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Bitcoin ATMs: Device guide for beginners

Andrew Zhoao

News editor

Aug 23, 2022 at 12:03

Bitcoin ATMs are devices that permit consumers to buy and sell BTC and altcoins. Judging by the name, they are like ordinary ATMs that give out cash and perform various other financial services, but Bitcoin ATMs features are usually restricted to exchanging fiat money and cryptocurrencies, and compared to exchanging digital assets, swaps occur instantly. But what pros and cons of these devices should we consider? What is the security of their use? Let’s talk about this in more detail.

What is a Bitcoin ATM?

A Cryptocurrency ATM or Bitcoin Teller Machine (BTM) is equipment that can help consumers purchase or withdraw BTC and altcoins. Using a bank card, it uses crypto wallets from which coins are withdrawn or dispatched.

Bitcoin ATM is, first of all, a valuable method to immediately swap digital assets for cash. They are most popular among consumers who don’t possess permanent admittance to the internet and those who don’t have a bank account or don’t want to have one for confidentiality purposes.

Although this device is distinct in functionality, they are visually quite identical to classic ATMs or cash dispensers. It is habitually a self-paced device with a sensor monitor for entering and displaying various transaction details, such as the receiving address or a QR code. They also have a slot for depositing or withdrawing fiat money.  

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Bitcoin ATM
Bitcoin ATM

How do Bitcoin ATMs work?

There are two types of Bitcoin ATMs: unidirectional and bidirectional. The first one allows only a one-way swap. They often permit consumers to purchase but not sell BTC and altcoins. Therefore, device owners should only worry about how to gather currency from the equipment, not only to have enough money to make it easier to sell assets. Some devices may demand cash deposits or can be purchased with a credit or debit card.

Two-way Bitcoin ATMs permit users to buy and sell crypto assets. When a consumer sells cryptocurrency, the money can be taken in cash or moved directly to a bank account. In the former case, interbank transfers take more time than cryptocurrency transactions, so there will undoubtedly be a hold-up between the consumer using ATMs and receiving money.

Traditional cryptocurrency exchanges are connected on the back of Bitcoin ATMs. They are designed to make buying and selling digital currencies easy. But, the range of prices you can buy and sell is quite exhaustive as the operating company joins them. You typically pay a premium from six to ten percent if you buy or sell at the same discount rate. 

Bitcoin ATMs fees

While ordinary ATMs may take a tiny fixed commission when using an offline device, Bitcoin ATMs gather a percentage of the transaction amount. And that commission is pretty expensive.

In fact, a lot of devices take from 9% to 12% for a BTC cost. But consumers can even find a 4% to 20% fee.

In comparison, many online crypto exchanges charge no more than 1,5% commission for transactions in highly liquid currencies such as BTC.

Pros & cons of using Bitcoin ATMs 

Pros:

  • consumers can buy and sell digital assets without a swapping platform or bank account.
  • money can be made instantly.
  • fewer private data can be requested, which can be better from a data protection point of view.
  • easy method to convert cryptocurrencies to cash.

Cons

  • the price spread when buying and selling digital assets is often very wide, higher when buying than on exchanges like OKX, and cheaper when selling.
  • it only supports a limited number of crypto assets — Bitcoin ATMs have difficulty countering altcoin, which is niche micro-currencies.
  • the devices can run out of money to pay.
  • anonymity is not as high as it used to be; there are also examples of money laundering using Bitcoin ATMs, and regulators have become stricter in recent years. 

How to use Bitcoin ATMs?

It is not that hard to find the nearest crypto machine. Many services for this purpose include Coin ATM Radar, Bitcoin ATM Map, and Buy Bitcoin Worldwide. Consumers can find the most relative device using the map and clarify its options.

Some ATMs only permit consumers to buy crypto, some to sell and withdraw money, but you can find multifunctional ones that can do everything. Check the options of the ATMs for the above services.

The conditions are up to the ATM, but the standard structure is identical. Also, it is worth mentioning that crypto ATMs in common don’t take bank cards because they have the possibility to abolish a transaction. It is impossible in the blockchain. But some devices accept crypto cards tied to consumers’ digital wallets.

