Buying bitcoin (BTC) guides frequently begin with the recommendation that you first open a cryptocurrency exchange account and download or purchase a crypto wallet to store it in. However, there is another handy way to buy bitcoin that does not require a computer, let alone a cryptocurrency exchange.
People can purchase #BTC via a #bitcoin automated teller machine (#ATM) by inserting #cash or their #debit #cards and following a few simple steps. While bitcoin #ATMs are becoming more common in the industry, many people consider using one as an oxymoron.
How can a #digital #currency like bitcoin be dispensed by an ATM that ordinarily dispenses actual #cash?
It’s an excellent question. Here’s what you should know.
#Bitcoin ATMs allow users to purchase bitcoin — and sometimes other #cryptocurrencies – with cash or debit cards. However, the name ATM can be misleading.
Bitcoin ATMs differ from #bank ATMs in that they do not allow clients to handle the monies in their accounts. Bitcoin ATMs are just instruments for making bitcoin purchases – and sometimes sells – and do not need users to create any account in order to do so.
Unlike #cryptocurrency #exchanges, bitcoin ATMs allow consumers to keep their purchased bitcoin by wiring it directly to a #crypto #wallet of their choice. However, if you use centralized exchanges such as #Binance or #Coinbase, you can have your #coins transmitted to your exchange’s “deposit address” and allow the platform to the custody of the assets for you.
Wallet creation is frequently a critical step in the process of purchasing bitcoin via ATMs, and it is this step that #scammers typically target (as we’ll see later).
The first bitcoin ATM appeared in a cafe in the Canadian city of Vancouver in 2013. It was normal behavior among #bitcoiners at the time to spend bitcoin at cafés or to spend $10,000 on two pizzas.
Bitcoin ATMs have sprung up all over the world since then. According to Coin ATM Radar, there are currently 36,610 bitcoin ATMs in 77 different countries.
With 15,140 machines, Genesis Coin is the leading manufacturer of bitcoin ATMs, followed by General Bytes with 7,965 and BitAccess with 5,549.
#Bitcoin Depot (19.1 percent market share), #CoinCloud (14.1 percent), and #CoinFlip are the major operators of bitcoin ATMs (9.7 percent ).
When you see a bitcoin ATM, it usually has a QR code on it that prompts you to download a specific crypto wallet that the ATM machine supports.
The Coinbase crypto wallet is a popular option, but you can also choose from a broad range of other wallets.
If you haven’t already, download the wallet and then follow any setup instructions that appear.
After the #transaction is confirmed and finished, your newly formed wallet will establish a unique bitcoin address to which the ATM will transmit your acquired coins.
Bitcoin ATMs are designed to be an effortless experience for anyone who has used an ATM before, so all you have to do is follow the instructions on the screen.
Machines will differ slightly depending on region and area, and some may require you to perform know-your-customer (KYC) processes before purchasing. Purchase minimums and maximums may also vary.
After you’ve set up the wallet and located your wallet address for inbound transactions, input the amount you want to buy and your crypto wallet address.
Instead of entering it in, this is usually done automatically by scanning the QR code on your phone’s screen (which can lead to mistakes and cause your #funds to be lost forever.)
The transaction usually takes about 10 minutes to complete, but it could take up to an hour.
Bitcoin ATMs are an ideal entry point into cryptocurrency for not tech-savvy consumers. Fortunately, it does not come at the expense of security because most ATMs do not keep users’ KYC information, bank details, or #private #keys.
However, there are some apparent drawbacks. In some situations, Bitcoin ATMs impose high fees ranging from 7% to 20% and have stricter buying limitations than a cryptocurrency exchange. Furthermore, there is little to no customer help available if something goes wrong.
There are two types of fraud with bitcoin ATMs.
- Scammers frequently post advertisements for things for sale on websites such as #eBay, #Craigslist, and #Gumtree (UK). These things are often priced far lower than the market rate, enticing potential purchasers to contact the seller.
The scammers tell victims that if they want to secure those prices, they must make crypto purchases, usually by placing monies into a bitcoin ATM and sending the crypto to the scammers’ wallet address. The scammers depart once the transaction is completed.
Due to the irreversible and mostly unregulated nature of blockchain-based payments, this is popular with scammers. Once a transaction has been completed, it is nearly impossible to undo it.
- Another type of bitcoin ATM scam is more complicated and malevolent.
Scammers frequently target job seekers and offer them trial jobs. Scammers send #money to a person’s bank account and then instruct the person to #withdraw the money and convert it to #BTC at a bitcoin ATM before transferring the #cryptocurrency to the scammers’ address.
However, the money paid to the victim’s account is reversed a few days later because it originated from a stolen account. As a result, the victim’s account has a negative balance.
Overall, if you want to buy a reasonable amount of BTC in a somewhat private setting and don’t mind paying hefty fees, a bitcoin ATM could be a viable option for you – provided there are machines in your area of course. Alternatively, both possible solutions are using an exchange or acquiring bitcoin through apps you already have on your smartphone.