As the name suggests, Bitcoin ATMs are standalone electronic kiosks that allow you to buy and sell Bitcoin or other cryptocurrencies in exchange for cash or with a debit card. These automated teller machines are a way for people to purchase crypto assets directly by bypassing traditional banks and crypto exchanges.
Today we will be looking at what Bitcoin ATMs are, how they work, their pros and cons, and how to use them.
What is a Bitcoin ATM?
A Bitcoin ATM enables users to purchase BTC and other cryptocurrencies by depositing cash or by using debit cards.
Unlike traditional ATMs that are operated by banks, where you will need to connect your bank account to authorize withdrawals or deposits, crypto ATMs allow you to deposit cash to purchase cryptocurrencies. Some Bitcoin ATMs may let you exchange crypto for fiat currency that can be withdrawn from the machine. However, most crypto ATMs are limited to purchase-only transactions.
Instead of connecting to your bank account, Bitcoin ATMs connect with your digital wallets. While traditional ATMs can complete a transaction within minutes, crypto ATMs can take anywhere from 10 minutes to an hour for the crypto to be added to your account.
How Do Crypto ATMs Work?
Crypto ATMs are connected to a cryptocurrency exchange and convert the deposited cash into the crypto you prefer to purchase. All transactions are processed on the native blockchain of the cryptocurrency. For example, if you are buying BTC, the transaction will be made on the Bitcoin network, the Ethereum blockchain for ETH, and so on.
Using a Bitcoin ATM involves connecting your crypto wallet, typically by scanning the QR code displayed on the kiosk on your wallet app, then depositing cash into the ATM, and transferring the purchased crypto directly to your digital wallet.
Most crypto ATMs offer one-way transactions, meaning you can only purchase crypto and not sell them. However, newer machines facilitate two-way transactions, allowing you to buy and sell cryptocurrencies in exchange for cash.
The selling process is relatively similar to the buying, where a user scans their digital wallet’s QR code, chooses what crypto and how much of it they want to sell, and then receives cash from the ATM once the transaction is completed.
How to Use a Crypto ATM?
Here is how you can use a crypto ATM:
Set up a crypto wallet
Since crypto ATMs connect to digital wallets to facilitate transactions, you will need to create one to purchase tokens through the electronic kiosk. Some wallet service providers even operate their ATMs.
Find your nearest crypto ATM
You can simply search on Google to find a crypto ATM that is closest to your location
Verify your identity
Most crypto ATMs will ask for your phone number to verify your identity. Some machines may require further verification, such as scanning your photo ID or your social security number if you are in the US
Scan your wallet
To purchase Bitcoin or any other cryptocurrency, you will need to first scan the QR code of your wallet address. Almost all digital wallets have the option to display a QR code that can be scanned into the ATM
Select the cryptocurrency that you want to purchase and choose the amount you want to pay for it. You can perform transactions either by depositing fiat into the machine or via accepted debit cards
Wait for the transaction to be completed
Since crypto transactions take place on a blockchain, it can be a while before they are processed. Therefore, it is advisable to wait until the crypto has been deposited into your wallet and the transaction is confirmed. You may get a receipt from the ATM signifying the status of your transactions.
What are the Pros and Cons of Crypto ATMs?
Let us look at the advantages and disadvantages of using a crypto ATM.
- Crypto ATMs bypass the need to go through traditional financial institutions to buy Bitcoin or other cryptocurrencies. The kiosks can be used by the unbanked to access decentralized finance and convert their fiat into crypto
- Crypto ATMs are a faster way to purchase crypto as you don’t have to deal with the long process of depositing funds into a bank account, transferring money to an exchange, and then buying the token
- Crypto ATMs offer more privacy as they don’t require users to go through the full KYC process that is required by centralized crypto exchanges
- Crypto ATMs tend to charge high fees for processing transactions. They may not necessarily be the best way to purchase or sell crypto
- Crypto ATMs have transaction limits as they need to comply with anti-money laundering rules
- It may be hard to locate crypto ATMs as they are limited in their number and locations
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