Cryptocurrency ATMs: the future of banking is already here
One of the challenges cryptocurrency has faced in gaining more mainstream adoption is mostly the purely digital nature of bitcoin and its alternatives. You need to have some pretty advanced computer skills and navigate a sea of online digital currency exchanges to purchase crypto.
Well, that’s now a thing of the past with the growth of cryptocurrency ATMs. What are they? In this case, they are just what they sound like. Often configured like standard banking ATMs, the cryptocurrency counterparts are designed to allow the purchase of bitcoin with either cash or a debit card. Many also allow you to withdraw fiat currency against your bitcoin balance.
According to Coin ATM Radar, which tracks locations worldwide, the total number of crypto ATMs recently just surpassed 4,000 across 75 countries. Many are run by operator companies like Coinsource, for example, with a total of 515 operators currently sharing control of the world’s machines.
Locating a cryptocurrency ATM
One of the simplest, and frankly the best ways to find one is the aforementioned coinatmradar.com website. Boasting robust searchable and map-driven charted locations, they also break it down by country and provider, and try to keep fees up to date as well.
Available not only on web browsers, there are Android and iOS apps as well to find crypto ATMs using your mobile phone. Many of the machines require the use of a mobile phone to complete transactions, so having an app to search and compare locations is quite convenient.
Using a cryptocurrency ATM
The use of various cryptocurrency ATMs vary by provider, but generally they require you to have a mobile device. Some go a step further and require you to scan an ID or provide a contact number as well. There is quite a bit of anonymity in depositing cash into an ATM and receiving decentralized currency like bitcoin, so the fees at most ATMs are considerably higher than online exchanges.
Before you pop into the local ATM location to buy some bitcoin, make sure you have either a virtual wallet or paper wallet ready to go, so you have a key code to input into the ATM so it knows where to store your coins. Most cryptocurrency ATMs feature a QR code scanner to read the wallet ID off your phone or paper.
Cryptocurrency ATM fees
As mentioned, expect to pay higher fees than via online exchanges. As of this writing, the average fee for deposits through ATMs tops 9%, while the fee to sell is around 8%. These steep fees are a result of the demand for a secure and anonymous way to transact bitcoin, and are creating a lucrative business in building the machines or being a multi-location operator.
With continued growth of the number of ATMs and operators, there will be more competition that will drive down the cost of fees at the machines, so expect them to go down in the future. There are also many who believe these services might end up merged with standard ATM services as legacy institutions look for ways to get involved in the market by leveraging their already substantial infrastructure.
As you might expect, bitcoin is the most available to transfer worldwide, according to Coin ATM Radar. Over 99.8% of cryptocurrency ATMs trade in the most popular currency. Around 60% trade altcoins, with the most popular being Litecoin at 59% of all the locations. Next comes Ether at 46%, and it trails off from there. Bitcoin Cash is available at 33%, and Dash at 17%.
Many others are supported, but none of the others at top 100 locations worldwide, so if you’re looking for a rarer crypto, make sure you check carefully before heading to your local ATM. With odds like that, chances are there isn’t one nearby if you’re interested in trading something that isn’t in the above list.
The negatives of the cryptocurrency ATM
Aside from the higher fees, which means you don’t get to keep as much of your own currency, there are other drawbacks. Locations are still quite scarce, and your preferred currency might not be available nearby.
In the event you want to make an exchange for fiat currency quicky, for example if the value of bitcoin is dropping rapidly, you will waste time travelling to the ATM and incur further losses.
Depending on your country, there might not be many locations available. Regulations can determine this, although even in places like India where crypto trading is banned, an ATM recently opened up. Over 71% of locations are in North America, with 56% being in the USA.
Europe boasts just over 23% of the total, while Asia – ostensibly the largest cryptocurrency market – has just 2.5% of locations worldwide. Again, regulations play a significant role here, exemplified by China’s outright ban on trading cryptocurrency.
The future of the cryptocurrency ATM
As the number of locations increases, fees should drop and the technology will be more accessible to more people. The promise of the cryptocurrency ATM is a physical place to exchange fiat currency for digital currency.
One innovative startup, MANNA Robotics, is pionering drone-based cryptocurrency transactions. Say you’re sitting at home and want to exchange cash for bitcoin. You would order a drone, which the company hopes to eventually limit to under a 15-minute flight time. You could then either deposit or withdraw fiat currency from such specialized drone.
According to financial analysts, with more and more companies accepting cryptocurrency, the need to exchange to fiat currency will decrease over time, so we may see a decreased demand for these ATMs in the far-off future. However, for now they are here to stay.