Since the rise of cryptocurrency, there’s been corresponding interest in having similar or identical access to virtual funds the way a traditional bank account would provide access. Enter the Bitcoin ATM, which is meant to be used in the same way as an old-school ATM but with the ability to buy and transfer Bitcoin instead of fiat currency like U.S. Dollars.
What Is A Bitcoin ATM?
Depending on the design and the company servicing the ATMs, you may find Bitcoin ATMs allow you to buy crypto with cash and have the Bitcoin sent to a crypto wallet you specify. You can buy crypto for yourself, or purchase it and send it to a third party.
In order to send cryptocurrency to someone else using a Bitcoin ATM, you will need to have the address of the other person’s crypto wallet. That is the “destination” for your Bitcoin when you want to buy it and send it to another person.
While it is true that some scammers may try to convince people to pay them via a Bitcoin ATM and provide a wallet address for you to send funds to, you can also use a Bitcoin ATM to facilitate a legitimate purchase of an NFT, more crypto, virtual real estate, etc.
Scam warnings associated with crypto abound, but don’t let those warnings scare you away from a legitimate transaction.
How To Use A Bitcoin ATM
There are a few things you will need to use a Bitcoin ATM, sometimes also known as a Bitcoin Teller Machine. One is your own crypto wallet. You will want to have this before you try to buy, sell, or transfer using a Bitcoin ATM.
Once you have a wallet, you’ll need to create an account with the company operating the Bitcoin ATM. When you are ready to buy Bitcoin using the ATM, it pays to look up the going exchange rate for your currency and Bitcoin. When you purchase you will enter your virtual wallet data as the destination address for the Bitcoin you purchase.
How To Find A Bitcoin ATM
A newcomer to crypto might have a difficult time locating a Bitcoin ATM…at first. Fortunately, there are services that can help you locate one near you. Coinsource and Bitcoin Depot both feature a Bitcoin ATM lookup page. You can also simply type in “Bitcoin ATMs near me” in Google or the search engine of your choice.
What To Know About Bitcoin ATMs
Any ATM can be hacked or compromised. There are even fake ATMs that simply take your money. And then there are the warnings from the Federal Trade Commission about scams where a con artist pretends to be a representative of the IRS, the U.S Treasury Department, or claims to be offering you a prize that’s too good to be true.
In all cases, these scams will require you at some point to visit a Bitcoin ATM to deposit U.S. dollars or other fiat currency to buy Bitcoin or for some other purpose. The scammer promises to send you a QR code or something similar so you can claim your reward, get paid, etc. They never do, or what is sent is practically useless.
It’s necessary to anticipate such scams and avoid participating in them. Any third party who contacts you unsolicited with an offer or claim requiring you to visit an ATM, especially a Bitcoin ATM, should be reported immediately to the Federal Trade Commission.
Like any regular ATM, the Bitcoin version you use may feature transaction limits on how much crypto you can purchase or transfer. Some platforms like Coinsource may feature transaction limits close to the $10,000 range. Others may have lower limits.
How You Can Purchase
You may or may not be permitted to purchase Bitcoin using a credit card at your favorite exchange. If you are permitted, you may be charged a higher fee if the credit card company determines that your purchase of Bitcoin is tantamount to a cash advance. And some cards simply won’t permit you to buy virtual currencies at all.
These limitations are just as applicable for Bitcoin ATMs. You may find these machines typically accept cash only, but there may be exceptions to this rule. The key is whether the card issuer and the ATM operator both permit you to use a credit card to purchase crypto.
If you buy crypto using an ATM, that purchase may be instantaneous depending on the ATM operator and the cryptocurrency. Bitcoin transactions on the blockchain require verification and the ATM operator is not fully in control of this process. Your experience may vary based on a variety of factors including internet congestion, technical difficulties, or other problems.
Compromised Bitcoin ATMs?
If you use a Bitcoin ATM on your own, make sure you watch out for signs that the ATM has been compromised. Some hackers install card skimmers on ATMs and gas pumps that allow you to swipe your card to pay but instead of paying for your purchase?
Your card data is captured and sent to an unauthorized third party. Sometimes these skimmers look exactly like what they are, a piece of hardware that has been forced onto the machine.
Other times the skimmers are designed to look more like the machine they are attached to. If you have never used a Bitcoin ATM before, it’s a good idea to note the company name and research it first. Online reputations in the crypto world mean a great deal depending on circumstances. Do you really want to test that Bitcoin ATM without knowing a bit more first?
Beware Of Fees
The ease and convenience of any ATM makes it easy to forget about checking to see how much using that ATM might cost you in fees. In a traditional ATM situation, you might be charged a fee to use your bank card in a non-participating ATM, and you could also be charged a fee for using your ATM card overseas.
For a Bitcoin ATM card, you’ll want to know exactly how the fee structure works for that ATM. Avoid any company that is not transparent about its fees and when they are required. Sometimes context and location are important.
You may be charged higher fees, for example for using a Bitcoin ATM if one is available in a place like Las Vegas where casinos and other tourist traps typically feature elevated prices for simple things like withdrawing from an ATM. Know your fees!
Joe Wallace has covered real estate and financial topics, including crypto and NFTs since 1995. His work has appeared on Veteran.com, The Pentagon Channel, ABC and many print and online publications. Joe is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.