Did you know that when Bitcoin first launched in 2009, it was worth absolutely nothing? Fast forward to mid-April 2021, and it saw its highest-ever value of over $60,000.
Bitcoin’s price has since then dropped significantly. As of June 2023, it’s been trading only at the $26,000 level.
That volatility is why Bitcoin makes for a high-risk, high-yield investment. It’s also the reason several people became crypto billionaires and many others millionaires.
So if you plan to invest in crypto, too, you should learn more about Bitcoin ATMs.
So, what is a Bitcoin ATM exactly, and how does it work? What do you need to use one, and how do you even use it?
This comprehensive guide addresses all those questions and more, so keep reading.
What Is a Bitcoin ATM?
A Bitcoin automated teller machine is an electronic, Internet-connected kiosk. While it looks like a traditional bank ATM, it’s specifically for cryptocurrency transactions. It doesn’t access a user’s bank account but interacts with their crypto wallet.
How Does a Bitcoin ATM Work?
A Bitcoin ATM acts like an intermediary or link between a user’s crypto wallet and the blockchain.
A crypto wallet stores the public and private keys of a user’s cryptocurrency account. Public keys are like the addresses of a crypto account, so it’s okay to share them with others. Private keys unlock a user’s crypto account, so users must always keep them secret.
The blockchain is the digital network where cryptocurrencies live. It’s a decentralized database within a computer network, securing cryptocurrency transactions.
A Bitcoin ATM must confirm a user’s identity to establish a blockchain connection. This is a multi-step process, although the exact steps vary from ATM to ATM. They have similarities, though, including requiring the following from their users:
- Cryptocurrency wallet
- Valid mobile number
- Government-issued identification card
Those requirements enable Bitcoin ATMs to verify their users’ identities and cryptocurrency ownership.
Bitcoin ATMs need crypto wallets so owners can provide their public keys to the machines. The ATMs won’t know which account to send or take crypto from without these keys.
Crypto ATMs also require authorization to proceed with transactions. Users provide this using the private keys their crypto wallets store.
Valid mobile numbers and identification cards are for security purposes. They help ATM operators comply with Anti-Money Laundering laws and regulations.
Only after users have provided those requirements can they transact with Bitcoin ATMs.
How Do You Use Bitcoin ATMs?
This again depends on the ATM, but most require you to register first. You may have to enter your valid mobile phone number at the machine. It then sends a one-time pin to your number, which you must input into the Bitcoin ATM.
The Bitcoin ATM may then ask you for your valid identification card. You have to present it to the machine’s camera, which then scans it. Some ATMs may also require your selfie, which their built-in camera also takes.
Once you’ve finished the registration, you’d need to link your crypto wallet to the machine. If you have a mobile wallet, you can generate an in-app QR code that you scan with the ATM’s camera. If you have a cold wallet like a USB or hard drive, you must plug it into the machine’s port.
After that, you may already be able to select the ATM transaction you wish to complete.
What Transactions Can You Make?
This depends on whether the Bitcoin ATM is uni-directional or bi-directional.
Both uni-directional and bi-directional Bitcoin teller machines let you buy cryptocurrency. You can buy Bitcoin and other digital currencies with cash on these machines. Some also permit the use of debit and credit cards.
That’s the only thing you can do with uni-directional machines. By contrast, a bi-directional Bitcoin ATM allows you to do more, such as sell, send, or convert.
For example, you can use a bi-directional Bitcoin ATM to convert fiat currency into crypto. After that, you can send the cryptocurrency to another crypto user.
Some bi-directional crypto ATMs also let you convert one crypto to another. For instance, they may allow you to convert Bitcoin to Ether, Tether, or U.S. Dollar Coin.
You can also make a Bitcoin ATM withdrawal in cash on bi-directional machines. This means you sell your cryptocurrencies and get fiat currency in exchange.
Many bi-directional Bitcoin ATMs also let you transfer Bitcoin or other digital tokens. For example, you can send some of the digital assets in your wallet to another wallet. However, you must know the other wallet’s public key to complete this transaction.
Are There Many Bitcoin ATMs?
