The Rise of the Bitcoin ATM

What easier way to get bitcoin than from a machine at your local coffee shop?

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In the early days of bitcoin, the elusive cryptocurrency was hard to come by. You could mine your own far more easily, but dealing with exchanges was a nightmare. They were often unreliable, frequently hacked, and sometimes took weeks to deliver bitcoins that customers had paid for.

Exchanges are far better now, but there is also another option: the bitcoin ATM.

The History of the Bitcoin ATM

Automated teller machines first emerged in the 1980s as a way to easily get money from your bank outside office hours.

Now, they are emerging as one of the main delivery points for casual bitcoin purchases.

Bitcoin ATMs first started appearing in late 2013, with the first installed in Vancouver, Canada. After that, they trickled through into other regions for a few months. Then, in February 2014, they exploded. The numbers of installed units took off, especially in North America, where most of the machines are installed. At the time of writing, there were just over 100 machines across the US, and another 60 in Canada. Australia and the UK came in a distant third and fourth.

One-Way and Two-Way Machines

Bitcoin ATM machines come into main flavors: one-way, and two-way. One-way machines let you buy bitcoins in exchange for fiat currency. Two-way machines let you do that, but also let you do the opposite, selling your bitcoins in exchange for fiat currency.

Buying money from a bitcoin ATM is as simple as selecting the amount that you want, and then using your smart phone wallet to display a QR code representing your bitcoin address.

The ATM will scan the code so that it knows which bitcoin address to send the bitcoins to. You will then feed cash into the machine, and it will send the bitcoins along to arrive in your software wallet.

Alternately, many bitcoin ATMs will generate a paper wallet for you, printing it out on a receipt for you to use later.

Some ATM vendors, such as Robocoin, have taken things a step further. They also provide their own bitcoin wallet software, giving you a seamless experience by allowing you to buy bitcoins and send them directly to your wallet.

Know Your Client

One of the biggest problems facing companies that sell bitcoin is regulation. Regulators in most countries require some kind of know-your customer (KYC) process, meaning that customers buying bitcoin must identify themselves to the companies selling them.

With exchanges, that can often mean a complicated paperwork process involving the sending of bank statements and other documents. With ATM machines, it’s generally less painful. Lamassu, for example, requires US and Canada users to simply scan their drivers license.

Other ATM vendors are more strict. Robocoin, which has turned itself into a global bitcoin-to-cash exchange network, requires all ATM operators to collect users’ personal information before they can sell them bitcoins through their machines.

Where to Find Bitcoin ATMs

Where can you find an ATM machine?  The best way is to use a map. Coin ATM Radar has one, which includes a search box enabling you to type in your local location. It displays the exact location of each available machine, along with which kinds of cryptocurrency it supports, which ATM vendor made the machine, whether it is a one-or two-way device, and what the opening hours are.

The advantage of purchasing bitcoin through an ATM? Quite simply, convenience. Even with the KYC requirements, it can be a simple and painless process if you use the right vendor's machine.

The downside? Commission. Operators don't run these machines for nothing, and they get to set the commission themselves, which means that you will generally pay more for your bitcoins via an ATM than you would if you bought directly from an exchange.

So, whether or not you use this option depends on what kind of bitcoin user you are: a casual buyer, or someone wants to use the currency more systematically.