A Beginner’s Guide to Bitcoin ATMs: What Are They? How Do They Work?

The growing popularity of cryptocurrencies draws in flocks of new investors each year. Since blockchain technology is relatively new, most of the time, potential investors don’t have in-depth knowledge of this burgeoning tech. Some find it overwhelming. Others think it’s not for everyday consumers. Although at some point, that may have been the case, that’s no longer true today.

If you aren’t tech savvy but you want to enter the crypto market, you can turn to Bitcoin ATMs. The same goes for investors who aren’t big fans of the often obscure nature of online exchanges. These ATMs are for you. They serve as an alternative to fiat-to-crypto exchanges like Coinbase. You can purchase and even sell cryptocurrency directly from these machines.

In other words, Bitcoin ATMs simplify everything for you, and they make cryptocurrency more accessible. Like any technological innovation, they come with several advantages, all of which you will be learning today.

What is a Bitcoin ATM Machine?

Bitcoin ATMs or a Bitcoin Teller Machine make everything more convenient for cryptocurrency investors. They look like your regular ATMs, but they aren’t linked to your bank accounts or any traditional financial institution for that matter. These kiosks connect you to an exchange where your bitcoin transactions take place. Though a BTM, you can purchase cryptocurrency using fiat money. Depending on the machine, you may also be able to sell Bitcoins.

Most of these machines will require you to present an ID when you’re purchasing Bitcoins. Others would require a phone number. Ultimately, these security measures depend on the machine and the operator.

How Does a Bitcoin ATM Work?

One of the advantages of using Bitcoin Teller Machines instead of online exchanges is privacy. You are often asked to verify your complete identity to be able to trade through these online platforms. Regardless of the amount you wish to transact, you are required to reveal personal information. On the other hand, BTMs need as little information as possible. For instance, you will only be required to provide your phone number if the amount you want to trade doesn’t go over a certain threshold.

Convenience is also one of the benefits of using Bitcoin ATMs. Unfortunately, it could also lead to one of its disadvantages. You may have to pay hefty premiums to enjoy such conveniences.

Due to Bitcoin’s extreme price volatility, BTM owners often have to protect themselves from risks. In doing so, they may set higher or lower Bitcoin exchange rates. Another factor that you need to be aware of is the transaction fee. According to the Consumer Financial Protection Bureau, they may reach as high as 7%. However, this is nothing compared to the fees that most banks impose, especially for international transfers.

You don’t have to deal with the expensive transaction fees when you’re transacting with cryptocurrency. With Bitcoin’s global reach, you should be able to use the digital currencies stored in your wallet wherever you may be in the world.

To cooperate with the local regulations and so as to prevent illicit activities, some BTMs impose a certain trade limit per day. That’s also why several of these machines around the world implement a simply KYC verification especially when you’re transacting large sums of cryptocurrency.

How to Use a Bitcoin ATM

Bitcoin ATMs are increasing in number. There are nearly 3,500 machines all over the world. To find out if there are any BTMs near you, use services such as Find Bitcoin ATM. From there, you can look up dozens of locations across Australia and find the closest BTM to your location.

Take note that not all machines allow two-way transactions. Some only allow you to purchase Bitcoins but not sell them. Hence, it’s always best to find out the BTM’s features beforehand.

As already mentioned, these machines require some sort of verification process. You might have to give a phone number for security reasons. It could also be an ID like a driver’s license or a passport.  Most likely, you will have to verify your identity using a One Time Password. Once that process is completed, you can start to purchase or sell Bitcoins.

Buying Bitcoin

If you want to buy Bitcoins, enter the amount you wish to exchange for cryptocurrency. You can start a new Bitcoin wallet where the digital currency will be transferred, or you can use a pre-existing wallet. You have to deposit cash through the machine in exchange for Bitcoins, and then you have to confirm the transaction. The machine will transfer the Bitcoins as soon as you’ve deposited the money.

Here are three ways of transferring the Bitcoins you purchased:

Pre-existing wallet

If you want your Bitcoins transferred to an existing wallet, all you have to do is scan the address QR code through the BTM scanner. The machine will then send the Bitcoins to the address shortly after.

Starting a Bitcoin wallet

You will receive a piece of paper that contains a QR code. You need to scan the code as it contains a private key which will then grant you access to the Bitcoins you purchased.

Email address

Not all machines have this option. Only some would let you receive Bitcoins through email. When you do choose this option, you will get your QR code through your email address. To make your transaction more secure, some services would let you encrypt the email with a password.

Note that the price of Bitcoins on these BTMs are often 5% to 10% greater than the current rates offered at online exchanges. Aside from the cryptocurrency’s volatile nature, BTM owners have to pay fees for rent, maintenance, etc. Thus, the price is frequently higher. But if you value privacy and convenience, then transacting through these machines should be worth it.

