Regardless of how long you’ve been interested in cryptocurrency, Bitcoin has likely sparked your curiosity for some time. It’s the first decentralized digital currency ever created, and it has a lot to show for itself. You’ve probably heard of its all-time high in November 2021, and now you’re wondering if it’s the right time to invest.
If you’re looking for an easy way to get started buying Bitcoin, a Bitcoin ATM is the perfect solution. But what is a Bitcoin ATM exactly? The short answer is that it’s a way for you to get your hands on some cryptocurrency in a few seconds.
If you have questions about how they work or whether they’re even legal, read on to find out.
What Is a Bitcoin ATM?
A Bitcoin ATM is a physical machine that allows you to buy and sell Bitcoins. They work like traditional ATMs, except they allow users to deposit cash in exchange for Bitcoins (and vice versa).
The first ever Bitcoin ATM was unveiled in Vancouver, Canada on October 29th, 2013. Since then, companies have installed thousands around the world, and luckily for you, America is catching up.
Are Bitcoin ATMs Legal?
In most countries, Bitcoin ATMs are completely legal. In the United States, for example, the Financial Crimes Enforcement Network (FinCEN) describes Bitcoin ATMs as money-services businesses. As such, they are subject to AML regulations and their use is legal as long as owners stay in compliance with federal law.
Bitcoin ATM operators should still check their local laws before installing a machine. Some areas have banned them outright or imposed strict regulations.
For example, New York City requires that Bitcoin ATM owners have a BitLicense to operate. Montana has no such rule.
How Does a Bitcoin ATM Work?
A Bitcoin ATM works much like a traditional ATM, except it’s specialized to allow people to invest in Bitcoin. To make a purchase on a Bitcoin ATM, users need only provide their mobile number or ID and follow some simple prompts.
Once the machine processes your transactions, you’ll get any amount of Bitcoin in return. Most ATMs will then print out a paper wallet for you if requested. This acts as proof of ownership of your newly purchased cryptocurrency.
Who Can Use a Bitcoin ATM?
Bitcoin ATMs are available for anyone who’s ready to buy Bitcoin, meaning you can use them if:
- You have a bank account
- Your bank account links to your crypto wallet
- You have cash in your pocket (or an ATM card)
If you don’t have a crypto wallet, you can easily download one from your app store. TrustWallet and the Exodus wallet are two of the most popular options, and you can use them on your phone or desktop.
How Do You Find a Bitcoin ATM Near You?
To find the nearest Bitcoin ATM to you, check the website of your local Bitcoin ATM operator. This will tell you where its machines are located and where new ones are coming soon.
You can also search for Bitcoin ATMs on Google Maps or use a Bitcoin ATM map like this here.
How to Use a Bitcoin ATM?
Once you’ve found your Bitcoin ATM, here’s what you’ll need to do:
- Enter your ID number
- Verify your identity by scanning your driver’s license or passport
- Enter the Bitcoin wallet address that holds your digital currency
- Insert cash into the ATM or scan your debit/credit card
After those steps are complete, it’s time for some final confirmations before completing the purchase!
You’ll see a confirmation screen that shows the amount of Bitcoin you’re about to purchase, as well as how much it will cost. If you want to proceed with the transaction, press “Confirm.”
If you’re satisfied with the purchase, press “Confirm” to complete the transaction. The screen will display a confirmation message, which shows how much Bitcoin has been sent to your wallet and how much cash is left in your account.
Do All Bitcoin ATMs Require ID?
No, not all Bitcoin ATMs require ID. Some may ask for your driver’s license or another form of identification, while others only verify your phone number. The reason behind this is that some states have anti-money laundering laws in place that require businesses to collect information about their customers’ identities before exchanging cash for cryptocurrency.
If you choose not to provide an ID, you’ll be limited in the amount of crypto you can purchase.
Can You Buy Other Cryptocurrency From a Bitcoin ATM?
Yes, you can purchase other cryptocurrencies from a Bitcoin ATM.
This is usually how most people use them. If you don’t have any Bitcoin and want to buy it, you just have to show up at one of these machines. The ATM will ask what cryptocurrency you want (Litecoin, Ethereum, etc.) and then dispense that currency into your wallet.
Some machines also sell your cryptocurrency for cash and allow you to withdraw the fiat currency.
Is It Safe to Use a Bitcoin ATM?
Before you purchase Bitcoin from a machine, it’s important to make sure that it’s safe. Many people are worried about their safety when they use ATMs in general, but it’s especially important when dealing with cryptocurrency because there is more room for scams and fraud.
The good news is that Bitcoin ATMs are just like regular ATMs. This means that all the same security precautions apply, such as monitoring your surroundings. If someone looks suspicious or if something doesn’t look right, leave immediately.
Also, check out reviews from other users before deciding which ATM to use. This will help ensure its legitimacy and give you some peace of mind about potential scams or faulty software.
Types of Bitcoin ATMs
Bitcoin ATMs are divided into two categories: one-way (unidirectional) and two-way (bi-directional).
One-way Bitcoin ATMs only allow you to either sell or buy cryptocurrency, not both. The machine only creates an address for your wallet and transfers Bitcoins. In contrast, two-way Bitcoin ATMs let you buy and sell cryptocurrency.
Bitcoin ATM Fees
Fees vary by location, but the average fee for buying Bitcoin at an ATM is around 15% of the total amount.
This pricey amount results from the fact that the ATM’s owner charges you a service fee. Bitcoin ATMs also charge exchange rates, which vary based on demand and supply.
If there’s high demand for Bitcoin in your area, then fees may be higher than usual because there are more buyers than sellers on that particular day—this drives up the price.
The exchange the machine uses will also charge you a withdrawal fee for your transaction. This is usually 1% of your withdrawal, but it can be much higher if you’re working on a congested network, such as Ethereum.
Benefits of Using a Bitcoin ATM
The greatest advantage of a Bitcoin ATM is its speed. You don’t have to wait several minutes to make a transaction as you would on an online exchange platform.
Bitcoin ATMs also allow you to make transactions in private without any interference from third parties. This means that you can buy Bitcoin using cash without having to reveal your account details (e.g., email address).
Drawbacks of Using a Bitcoin ATM
Still, there are some drawbacks to using a Bitcoin ATM.
It’s not as easy to use as an online exchange or a mobile wallet. The transaction also costs more than if you purchased cryptocurrency from another source.
And though there are many Bitcoin ATMs available around the world, there may be some areas where they don’t exist at all—or regulation restrictions may limit their availability. So, Bitcoin ATMs are a relatively niche way of purchasing crypto.
Do Bitcoin ATMs Have Limits?
The Bitcoin ATM may have a daily limit on how much you can purchase, which is usually determined by the machine’s operator. For example, some ATMs allow for purchases of up to $2,000 per day or $5,000 per week. Some machines even have monthly limits on how much you can buy.
It’s important to check with your local ATM before attempting to use it so you’re not disappointed when the transaction doesn’t go through.
Spend Less on Bitcoin ATM Fees
So what is a Bitcoin ATM? It’s a way to withdraw your cryptocurrency when you need funds right away, such as for bills or groceries. It’s fast, but its speed comes at a high cost. However, there are ways to get around this.
Check out a few of our finance and tech posts for new ways to withdraw Bitcoin that cost less. If you choose to invest in Bitcoin, or any other security, be sure to check back here on our blog. There are lots of helpful posts about how investments work and making the most out of them.