The global market cap for crypto is breaking records every other day, and Bitcoin is ruling the market. One way to access your Bitcoin accounts is through a Bitcoin ATM (BTM). Although more experienced players in the crypto market have known about these machines for years, Bitcoin ATMs are a new concept for many.
The Bitcoin ATM: Past & Future
Market experts regularly offer optimistic estimates for the future of crypto. The increase in the market potential of Bitcoin and other cryptocurrencies is pulling more users towards this form of currency. Noticing this increase, several crypto-related companies are formulating strategies to help owners plan how to make the best of the current crypto boom. As part of this movement, numerous companies all around the globe are adopting Bitcoin ATMs.
The first Bitcoin ATM opened in Canada in 2013. From 2013 to 2021, the number has grown exponentially to over 31,000. The USA has by far the largest number of active Bitcoin ATMs. Canada, Spain, Brazil, Nigeria, and many more countries are catching up with the trend to assist in mainstream adoption of the new asset class.
However, numerous users have yet to make their first transaction using a Bitcoin ATM. If you are also a first-timer wondering how to use a Bitcoin ATM, this article is for you.
This is a comprehensive guide to help you use a Bitcoin ATM for your first transaction.
What is a Bitcoin ATM?
A Bitcoin ATM is an online cloud-based kiosk that permits customers to purchase Bitcoin and other cryptocurrencies with their credit/debit card or a cash deposit. Use of these machines is progressing incrementally in the crypto market as more people learn how to use Bitcoin ATMs.
A Bitcoin ATM is not the same as a standard ATM (Automated Teller Machine) that permits bank customers to deposit, transfer or withdraw funds to a personal account. Bitcoin ATMs create blockchain-based transactions that lead cryptocurrencies to the user's digital wallet, usually through a QR code or standard bar code. Put simply, you insert fiat cash, and you receive Bitcoin in return (BTC).
Bitcoin ATM machines are not actually ATMs in the usual sense. They do not connect customers to a bank account and do not dispense money. A Bitcoin ATM merely enables customers to purchase Bitcoin and other cryptocurrencies. The number of options available for the purchase might differ as per the ATM policy. Basically, Bitcoin ATMs are kiosks that link users to the bitcoin network and allow them to purchase crypto tokens for a set amount of money.
Crypto Dispenser customers scan a quick response code corresponding to the address of their personal Bitcoin wallet. Every time a purchase is made, the coins are transferred to this wallet. If the consumer does not already have a Bitcoin wallet, they can easily create one. After purchase, the transaction record will appear in the customer's wallet. Be aware that the appearance of updated records after the transaction may take a few minutes to process.
The Different Types of Bitcoin ATMs
Before you learn how to use a Bitcoin ATM, it is essential to understand that all Bitcoin ATMs are not identical. Bitcoin ATMs are usually one of two types – a Unidirectional (one-way) Bitcoin ATM and a Bidirectional (two-way) Bitcoin ATM.
The Unidirectional Bitcoin ATM only allows the user to purchase cryptocurrencies. Globally, more than 70% of Bitcoin ATMs are Unidirectional. Bidirectional ATMs allow the user to both purchase and sell cryptocurrencies. However, there are not many Bidirectional Bitcoin ATMs worldwide. Of the 30% percent of Bitcoin ATMs in the world that are Bidirectional, 23% are in the US. Making the United States the leading hub for Bidirectional Bitcoin ATMs.
Both the Unidirectional and Bidirectional Bitcoin ATMs are internet-based and allow the user to conduct cryptocurrency transactions. Some machines use paper receipts; others transfer money to the public key in the blockchain.
Although Bitcoin ATM kiosks are similar to traditional ATMs in appearance, the purpose of a Bitcoin ATM is to connect the user straight to the Bitcoin wallet or exchange platforms. and services in order to make buying or selling cryptocurrency transactions more convenient.
