Robocoin is updating its machines to allow users to easily send digital currency directly to any person using just a phone number.

  • Lamassu machines currently accept fiat currency from over 200 countries in exchange for bitcoin.

  • Genesis1 machines were noted as some of the most advanced, due to features such as a “magnetic/EMV card reader, a 1,700 to 6,800 note Bank-grade cash dispensing system and an optional fingerprint reader.”

Regulation

Like all things bitcoin, operating a bitcoin ATM comes with some regulatory hurdles. Bitcoin ATM operators must have money transmitter licenses, and must be a registered money transfer service in compliance with state and federal money transfer laws.

In Switzerland, the Swiss Financial Market Supervisory Authority has taken a very hands-on approach to bitcoin ATMs. In the states, New York’s BitLicense regulations, if enacted, could impact those looking to operate these machines as well. On the other hand, some countries, such as Spain, have little to no digital currency regulations, making it attractive location to install many of these machines.

Regardless of the ongoing regulatory issues, new bitcoin ATMs continue to pop up around the world. ATMs make digital currency more easily accessible and the simplicity of the transaction process can help boost adoption worldwide.