A standalone kiosk that allows you to withdraw and deposit cryptocurrencies, Bitcoin ATMs are a convenient and quick way for anyone to trade fiat for bitcoin and vice versa.
A similar concept to traditional ATMs, that deal solely with fiat currencies connected to your bank account, bitcoin ATMs are connected to the bitcoin blockchain that directly sends transacted bitcoin to your desired wallet by accepting fiat in exchange.
They are in no way connected to your fiat bank account and are not run by banks or other centralized financial institutions.
Most times you do not need to provide any personal information to transact using these ATMs. But such transaction values are capped. All bitcoin ATMs at least in the USA are required by law to register with the Financial Crimes Enforcement Network (FinCEN) and comply with anti-money laundering provisions of the Bank Secrecy Act (BSA).
Similar to the USA, other countries have their own regulations regarding bitcoin ATM transaction limits and information required to use this service.
Due to this ATMs must follow strict deposit and withdrawal limits, for high-value transactions they usually ask you for KYC information. This could include your name, phone number, address and even scanning your personal ID.
Steps to using a Bitcoin ATM
Using bitcoin ATMs are simple and straightforward process, allowing you to skip the complicated process of using crypto exchanges and at the same time withhold your privacy [for small value transactions at least].
If you have used a traditional fiat ATM to withdraw cash, using a bitcoin ATM would be easy. One to keep in mind is that there is a fee involved in using these bitcoin ATMs which is usually quite high compared to using a crypto exchange
Bitcoin ATM fees might range anywhere from 4% to 20% of the transaction value, a stark increase in contrast to crypto exchange fees which usually range from 0.1% to 2%.
If you are comfortable with paying this fee you can go ahead and use a bitcoin ATM.
Other the fees the only roadblock you might face in using a bitcoin ATM is locating one near you, unlike fiat ATMs which can be found everywhere around the globe, Bitcoin ATMs are more scarce and are at present located in select regions of the world. But don't get disheartened just yet, as of writing this article there are a little over 37,000 bitcoin ATMs around the world.
You can use a bitcoin ATM locator to find one near you.
Once you find one near you, follow the steps below to use one:
#1 Get A Crypto Wallet
The first thing you need is a bitcoin wallet where you will receive your newly purchased bitcoin. There are multiple types of bitcoin wallets available in the market, ranging from mobile, desktop, hardware, and paper wallets.
Top wallets include:
- Mobile: Mycelium, Trust, Coinomi
- Desktop: Exodus, Electrum
- Hardware: Trezor, Ledger
Since you will be using a bitcoin ATM, which requires you to be physically present at a specific location, using a wallet that supports a mobile version would be the most convenient option.
After you have set up a bitcoin wallet, you will have a receiving address where you will be receiving your newly purchased bitcoin.
#2 Enter Wallet Information and Details
In the bitcoin ATM, follow the on-screen prompt and instructions. You will need to scan your bitcoin address QR code, which is the receiving address of your bitcoin wallet.
Open the QR code on your phone and let the machine scan the code.
#3 Insert Cash and Receive Bitcoin
After this, enter the amount of bitcoin you wish to purchase and insert the equivalent fiat currency into the machine.
Note: you might need to complete ID verification for high-value transactions.
Upon confirmation, you will receive a receipt of your transaction, with the amount of bitcoin purchased minus the fees.
You should now see an unconfirmed bitcoin transaction of the transacted value in your bitcoin wallet.
The transaction may take 10 minutes to several hours to successfully confirm. This has nothing to do with the bitcoin ATM and is related to the inner workings of the bitcoin blockchain.
Similar to buying bitcoin at an ATM, the process of selling it is quite similar. Here are the steps for selling bitcoin at an ATM:
#1 Locate an ATM and Enter the Details
Select the sell option at the onscreen prompt, and enter the desired amount of bitcoin to sell. This option would usually be in fixed fiat denominations as the bitcoin ATM needs to dispense that amount upon successful transaction.
You will be seeing the equivalent bitcoin for the amount on the screen.
Tap the sell bitcoin option.
#2 Send Your Bitcoin
Now, you will see a bitcoin address where you need to send the bitcoin you are selling.
Simply scan the QR code from the mobile wallet and send the bitcoin to the displayed address.
The transaction needs to confirm on the bitcoin blockchain before the ATM can dispense the equivalent fiat amount. Since this can take time, bitcoin ATMs usually print a receipt with a redeem/QR code, which you can redeem at a later time once the transaction has been confirmed on the blockchain.
#3 Redeem the Receipt and Receive Cash
Once the transaction has been confirmed, you can visit the bitcoin ATM again, enter/scan the redeem code and receive the cash.