Did you know that the world is home to at least 19 cryptocurrency billionaires? Of these wealthy folks, at least 16 are U.S. passport holders. Most have also built their wealth through Bitcoin (BTC) investments.
So it’s no wonder about 46 million Americans now own a share of Bitcoin. However, they don’t only use it as a high-risk, high-yield investment means. Many also utilize BTC as a payment method or send it as an alternative currency to friends or family.
Bitcoin’s increasing adoption has also spurred the growth of the Bitcoin ATM industry. Thanks to these machines, cryptocurrency users now have more ways to buy, sell, and send crypto.
But what exactly is a Bitcoin ATM? How does it work, and what do you need when using it for your crypto transactions?
We’ll answer all those questions and more in the guide below, so keep reading.
What Is a Bitcoin ATM?
A Bitcoin ATM is an internet-connected, electronic kiosk that resembles a traditional ATM. The chief difference is that the former is specifically for Bitcoin transactions. Some Bitcoin ATMs also support other cryptocurrencies like Ethereum (EHT) and Tether (USDT).
How Do Bitcoin ATMs Work?
Unlike a traditional bank ATM that requires a user to have a bank account, a Bitcoin ATM doesn’t. Instead, a Bitcoin ATM connects to the blockchain network where a user’s crypto lives.
A blockchain is a decentralized, distributed database within a computer network. It stores data in digital form, helping secure Bitcoin and other cryptocurrency transactions.
To establish a connection to the blockchain, a Bitcoin ATM must first verify a user’s identity. It’s often a multi-step process; the first one requires a user to input their phone number into the kiosk. The ATM then sends a one-time pin (OTP) to that number, which the user must input into the machine to proceed.
Some Bitcoin ATMs also require a photo ID which they scan for identity verification. It can be a valid, government-issued ID, such as a driver’s license or a passport.
Bitcoin ATMs must also confirm the user’s cryptocurrency blockchain address. This step ensures the ATM accesses the correct crypto account. Users often complete this step by scanning a quick response (QR) code from their crypto wallet.
After completing those steps, a user can proceed with the Bitcoin transaction.
What Are Crypto Wallets for Bitcoin ATMs?
Crypto wallets store the public and private keys associated with cryptocurrency accounts. You can think of a crypto wallet as a mailbox. A public key, in turn, is like that mailbox’s address, whereas a private key is a key that opens the mailbox’s lock.
As mentioned above, using a Bitcoin ATM requires confirming your cryptocurrency blockchain address. That’s your public key, usually generated as a QR code. Scanning this code into the ATM lets the machine determine your unique address.
Crypto wallets are available as mobile apps, hardware wallets, and paper wallets.
Mobile apps are the most convenient to use with Bitcoin ATMs because they let you generate QR codes on the go. Hardware wallets are often USB devices, some of which allow you to create a QR code on their built-in screen. Finally, paper wallets are pieces of paper with a printed QR code.
Consider using a mobile wallet app if you plan to make frequent Bitcoin ATM transactions. This way, you can create public and private keys anytime, anywhere. Then, you only have to scan their QR codes into the ATMs straight from your phone.
Many mobile crypto wallets also support different cryptocurrencies and altcoins. So aside from BTC, you can also use them to manage ETH, USDT, and DOGE (Dogecoin), to name a few. With this wallet, you can make different transactions with ATMs supporting multiple cryptocurrencies.
What Transactions Do Bitcoin ATMs Allow?
Unidirectional Bitcoin ATMs only support one-way cryptocurrency transactions. Use this type of ATM, and you can only either buy or sell BTC, not both. However, most of these machines are for buying crypto.
By contrast, bi-directional Bitcoin ATMs support two-way transactions. They let you purchase and sell BTC and other cryptocurrencies.
Where Can You Find Bitcoin ATMs?
Of the 34,000+ Bitcoin ATM locations worldwide, over 32,000 are in North America. In the U.S. alone, you can find 30,000+ of these cryptocurrency ATMs. Canada is also home to over 2,200 machines.
To narrow down your search, use an online Bitcoin ATM locator. It utilizes your smartphone’s or computer’s GPS to search for ATM locations near you. It should give accurate results provided you enable your device’s location services.
Some online Bitcoin ATM locators provide even more accurate results with specific locations. You only have to enter your full address details, and they will look up nearby ATMs based on that info. To learn more about these web-based crypto ATM locators, click here.
How to Deposit Bitcoin in ATMs?
To deposit Bitcoin at an ATM, you must first go through the identity verification steps. After that, you can scan your blockchain address into the machine using your prepared QR code. If you’re using an ATM supporting different crypto, ensure you use the QR code for your BTC account.
Once confirmed, select the transaction option for buying BTC. Then, insert your cash into the ATM’s cash receptacle. The machine should count your money and display the amount on the screen.
You should also see the current exchange information on the ATM’s monitor. For example, if the rate is $1 to BTC 0.00005, and you deposited $100, you should see something like “$100 = BTC 0.005” on the screen.
If you’re okay with the exchange rate, you can confirm the transaction, usually with an “OK” or “YES” button. The machine then proceeds and may also issue a printed receipt. However, the Bitcoin deposit may take several minutes to an hour to reflect in your crypto wallet.
Can You Use Debit or Credit Cards?
Yes, some Bitcoin ATMs let you buy BTC and other crypto using debit and credit cards. However, not all debit and credit card issuers allow for such transactions. As for those that do, they often charge withdrawal and cash advance transaction fees.