Even though some Bitcoin ATMs are traditional ATMs with updated software, customers do not need a bank account or debit card. On average, transaction costs for using Bitcoin ATMs are 10-15% but can go up to 25% or be as low as 7%.
Most Bitcoin ATMs place a lower and higher limit on cash deposits and transactions. Every Bitcoin ATM operator in the United States of America must register with the Financial Crimes Enforcement Network (FinCEN). It is mandatory for them to comply with the anti-money laundering provisions of the Bank of Privacy Act (BSA).
Depending on the transaction size, a Bitcoin ATM may request you to share your mobile phone number. They will use your contact info to send text verification codes or One Time Passwords to enable a secure environment. Before completing a transaction through the Bitcoin ATM, you might need to scan a government-issued ID. This ID can be your driver's license, passport, or social security card.
Where Are Most Bitcoin ATMs Located?
Worldwide, the total number of Bitcoin ATMs is about 31,000 at the time of this writing, according to Coin ATM Radar. With over 26,000 Bitcoin ATMs, the USA has the largest number of these machines. Canada has about 2,000 while Europe has less than 1,500. Much of this growth is recent, with a major upsurge in Bitcoin ATM installations in 2020 and 2021. But the USA is clearly the leader when it comes to Bitcoin ATMs.
You can spot a Bitcoin ATM or a BTM (Bitcoin Teller Machine), also known as a Bitcoin Kiosk, at restaurants, bars, or other general shops. Many local business owners are accepting and encouraging the use of this innovative new-age monetary form. However, you can expect to see most of them in high-traffic areas like airports, malls, and urban environments. This holds true across all countries.
Bitcoin ATMs are more likely to be maintained and operated by companies that participate in the crypto market or accept cryptocurrency payments. A Bitcoin ATM may be administered by a company that provides its own trading platform or, in a few instances, crypto wallets. These companies might have a prerequisite for the user to have an account with them in order to perform transactions at their kiosks. This part of the process is somewhat similar to how banks and bank ATMs function.
Despite the constant increase in the number of Bitcoin ATMs or BTMs, they are still not accessible in all areas. But this is slowly changing. If you are looking forward to using these machines, the number of companies investing in setting up Bitcoin ATMs is accelerating sharply.
If you wish to locate a Bitcoin ATM, you can seek assistance from many resources like Coin ATM Radar, Bitcoin ATM Map, or Coin ATM finder. These platforms keep a record of Bitcoin ATM facilities and can make the process of BTM searching somewhat more straightforward. There could be one closer than you think!
How Do I Use A Bitcoin ATM for the First Time?
Using a Bitcoin ATM is a new experience for many crypto investors and traders. If you have ever used a conventional ATM, you do not need to wonder how to use a Bitcoin ATM. It is a simple process. All it takes is some basic knowledge of the Bitcoin wallet you are using and the Bitcoin ATM facility.
Before you visit a local Bitcoin ATM, installing a mobile Bitcoin wallet on your smartphone is vital. If you scroll through the internet, you will come across many options for mobile Bitcoin wallets. A blockchain (Bitcoin) wallet is available for both iPhone and Android and comes with a web version as well.
The blockchain wallet can be understood as a digital wallet that enables the user to manage and store their Bitcoin or other cryptocurrencies. This wallet allows the user to purchase cryptocurrencies and convert them back to the local currency. The wallet will have a code associated with it for transactions.
So, how do you create a wallet? Performing this function is slightly different depending on which platform you are using. Each website for the various wallets will give you detailed instructions for setting up the wallet. Be sure to follow the instructions exactly as presented. But usually, all you have to do is click a ‘create wallet’ button and store your passcode for recovery. You can log in using a username and password just like other applications.
After you have your wallet, you can install the Bitcoin ATM application and create an account using your email id and password. When that is done, you can locate a Bitcoin ATM or BTM near you and make your purchase.
If you are wondering how to use a Bitcoin ATM, below are some common steps that can guide you in the process:
- Step 1 – Access the Bitcoin ATM dashboard.
