What Is a Bitcoin ATM?
A Bitcoin ATM is an Internet-connected kiosk that allows customers to purchase bitcoins and/or other cryptocurrencies with deposited cash. You can even sell your bitcoin using some of these machines.
A Bitcoin ATM is not the same as an automated teller machine (ATM) that allows bank customers to physically withdraw, deposit, or transfer funds in their bank account. Rather, Bitcoin ATMs produce blockchain-based transactions that send cryptocurrencies to the user’s digital wallet, often via the use of a QR code.
Key Takeaways
- A Bitcoin ATM is a standalone device or kiosk that allows you to buy or sell bitcoin or other cryptocurrencies using a terminal.
- Bitcoin ATMs are connected to the Internet and often utilize QR codes to send and receive tokens to users’ digital wallets.
- There are currently more than 38,000 Bitcoin ATMs in operation around the world.
Using a Bitcoin ATM
A Bitcoin ATM is a machine that provides a convenient way to buy bitcoin and other cryptocurrencies. The machines are not actually ATMs and do not dispense cash—instead, they are kiosks that connect to the Bitcoin network and allow customers to purchase or sell crypto tokens. Bitcoin ATMs are rarely operated by major financial institutions and do not connect to customers’ bank accounts.
To start a transaction, most Bitcoin ATMs will ask you for a “Buy Range.” Next, you’ll likely need to scan your wallet’s QR code, insert the cash, debit, or credit card, and confirm the purchase. After the purchase, a record of the bitcoin will appear in the customer’s wallet, though this may take several minutes for the blockchain to process.
Important
If you don’t have a wallet, you’ll need to create one so that you can store your crypto keys and provide a QR code for the ATM.
Bitcoin ATM Regulatory Requirements
All Bitcoin ATM operators in the United States must register with the Financial Crimes Enforcement Network (FinCEN) and comply with anti-money laundering provisions of the Bank Secrecy Act (BSA). The Bitcoin ATM may ask you for a mobile phone number for text verification or require you to have an account and scan a government-issued identification, such as a driver’s license, before completing a transaction. Generally, most will ask for your name and other identifiable information so that the owners are compliant with regulations.
Bitcoin ATM Fees
Customers are charged a service fee for using a Bitcoin ATM. This fee is typically charged as a percentage of the transaction rather than a fixed dollar value. Bitcoin ATMs can be very high, and the exchange rates offered may not be as competitive as could be found elsewhere. For example, Bitcoin ATM operator CoinFlip charges between 4.99% and 21.90% of your total transaction amount, compared to paying between $0.49 for a Bitcoin purchase of $1 to $4.99 and 1.5% on a purchase of $1,000 or more using Paypal.
Bitcoin ATM Locations
Bitcoin ATMs are becoming increasingly popular in the U.S. Coin ATM Radar, which maintains an online directory of Bitcoin ATMs, estimates an installed base of more than 31,000 kiosks in the U.S. as of July 2024.
ATMs are more likely to be owned and operated by companies focused on the cryptocurrency industry. In some cases, a Bitcoin ATM may be operated by a company that offers its own trading platform or wallet. These companies may require a customer to have an account to conduct a transaction, much like a bank.
Avoiding Bitcoin ATM Scams
Traditional ATMs have been used by scammers, so it should be no surprise that they would also use Bitcoin ATMs. Fraudsters and scammers will email, text, or contact you through social media. They’ll claim that you’ll need to pay bills, transfer money, pay ransoms, or other schemes using a Bitcoin ATM.
If you receive any communications directing you to a Bitcoin ATM, it is most likely a scam, as legitimate companies will not ask you to use cryptocurrency or only a crypto ATM to make a payment.
How Does a Bitcoin ATM Work?
A Bitcoin ATM works similarly to an ATM, but it uses your wallet and blockchains to initiate transactions. You can buy and, in some cases, sell bitcoin using a Bitcoin ATM.
Do Bitcoin ATMs Dispense Cash?
Some Bitcoin ATMs dispense cash, while others do not. It depends on the vendor and how they have set it up.
How Much Does a Bitcoin ATM Charge for $1,000?
It depends on the vendor. Byte Federal claims its ATMs might charge between 10% and 25%, while CoinFlip ATMs charge between 4.99% and 21.90% of the total transaction amount.
The Bottom Line
Bitcoin ATMs provide a convenient way for users to buy and sell bitcoin. There are more than 38,000 Bitcoin ATMs worldwide, most of them located in the U.S. However, convenience comes with a cost, as you might pay between 4% and 25% of the value of your transaction, depending on the ATM you use.
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