All those extra fees are on top of the ATM’s brokerage and transaction charges.
Can You Withdraw Cash From Bitcoin ATMs?
Yes, withdrawing Bitcoin from ATMs converts some of the BTC you own into cash. In this case, you’re selling BTC in exchange for fiat money. Likewise, you can turn other cryptocurrencies into cash through ATMs.
Just ensure you use an ATM that supports both buying and selling.
How to Withdraw Cash From Bitcoin ATMs?
Suppose you’ve already gone through the ATM’s identity verification steps. After that, select the option to sell Bitcoin and how much you want to sell.
The ATM should display a QR code. This code is the ATM’s public key containing the machine’s blockchain address.
Scan that QR code into your mobile wallet so that you can send your digital currency to the correct address. You can then access your crypto and confirm you want to sell some of it for cash using your private key.
After confirming the transaction, the ATM should then dispense your cash. You may have to wait a few minutes for the machine to issue your money.
Can Bitcoin ATMs Send BTC to Others?
Yes, you can use Bitcoin ATMs to send BTC to friends or family who also use this cryptocurrency. It’s like selling Bitcoin for cash, except you transfer the BTC to another person’s wallet, not the ATM.
To ensure the ATM transfers the funds to the correct address, you must have the recipient’s public key. You can get this by asking the receiver to send you their wallet’s QR code. You then scan this code into the ATM when it asks you for the recipient’s address.
Are Bitcoin ATMs Legal and Safe?
Yes, Bitcoin ATMs in the U.S. are legal, as their operators must abide by the federal Bank Secrecy Act. Compliance involves registering the machines with the Treasury Department’s Financial Crimes Enforcement Network.
Bitcoin ATMs are also safe since they require identity verification. These include the mandatory OTP and scanning of photo IDs and QR codes.
However, the safety of Bitcoin ATMs still depends on your due diligence. So you know, criminals now use them to scam people into sending crypto into their wallets.
So when sending crypto using an ATM, send it only to people you know. Always double-check that it’s a friend or a family member asking for crypto.
For example, let’s say you get a text message claiming it’s your friend asking you to send crypto to a QR code. Video call that friend first to ensure they sent the message and their phone isn’t in someone else’s hands.
You should also avoid buying or selling Bitcoin to people you’ve never met. Otherwise, you may unknowingly become part of a money laundering scheme. You’re also at risk of sending BTC to someone who’ll never pay you.
Why Consider Using Bitcoin ATMs?
Traditional online exchanges can take days or even weeks to verify cryptocurrency transactions. By contrast, Bitcoin ATMs complete transactions within minutes to an hour. That makes ATMs faster and more convenient to buy and sell BTC and other types of crypto.
Also, remember that BTC is so volatile that, in May 2021, its value shrunk by 30% within a day. Since Bitcoin ATMs complete transactions immediately, they can protect you against that volatility. But if you transact online, you’re at risk of a significant value change by the time it gets completed.
Some Bitcoin ATMs also offer users to pre-book and reserve cash they want to withdraw. They can usually perform these using the ATM’s specific mobile wallet app.
Cash transactions with Bitcoin ATMs are also more private than online exchanges. You don’t need to provide bank details when you deposit or sell BTC and other crypto using an ATM. By contrast, it’s a requirement when you transact with online exchanges.
Are There Downsides to Using Bitcoin ATMs?
Bitcoin ATMs and online exchanges charge a percentage of a transaction’s value. However, ATM transaction fees are always higher than online exchanges.
Some Bitcoin ATMs charge as low as 4%, while others can reach 20%. The typical average range is between 9% and 12%. Conversely, online exchanges often only charge between 1% and 3%.
Those fees go on top of your transaction, not deducted from it. For example, if you’re buying $100 worth of BTC in cash and the transaction fee is 10%, you must pay $110. You must put $110 in the ATM’s cash receptacle for the transaction to proceed.
Most of those fees go toward maintaining the ATMs’ hardware and software. The rest goes toward expenses like cash handling and foreign exchange transaction rates.
Most Bitcoin ATMs also have lower transaction limits to prevent money laundering. For instance, most only allow you to buy or sell between $100 to $10,000 worth of crypto. Many machines also require additional verification processes for higher transactions.
Can You Reduce Bitcoin ATM Fees?
Yes, by checking beforehand how much Bitcoin ATMs charge per transaction. Most reliable ATM operators publish their fees on their websites.
So once you find ATMs near you, check their operator’s website to see which ones charge the least. Do this every time you want to use Bitcoin ATMs, as ATM fees can fluctuate based on BTC’s value. For example, the machines may charge 10% today but may charge 12% a few days later.
Another option is to check for discount codes offered by ATM operators. Some provide these money-saving deals to first-time registrants. These codes give you a discounted ATM transaction fee the first time you use their machine.
It’s also wise not to rely too much on Bitcoin ATMs; instead, alternate their use with online exchanges. You can use the former for urgent transactions and the latter for those that can wait. That way, you don’t always have to pay high ATM fees.
Find Bitcoin ATMs Near You Today
Considering the massive growth in Bitcoin ATM use, it looks like these machines are here to stay. After all, they’re a much faster, more convenient way to buy, sell, and send BTC and other types of crypto.
If you don’t mind paying higher fees or need to make a transaction ASAP, it’s time to look for Bitcoin ATMs near you.
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