Crypto continues to gain traction worldwide and the infrastructure supporting digital assets is rapidly evolving. One of the most interesting developments in this space is the emergence of specialized Bitcoin ATMs that facilitate the buying and selling of Bitcoin. In 2024, Bitcoin ATMs have exploded and are popping up in cities across the globe, meaning there’s a good chance you’ve walked past a machine without even realising!
But despite ascending to mainstream use, inner workings of crypto ATM’s remans a mystery to most of us. Let’s change that, shall we? In this article, we’ll get under the bonnet of crypto ATMs, explaining how they work and how to use one yourself.
A crypto ATM is a physical booth that lets users buy and sell Bitcoin (sometimes other cryptocurrencies) using cash or debit/credit cards.
However, while this might sound similar to a regular bank machine, crypto ATMs don’t inolve a bank. Instead, the machines are operated and maintained by private companies, such as Coin Flip and CoinMe. The BTC in a Bitcoin ATM isn’t held within the machine itself, but at a designated blockchain address used by the operator.
These machines can be divided into two types:
Each machine is connected to the internet, and is also linked with a crypto exchange that feeds the ATM real-time pricing information. If you want to buy BTC, you’ll deposit cash or pay by credit card, and the machine will send the corresponding amount of Bitcoin from the operato’s crypto wallet to your wallet. Conversely, if you want to sell some Bitcoin, the ATM “buys” it from you, transferring your BTC to its own wallet and giving you the cash value in return.
Here’s an example:
John decides to buy some BTC at a crypto ATM. The machine transfers John’s cash deposit to the operator, and in exchange, initiates a transfer of BTC from the operator’s crypto wallet to John’s. A fee is charged for the service.
Now we’ve covered the basics of how these machines operate, let’s talk about how to use a Bitcoin ATM yourself. To attract a wider audience, crypto ATM companies have made the process of using their machines easy and intuitive. You can utilize the machine’s touch screen to:
To kick things off, select the Buy BTC Option on the screen.
Selling Bitcoin at an ATM follows a somewhat similar process.
There’s also a third option where you can send Bitcoin to a friend or relative. Simply follow the same steps as you’d regularly purchase Bitcoin but enter their wallet address instead.
The fees at Bitcoin ATMs are usually higher when compared to online exchanges. Convenience on the go has a price and BTC purchase fees are often in the range between 5-25% per transaction (plus a flat fee in some cases). These fees can vary a lot from provider to provider and serve to cover the operational costs of the machines. For some users, they might not be worth it, especially when it comes to larger transactions. Selling BTC usually incurs much lower fees than most providers.
Crypto ATMs are available in many countries around the world and this means they fall under different jurisdictions. As a result, the regulation around KYC procedures can vary. To be compliant with the regulatory environment, the companies owning Bitcoin ATMs can set different requirements when it comes to Know Your Customer (KYC) procedures.
A Bitcoin ATM might require very basic identification such as a phone number. In other cases, it can ask users for a government ID, biometric data and other information. While this might be seen as inconvenient and limiting the privacy of users, KYC also offers some benefits such as increased security for the customer’s funds.
We’ve just discussed the high fees of a Bitcoin ATM and this raises the logical question, why use them at all? After all, buying Bitcoin on a centralized exchange offers much lower fees. Using a crypto ATM offers two notable advantages:
There are over 38,000 Bitcoin ATMs around the globe. While the majority of them are located within the US, you’ll probably have no trouble finding one in your country. Bitcoin ATMs make crypto accessible in countries where other options to purchase might be lacking. They’re accessible on the go, easy to use and offer immediate transactions.
With tens of thousands of Bitcoin ATMs in the world, they’re nowhere as popular as traditional bank ATMs. The high fees might make a lot of people think twice before they decide to use them. Last but not least, Bitcoin ATMs carry some security risks such as hacks.
If you’re trying to locate a Bitcoin ATM near your location, your best option is to use an online tool. Enter the city you reside in at CoinATMRadar. The platform will provide you with information on the nearest machines, their supported cryptocurrencies, and their specific transaction fees.
With over 80% of Bitcoin ATMs located in the US, it’s no surprise that some of the leading cities for Bitcoin ATM adoption are also in the United States. According to Statista’s number of Bitcoin ATMs by city, these are:
Bitcoin ATMs provide a physical way to engage with Bitcoin and the world of crypto. While they come with higher fees and certain risks, their ease of use and immediate transactions make them a popular choice for many crypto enthusiasts. By understanding how to operate them, users can easily buy and sell Bitcoin, attracting a wider audience into the crypto ecosystem.