According to Coin ATM Radar’s latest data, the number of Bitcoin ATM installations has risen by more than 115% since January. At the start of the year, there were 14,017 installations, and as of October 2021, there are 30,276. What is a Bitcoin ATM and how does it work? And why is installation on the rise?
What is a Bitcoin ATM?
A Bitcoin ATM is somewhat similar to a typical ATM, but it isn’t connected to any bank accounts. Instead, it’s connected to the Bitcoin network, allowing the purchaser to buy cryptocurrencies with their deposited cash.
It might be important to note that most Bitcoin ATMs offer a buying option, but only a few offer a selling option. It’s your responsibility to find a Bitcoin ATM that offers the services you need (buying or selling).
You may also realise that Bitcoin ATMs may only offer limited cryptocurrencies. The most common are Bitcoin (BTC), Lightning BTC (LBTC), Bitcoin Cash (BCH), Ether (ETH), Dash (DASH), Litecoin (LTC), Zcash (ZEC), Monero (XMR), Dogecoin (DOGE), Tether (USDT) and Ripple (XRP).
How does a Bitcoin ATM work?
It’s pretty straightforward. Usually, you’ll find a touch screen with a ‘Touch to Begin’ prompt. Touch it and follow the steps on screen. They involve:
- Selecting whether you are buying or selling and the amount you intend to spend if you are buying
- Confirming your identity by inserting your phone number
- Completing a customer profile (your name and email address) – a code will be sent via email or SMS
- Setting a PIN once you confirm the code
- Logging in using your PIN
- Selecting the cryptocurrency you’d like to buy or sell
- Scanning a QR code to access your wallet on your mobile device – you’ll need to have created a cryptocurrency wallet in advance
- Depositing the cash you’d like to spend and, when done, touching finish and printing a receipt
Are Bitcoin ATMs legal?
Bitcoin ATMs are only illegal if they don’t follow laws stipulated by regulatory institutions, especially detecting and preventing money laundering. This also includes obtaining the necessary licences to operate. In the UK, Bitcoin ATM operators must comply with FCA laws.
Note: the FCA’s regulatory powers don’t cover how cryptoasset firms conduct their business with consumers and it’s unlikely that Bitcoin buyers would have access to the Financial Services Ombudsman service (FOS) or Financial Services Compensation Scheme (FSCS), even if a firm is registered.
Why is Bitcoin ATM installation on the rise?
Bitcoin has gained popularity over the years, with interested parties like Elon Musk influencing potential investors. The recent launch of a new Bitcoin exchange-traded fund (ETF) linked to the cryptocurrency also saw Bitcoin hit a new record price, surpassing £48,500. This has caused demand for cryptocurrency to steadily rise, despite complex systems, risk warnings, limitations and bans in some parts of the world.
Bitcoin ATMs solve problems many people face when trying to purchase cryptocurrency. For example:
- Various banks not supporting transactions linked to cryptocurrency exchanges
- Complex and lengthy procedures when registering on cryptocurrency exchanges
- Falling victim to scams when purchasing cryptocurrencies
For this reason, alongside the increase in demand for Bitcoin and the lucrative nature of Bitcoin ATMs, installations have been on the rise, and it appears this rise will continue.
Investing in cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.