- Step 2 – Enter the amount of Bitcoin you wish to purchase.
- Step 3 – Insert the amount of cash in the Bitcoin ATM.
- Step 4 – To receive the Bitcoin, scan your wallet’s barcode.
- Step 5 – Wait for a few moments for the transaction confirmation.
Note that the process might vary depending on different Bitcoin ATM facilities, but it largely remains the same for all.
In the final part of your transaction, you will have to wait for a few moments before your wallet updates the current records. The waiting period will differ depending upon the ongoing activity on the Bitcoin network at that particular instant.
You do not need to be much worried about how to use a Bitcoin ATM, even if you are operating it for the first time. If any issue persists, you can always contact the customer care or mentioned helpline for assistance.
How to Use A Crypto Dispensers ATM to Purchase Bitcoin
The Crypto Dispensers Bitcoin ATM has been designed with customers in mind for a seamless and easy transaction. It offers multiple languages, 4 different cryptocurrencies, and an appealing interface.
Fees are fixed at a low rate of 10% and verification is easy. After you have located the nearest Crypto Dispensers ATM and registered your account online, the steps are as follows:
- Select your cryptocurrency of choice (BTC, LTC, ETH, BCH), in this case Bitcoin.
- Select the buy option.
- Select price range (below or above $900).
- If above $900: Enter One Time Passcode (OTP) code sent to your phone via SMS.
- If above $900: Scan identity document.
- Enter the exact price amount.
- Scan your Bitcoin wallet barcode.
- Insert cash to receive funds into your Bitcoin wallet.
The entire process should take less than 20 minutes once you find the Bitcoin ATM and start the transaction. The cryptocurrency should arrive in your wallet within 10 minutes or so, though the times can vary.
How to Purchase Bitcoin in Person Using Crypto Dispensers
You can also purchase Bitcoin by opening a Crypto Dispensers account and depositing cash at a retail location to exchange for BTC. The steps for purchasing in person at a store are as follows:
- Sign into the Crypto Dispensers Site
- Select a retailer store and generate a barcode for the transaction.
- Visit the retailer, presenting your barcode (printed or on your phone)
- Give cash to the retailer after the barcode has been scanned.
- Wait for funds to arrive.
Alternatively, you can top up your Crypto Dispensers account by paying via ACH or debit card online. Money goes straight to your account and you can purchase Bitcoin without leaving your home.
How Do I Make A Withdrawal from A Bitcoin ATM?
When researching how to use a Bitcoin ATM, people are often confused about whether or not they can use a Bitcoin ATM to withdraw cash.
The answer to your question is: YES! You can easily withdraw cash from a Bitcoin ATM, but the withdrawal method might differ from machine to machine depending upon the ATM policy.
As mentioned earlier, not all Bitcoin ATMs have the ability to sell your cryptocurrency. However, some allow the conversion of your Bitcoin into cash. Those that do are known as Bidirectional Bitcoin ATMs.
The most crucial requirement to withdraw cash from a Bitcoin ATM is to have an actively functional Bitcoin wallet. Below are some steps you can keep in mind while withdrawing funds from a Bitcoin ATM:
Create A Bitcoin Mobile Wallet
If you do not hold a Bitcoin wallet, you must first create one after searching for all relevant options available on the internet. Most wallets allow quick, convenient, and free-of-cost facilities to store and manage your cryptocurrency. You need an app that supports your crypto wallet on your mobile device.
Search for A Bitcoin ATM That Allows Cash Withdrawal
After you have an account set up, the next step is to search for a nearby Bitcoin ATM. There are many applications and websites that maintain an updated record of ATM locations. Keep in mind that all bitcoin ATMs do not provide the option for cash withdrawal, so you have to search for a Bidirectional Bitcoin ATM that allows for the selling of Bitcoin.
Keep Your Wallet Address Handy.