Selling Bitcoin

When it comes to selling your Bitcoins, the process is similar to the one mentioned above. You need to key in the amount of Bitcoin you wish to sell, and then the wallet address on the machine. Once the transaction is completed, the machine will dispense cash.

The selling price at BTMs are usually not more than 5 to 10% of the rates offered at online exchanges.

How to Find a Bitcoin ATM Near You

Most Bitcoin ATMs are in North America. But like the rest of the world, there has been a significant increase in the number of BTMs in Australia. As of this writing, Coin ATM Radar indicates that the country has 52 machines. Melbourne has most of them with 19 in total. Sydney comes second with 11 BTMs. Other major cities that have them include Brisbane, Adelaide, Perth, Canberra, Surfers Paradise and more.

To find one near you, seek help from services like Coin ATM Radar and Find Bitcoin ATM. These platforms will let you search for nearby machines through a live view of the Bitcoin ATM map.

Using these services, you can find BTMs anywhere in the country, including the ones closest to your location. More importantly, you will be able to look up important details about any BTM such as their fees and limits.

You can also find out what their features are. These platforms will let you know if the machine you’ve chosen offers two-way operations. You can find out if the BTM only lets you buy or sell Bitcoins. Not to mention, you can get directions from your current location to the nearest machine.

You don’t need to break a sweat to conduct your search. If you use Coin ATM Radar, here’s what you need to do:

1. Open their website and find the live map.
2. Tick a few boxes that indicate what you’re looking for in a BTM. You can choose the cryptocurrency you want to transact with, and the operations you want your machine to have.
3. Add your location and the search will begin.
4. Select the machine that’s closest to your location to view its details.
5. Click on the Get Directions

Screenshot from coinatmradar.com

Find Bitcoin ATM has a slightly different setup. They show the live map, but they don’t have those boxes which you can tick. However, you can zoom in on the locations that are tagged in the map. Here’s what you need to do to find a Bitcoin ATM using this specific platform:

1. Open their main website.
2. Find the Locations menu on the navigation bar, where they list the cities with BTMs. And choose the city you’re currently in.
3. From there, you will find everything you need to know about the machines found within that city, including directions.
4. You can click Open to learn more about the BTMs on the list.

Screenshot from findbitcoinatm.com.au

Operating a BTM

The ever-increasing growth of crypto markets is creating even more opportunities for entrepreneurs looking to establish themselves in the industry before mainstream adoption. But before you decide to delve right in and operate a BTM business, you need to look at the costs and risks involved.

Revenue 

Operators receive an average of $30,000 a month in transaction volume, according to Coin ATM Radar. Some earn about $20 to $25 while there are others who reap about $100,000 for each machine.

Several factors determine your revenue— transaction volume, population density, and the community’s Bitcoin-awareness level are some of them. For instance, a BTM located in Sydney would be used more often than a machine found in a city with a smaller population.

In the same report, Coin ATM Radar noted that machines placed in commercial areas with high foot traffic are more profitable. As for machines placed in stores and shops, revenue is determined by opening hours and type of business hosting them. They say that restaurants and pizzerias are some of the more popular locations.

In a month, you should be able to determine if the current location is a good spot for your Bitcoin ATM. If it isn’t, you should opt to move it to a different location.

Costs of operating a Bitcoin ATM

Now that you know how much you can possibly earn from operating a Bitcoin Teller Machine, let’s look at the costs of running a BTM. The type of machine you want, its manufacturer, your country and currency are all factors that influence the price of a machine. Today, you may purchase a BTM for as little as $775. But for a two-way model, you might have to spend as much as $14,000.

Apart from the price of the machine, you have to pay for delivery and installation costs. If you’re purchasing hardware from a foreign country, you might have to pay a hefty price for the shipment. All of that will cost around $10,000 to $15,000.

When you’re running a BTM business, you have additional expenses to think about. Rent, advertising, maintenance, and customer support are a few examples. Now that cryptocurrencies are becoming more mainstream, governments are starting to implement stricter regulations and policies. In order for you to run a legitimate business, you need to pay legal fees to consult with a lawyer. You also have to spend for your licenses. More importantly, you need to consider the cost of stocking cash and cryptocurrencies as these BTMs can’t operate without them.

How to Start a BTM Business

Without a doubt, cryptocurrencies are growing in popularity. However, a BTM business won’t necessarily be profitable. You need to consider a bunch of factors before entering such a venture. You need to do more research about your city’s Bitcoin-awareness level, and you need to check out your local cryptocurrency regulations.

If you’ve weighed the risks and benefits and you’re certain about entering this industry as an entrepreneur, come up with a great business plan. Outline your strategies so you can guarantee that your business will be profitable. Decide if you want a one-way or two-way BTM, and choose a manufacturer that has a great track record.

Don’t forget about customer support and maintenance. To ensure that your machine is profitable, you must constantly strive to provide excellent customer service. Lay a firm foundation for your business, and success should follow.