Yes, there are; over 35,000 Bitcoin ATMs now exist worldwide. Nearly 85% or over 29,000 machines are in the United States. Canada ranks second, home to 7.6% of all installations.
Where Can You Find Bitcoin ATMs?
You can find Bitcoin ATMs in retail or convenience stores, malls, taverns, and airports.
If you’re in a hurry to find one, you’re in luck, as you can look them up online using crypto ATM locators. You can even use map services, including Google Maps and Apple Maps, to track them down.
To locate one online, type “Bitcoin ATMs near me” on your preferred browser or online map. It should give you a list of hits, provided you’ve enabled your device’s location services.
Online Bitcoin ATM locators also provide more accurate results using your address. You only need to provide your complete location or zip code. You should then get a list of crypto ATMs nearby.
Why Consider Using Bitcoin ATMs?
The primary reason to use Bitcoin ATMs is their speedy transaction processes. They also let you remain unbanked. Plus, they’re convenient, and many allow for round-the-clock transactions.
Speedy Completion of Transactions
Bitcoin ATMs can complete transactions within a few minutes to about an hour. By contrast, crypto brokers and exchanges can take a few days to a week to process transactions.
So with Bitcoin ATMs, you can take advantage of crypto price fluctuations. For instance, you can buy as soon as their values drop or sell when they increase.
If you use a crypto broker or exchange, you may be unable to do the same. The price may already differ from when you first initiated a transaction by the time it goes through. This can mean you’ve sold your crypto for less or bought it for more than you expected.
No Need for Bank Accounts
The latest federal data found about 5.9 million unbanked U.S. households in 2021. Unbanked means no household member has a bank or credit union account. Many of these families cited not trusting banks as their primary reason.
The good news is that Bitcoin ATMs don’t require users to link their bank accounts. While some allow debit and credit card payments, it’s not a requirement. You can use these machines to buy cryptocurrencies with cash.
Crypto brokers and exchanges often require their users’ bank accounts. Users have to link their accounts with their crypto broker or exchange profile. This is typically necessary to fund their brokerage or exchange account.
Transact Anytime
Because Bitcoin ATMs operate online, they’re usually online 24/7.
However, that doesn’t mean all machines are accessible round-the-clock. You can’t access them if they’re in a location operating within business hours, such as malls.
Fortunately, you can find many other Bitcoin ATMs in locations with round-the-clock operations. These include airports and 24/7 convenience stores.
Online Bitcoin ATM locators often provide information about the machine’s location. They can tell you if it operates 24/7 and, if not, what its business hours are.
What About the Drawbacks?
Bitcoin ATMs, brokers, and exchanges all charge fees based on a transaction’s value. However, those charged by ATMs are almost always higher than brokers and exchanges. So if you decide to use a crypto ATM, you must prepare to pay more fees.
The fees differ across Bitcoin ATMs; some have rates as low as 4%, while others have a fee of 20% or more. Brokers and exchanges only usually charge between 1% and 3%.
The fees charged by Bitcoin ATMs are on top of your transaction value. So if you want to buy $200 worth of Bitcoin in cash, you must feed the machine more than $200. For instance, if it charges a 10% fee, you must give it $220.
Also, remember that Bitcoin ATMs, like traditional ATMs, don’t accept coins. Most also don’t accept $1 bills. The smallest they allow is usually $5.
Bitcoin ATMs don’t give change, either. So, for instance, if your total bill is $220, but you feed the machine $250, you won’t get your $30 change back. Instead, the ATM will automatically convert it to crypto and send it to your wallet.
While that doesn’t mean you lose money, it’s not ideal if you need your change to buy other stuff.
Make Crypto Transactions With Bitcoin ATMs
And there you have it, the ultimate guide that answers the question, “What is a Bitcoin ATM?” Now you know it’s an Internet-connected machine that lets users complete crypto transactions. You also learned it accepts cash and is faster than brokerages and exchanges.
So, take advantage of fluctuating crypto prices by using Bitcoin ATMs. Just ensure you prepare enough to cover your transactions and the fees charged by the ATM.
Ready for more investor tips and tricks? Then check out our guide discussing tips to help you start trading!