You must have your wallet address ready before you initiate the conversion of your Bitcoin to cash. Since you are selling your Bitcoin, you might naturally have a specific value of Bitcoin in your wallet. Your wallet address is sensitive information, and you must keep that private. If you own multiple wallets, you must have the relevant wallet key ready for when you perform your transaction. You can simply open the wallet on your phone with the barcode displayed.
Make Sure You Are at the Right ATM
We mentioned this earlier, and it is information worth repeating. If you head to a one-way kiosk, you will not find the option for cash withdrawal. It is, therefore, necessary that you head to a two-way kiosk.
You will have to log in to your account on the Bitcoin ATM and select the option “Withdraw Cash”. Next, you will need to enter the cash amount you want to withdraw and scan your wallet address barcode.
You probably will have to wait for the transaction confirmation on the blockchain network. When you receive this confirmation, you can collect your withdrawn cash. However, this process can take some time depending on the ATM you are using. The operator is not responsible for the waiting time, and how long the transaction takes entirely depends on the network. While 30 - 60 minutes can be the online average, with certain Bitcoin ATMs the average can be closed to 10 minutes.
Consider the Fee
Using a Bitcoin ATM for cash withdrawal is pretty convenient, but it comes with a fee. All Bitcoin ATM operators charge a specific fee for using their facility to either buy or sell Bitcoin. This fee will differ from BTM to BTM. You can research the different Bitcoin ATM facilities and should definitely take the time to read the reviews before using any of these services.
How Much Do Bitcoin ATMs Make?
The crypto ATM market was valued at $54.8 million (USD) at the end of 2020. The compounded growth rate of this market is estimated at a staggering rate of 58.7% CAGR.
With the expansion of crypto all around the globe, the need for Bitcoin ATMs is increasing. Every passing second, a new bitcoin ATM machine is being set up somewhere in the world, and more people are learning how to use a Bitcoin ATM.
Companies that own Bitcoin ATMs mostly earn money through the transaction fee that is charged every time an individual uses the machine to buy or sell Bitcoins. This ATM transaction varies depending upon company policies. Some companies charge a nominal percentage of 6.99%, while other companies charge up to 25% of the total transaction.
However, this percentage does not determine the exact profit because of overhead fees and recurring costs involved in setting up a Bitcoin ATM. There are also significant KYC and AML reporting requirements which are time-consuming and cost-prohibitive for Bitcoin ATM operators.
Some factors that contribute to assessing how much Bitcoin ATMs make include:
The Types of Bitcoin ATM
Owning a Bitcoin machine is the primary requirement for the business and it involves a reasonable amount of investment. Bitcoin ATMs come in distinct varieties, and each has different price points.
The freestanding Bitcoin ATMs are ideal for locations that have plenty of space and can sustain minimal installation. These machines are the most popular ones but have a higher price range compared to the other kinds. They cost approximately $6000 to $6500 (USD).
Built-in Bitcoin ATMs are desktop models that are smaller and have limited features. They are available in a lower price range of approximately $3500. However, they have a higher installation cost and require more security.
Pre-owned Bitcoin ATMs are relatively affordable. The reseller market for Bitcoin ATMs is gaining momentum, and you can readily obtain a decent model for a 40-50% price reduction.
Cost of Shipping and Installation
After the machine is purchased, owners can expect added costs for shipping, installation, and delivery. These can run from $2000 to $3000. You will sometimes be offered the choice of purchasing additional software. The cost of installation and shipping will also depend on the model, as they will have different weights and sizes.
Commission and Transaction Fee
The Bitcoin manufacturer will process all payments through the kiosk software. This process covers a transaction and commission fee. The fee can range from 1% to 12%, or one can fix up a straight monthly fee starting from roughly $100.
Banks also charge a fee for every fiat-to-crypto exchange. They might also include surcharges to the Bitcoin hot wallets. The rates depend on market conditions and the financial performance of the Bitcoin ATM.