The users can get as many digital assets as the ATMs owners have and get all their money in the device. Let’s also emphasize a few details: 

  • Exchange rate and commission. The crypto asset price and commission value are up to the ATM and its holder. In common, cryptocurrency in ATMs is pricier than on swapping platforms. It is a significant disadvantage. This price is needed for the ATM holder to rent a space, maintain agreement with the regulator’s requirements, and pay fees to banks for fiat money. ATM holders also give some money from this spread.
  • User Identification. In countries where the government controls digital assets, using an ATM would probably have to be verified. Such tests are often performed if consumers buy or withdraw a lot of money, such as over $1K. The higher the sum, the more information a consumer will have to share. These rules entered because of anti-money-laundering legislation (AML) for ATMs holders to perform consumer verification. This identification makes it hard for scammers to bleach their ill-gotten gains. Honest users have nothing to fear. Consumers have absolutely no reason to be afraid about their savings.

In foreign countries, where there are no legislative regulations concerning cryptocurrency, digital assets can be used anonymously. 

How to buy the coins?

Exchanging assets at a crypto ATM is usually more expensive than online transactions at swapping platforms because the cost of the infrastructure itself is higher: the creation and installation of a real ATM, as well as the steps required to convert fiat money and bitcoins. All crypto ATMs have a similar buying process: 

#1 Choose a cryptocurrency purchase bottom and type your contact number or credentials.

Press the bottom “Buy BTC” or altcoin. After that, type any needed credentials.

As we have said above, nearly all devices demand identification data today, especially if consumers want to buy more digital assets. This is necessary to keep up with “Know Your Customer” legislation and other AML policies.

You could also be required to create an account with a Bitcoin ATM operator. This will most probably need a current email and telephone number. But before you begin, it’s best to check if you must make an account and, if so, if it can be done on the device itself.

#2 Scan the receiving wallet’s QR code

A Bitcoin ATM has a video camera or QR code scanner. When asked, reveal the QR code of the crypto wallet to which you intend to get the digital assets to the scanner. Make sure to display the QR-code for the proper crypto because all operations are non-recallable.

#3 Pay for your purchase

If you are buying digital assets such as BTC in cash, type the needed sum and enter it using the banknote slot on the device. Check in advance to see if the terminal can release the tilt angle. In the opposite case, ensure to add enough cash. Or type your credit or debit card information.

#4 Check the details and submit the transaction

Bitcoin ATMs will display the order details again before sending the transaction. These include the recipient’s email, the number of crypto assets purchased, and the funds. Please check that the emails are the same as your actual wallet address.

When you are sure that all information is correct, click the “Confirm” button. Once the blockchain submits the transaction, your savings will arrive in your crypto wallet.

The transaction time can range from a few seconds to more than one hour, which depends on the network the consumer uses and the current load.

How to dispatch BTC to someone with Bitcoin ATMs?

  1. If you don’t have an account for the needed ATM, create one. It only takes a couple of minutes.
  2. Find the nearest Bitcoin ATM. Above, we wrote about services to help you do this.
  3. Once you reach the ATM, put cash into the device and transfer it to bitcoin. Depending on the ATM, you can deposit a certain amount each day. Usually, it does not exceed $10K.
  1. To send the coins, enter the recipient’s wallet address in the correct field. To do this, follow the instructions on the device’s screen. The coins will come almost immediately.
  2. After receiving the funds, the recipient has several ways to convert the coins obtained, including withdrawal as cash.

Scams with Bitcoin ATMs — how to avoid them?

You might be afraid that the device will cheat you and not send the coins. Although these suspicions are valid, such a scenario is quite unlikely. Since BTMs rarely change their location and are often operated by known operators, any fraud will be quickly discovered.

Therefore, if you see a working BTM, it is much more likely that it has never defrauded anyone. At least there have been no high-profile cases of significant operators cheating their customers — after all, a reputation is worth more than a couple or three hundred dollars stolen. However, some people invent the most sophisticated ways of stealing money from naive users: for example, they write ingenious ads asking to transfer money to their wallets. To keep the risk of fraud to an absolute minimum, you can first conduct a mini-transaction and gradually increase the amount.

By the way, when thinking about Bitcoin ATM’s security, don’t forget to consider the degree of protection of your mobile cryptocurrency wallet. A cryptocurrency wallet is usually used on a smartphone or tablet. They are suitable for convenient storage and use of small amounts of BTC that you buy through a bitcoin machine.

However, it would help if you did not use them for the long-term storage of digital assets. Mobile gadgets are not designed with a security bias, so they tend to be a lot easier to hack than a standard computer. You can enhance gadget security by storing your private key on a hardware wallet.

In conclusion, it’s not that Bitcoin ATMs are insecure. It is more about the fact that it is a very niche market, which attracts certain characters accordingly. In general, if you follow the standard security measures, nothing bad will happen to you. In addition, due to the limited choice in terms of ways to buy bitcoins, we are now forced to balance and choose the least risky options — often sacrificing convenience.

Have you ever used a Bitcoin ATM?

 

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