The Bitcoin ATM owner is required to possess liquid assets in both fiat and cryptocurrency. Most operators opt for a 50% split between both currency types. The amount of liquidity depends on the total transaction volume of the kiosk and the number of machines used to pool cash. As per the state's requirements, one will also have to maintain compliance and pay a regulatory or sign-up fee for the ATM owned.
A typical Bitcoin ATM repair fee costs approximately $150. The price can vary depending upon the number of physical or software malfunctions and repair needs. If you purchase a high-quality BTM, then you should not need to get repairs all that often. But you might need updates to the software.
To have a smooth functioning system with practical customer assistance, one has to invest in training employees to collect cash and regulate the machine operations. This is a variable and ongoing cost. There might even be standard utility costs and supply payments for customer support, receipt paper, and branding. The real estate rent also adds up depending upon the location where the Bitcoin ATM is situated.
KYC & AML Requirements
This can be a significant cost depending on the business in question. You might need to get a legal consultation before purchasing the BTM. You will need to register with FINCEN, train staff, hire a dedicated compliance officer, and maintain a series of KYC procedures and checklists. These costs vary depending on your state of operation.
How Do Bitcoin ATMs Make Profits?
Bitcoin ATMs earn profits through the margins attached to the fees levied on the customer. Every Bitcoin ATM machine gains a return on the owner’s investment in the financial mode in three primary ways:
#1 - Transaction Surcharges
The direct fee percentage Bitcoin ATMs charge their customers for every transaction is known as a Transaction Surcharge. This surcharge is associated with the cost of trading crypto coins on internet-based exchange platforms.
These charges are applied as a percentage of total transaction values or included in the spread between the cryptocurrency and the fiat rate. Fees involved with market-making, payment processing, and currency shifting between hot wallets and financial institutions are also added.
#2 - The Commission Fees
The direct earning percentage of a Bitcoin ATM is known as the commission fee. This is the owner’s labeled fee for the services provided. Charges can change per the owner’s wish.
The average commission percentage is about 10%, and the commission fee often changes depending upon other cost factors like real estate prices and rental values. The cost of wallet hosting, fast payments, and institutional transfers also affects the overall commission rate.
Most of the profits derived from Bitcoin ATMs come from commissions gained from high transaction volumes.
For example, an average kiosk generates about 30,000 transactions/month. These transactions would generate a profit of around $3000 (USD) at the average 10% rate.
#3 - An Increase in Foot Traffic
The demand for Bitcoin ATMs comes as a result of more consumers seeking convenience. This drives the target market to the Bitcoin ATM business. Retailers earn additional profits from the increase in foot traffic to their Bitcoin ATMs when they are placed in noticeable locations. However, this higher visibility comes with a higher rent for the location.
Factors Affecting Bitcoin ATM Profits
Many components contribute to the overall profits generated by Bitcoin ATMs. Some factors that directly affect the overall profits produced by Bitcoin ATMs are:
Location is an essential component that can entirely transform the earnings of a Bitcoin ATM. A good location will attract more traffic, and it can lead to an excellent revenue of $30,000 to $40,000 (USD). Contrasting that, if the ATM is installed in a remote area with less potential to attract traffic, the prospective profits might considerably decrease.
The amount Bitcoin ATM owners charge their customers plays a significant role in painting a market image. If the services do not stand true to the fees, one might end up losing customers. The same can happen if one does not keep up with the market competition because customers will compare prices with other Bitcoin ATMs. Now that more people are learning how to use Bitcoin ATMs, they are becoming more aware of how different ATMs function with respect to the fees they impose.
If a Bitcoin ATM supports transactions related to other cryptocurrencies like Ethereum, USDT, and Ripple, it increases revenue because more customers will opt to use that BTM. Revenue can increase by 10-15% simply by providing services for a variety of cryptocurrencies in addition to Bitcoin.
Do Bitcoin ATMs Require ID or Verification?
Your mobile phone, some cash, your account address, account key, and the barcode for your crypto wallet are all you need for buying or selling Bitcoin and other cryptocurrencies.
In the case of small transactions, the user is not required to show a license or verify identity. In the case of high-volume transactions, your ID and some other information is required. This information depends on the frequency and size of the initiated transactions.
An ID is required by Bitcoin ATMs to ensure compliance with respect to federal regulations. It is aimed at preventing large-scale illegal financing, money laundering, or any other criminal activity. Many Bitcoin ATMs require the user to create a user account through SMS verification, form updates, picture identification, and in some cases, user ID images. These elements are required to verify that the user image matches the presented ID.
Despite the fact that all transactions get logged in the blockchain, the identity of users is not linked to their Bitcoin wallets. In a few cases, the user is required to complete the KYC to use the Bitcoin ATM facility. As more people learn how to use Bitcoin ATMs, chances of fraud and unethical conduct also increase. KYC regulations are a measure to protect against identity theft. Users who perform high-value transactions are asked to identify themselves and to add to the safety of the transaction process.
Even though the above-stated regulations are carried out in many cases, all Bitcoin ATMs do not ask their customers to present their identities. Some services require simple verifications via SMS, others ask for the user’s Social Security Number or Biometrics. The security accompanying Bitcoin ATMs is designed to keep the user accounts safe and avoid any mishaps.
What Are the Bitcoin ATM Fees?
As mentioned earlier, customers who use Bitcoin ATMs pay a service fee for using the facility. The fee is charged in the form of a percentage on the overall transaction. Unlike a fixed dollar value, a fixed percentage value is applied on every withdrawal.
The approximate charges of Bitcoin ATMs in the USA are about 10%. However, there are different ranges depending upon diverse companies, locations, and offered services.
The low-end fees for Bitcoin ATMs can range between 6.9% to 10%. The mid-range goes from 10% - 17%. The high-end fees for using some Bitcoin ATM facilities fall between 18% to 22%, and you might even come across over the top 22% - 33% fees. Generally, speaking, you will want to veer clear of higher fees and opt for more established crypto ATM dispensers with standardized and transparent rates.
The fee charged by the Bitcoin ATMs depends on many pointers like the market fluctuation, rental, and exchange value.
Are Bitcoin ATMs Safe?
Many users might be doubtful about the security of Bitcoin ATMs due to their recently growing popularity and connection with the ever-fluctuating crypto market. However, Bitcoin ATMs have been around for nearly a decade. These ATMs process daily transactions worth billions of dollars.
Similar to conventional ATMs, Bitcoin ATMs cut off human interaction during money transfers or crypto transactions. Users can only access their accounts through identity verification. For large transactions, Bitcoin ATMs opt for more comprehensive security measures.
Bitcoin ATMs do not bring in any third party and the process makes sure that your funds are directly transferred to or from the blockchain. They solely facilitate machines and software that automate the transaction process as per the user’s will.
Bitcoin ATMs are among the safest ways of selling, buying, or transferring Bitcoin or other cryptocurrencies. Instant transactions safeguard you from any volatility. Moreover, the two-factor authentication and passwords protect the account from violation. Bitcoin ATMs work on establishing practical and adequate security measures to keep finances protected.
A Bitcoin ATM is highly profitable, earning a great commission percentage and service fee. The convenience of the machines is growing the popularity of Bitcoin and other cryptocurrencies. Many companies that own Bitcoin ATMs meet their break-even points between a period of three to four months and establish a steady stream of passive income.
How Hard is it to Use A Bitcoin ATM?
Using the BTM is easy, in the same way that using a traditional banking ATM is easy. If you do it once, you won’t forget. The BTM offers a simple way to gain access to a new financial asset that is taking the world by storm.
Some platforms also offer 0% ATM processing on their kiosks and allow Bitcoin ATM holders to cash maximum profits.
The crypto market is here to stay, and so are all the facilities and services related to it. From users of Bitcoin ATMs to the owners, everyone is enjoying the benefits in one way or another.
Visit your nearest Crypto Dispensers ATM or retail location here.