Pros and cons of using a bitcoin ATM
Bitcoin is much more widely known and used today than just several years ago. However, it is still not easy to acquire bitcoins in the first place and sell it in exchange for fiat currency might be even harder. Bitcoin ATMs are supposed to make the process easier and more accessible. Let’s look at what makes bitcoin ATMs a good or a bad means for bitcoins conversion.
There are almost 500 bitcoin machines worldwide at the moment. By “bitcoin ATM” I assume a machine specifically developed and dedicated for buying and sometimes selling bitcoins. By the way many other bitcoin alternative terminals exist in the world, one can use even a traditional bank ATM in order to buy or sell bitcoins (however, the service is provided by external to bank companies, not banks directly).
Bitcoin ATM usage pros
Many people use bitcoin ATM services every day, why?
Speed
Bitcoin ATM is one of the fastest ways to buy and sell bitcoins. It really depends on the machine type, but some bitcoin machines like Lamassu support a 15 second operation, which consists of scanning QR code of your bitcoin address, feeding bank notes to machine and clicking “Send”. Bitcoins are sent immediately after finishing this easy process.
The process of buying / selling bitcoins for the first time might include some verification steps (depends on operator and regulatory field where machine is operated). Nowadays, most common verifications are mobile phone check via SMS for small amounts and ID scan for bigger ones. Palm vein scans, which Robocoin promoted initially, or finger print scanning (although many machines are equipped with a finger print scanner) are rarely used or not used at all. Anyway, even when verification is required — it is much faster comparing to registering and getting verified at exchanges, which might take several days.
Security and anonymity
Bitcoin ATMs are usually run by known operators with established business entity. They normally have a business address, support phone and email provided. A user interacts with machine directly and there is nobody else involved in the process. Compared to meeting someone from localbitcoins — it is much safer, as no one knows in advance you carry some substantial amount of cash with you.
This also applies to anonymity. Of course, if bitcoin machine has a full featured verification turned on — it is hard to make an anonymous purchase, despite this it is often possible to find a machine, which don’t require any form of verification, especially for relatively small amounts.
User-friendliness and availability
One can argue that bitcoin ATMs are less available than online bitcoin exchanges. They have a physical location, which you need to visit, compared to just using your computer or mobile phone connected to internet from anywhere. Also bitcoin machine is usually available during business working hours, which is far less than 24/7 availability of online exchanges. But under availability I mean access point to bitcoin for many people who are not familiar with digital currencies. Obviously, there is a segment of users, which won’t go through registration at online exchange and wire transfer for deposit funds in order to get some portion of bitcoin for the first time. In this case bitcoin machine is a much easier option, which one can accidentally spot at location nearby, be it a local groceries shop or a beauty salon. People are acquainted to transact with cash, so buying bitcoins with cash is a pretty straightforward process. Bitcoin ATM manufacturers are working on adjusting the operations flow and making it easier for the user, so that even kids can use it.
Financial inclusion
This is an obvious fact that in order to use online exchange you need to send fiat funds as a deposit. For this you need to have a bank account. Although things get better lately with development of mobile financial services, still half of the adult population worldwide are unbanked or underbanked according to the World Bank report.
One can argue that bitcoin ATMs are installed mostly in the countries with high financial inclusion already, and this is true. However, even when you have a bank account, you might not want to risk it and use bitcoin ATM instead in order to conduct bitcoin operations. There were many users reporting that banks terminated relationships and closed accounts when fund transfers were identified to be sent to or received from known bitcoin exchanges.
Bitcoin ATM usage cons
There are many advantages of using bitcoin ATMs, however, at the moment there are still some disadvantages present.
Fees / Costs
Many complaints by users are about bitcoin ATMs charging a lot in commission. To some extent this is true. According to the bitcoin ATM industry stats page on our site average fee for buy / sell bitcoins is at 6.5% now. This is calculated based on 373 machines which provide buy operations and 152 sell bitcoin machines. This is an “average temperature in the hospital”, while some bitcoin ATM operators charge as high as 30% or even more via commission or price mark up.
It is assumed that with growing competition and more matured market — the fee will decrease.
Up-time / service reliability
Services unreliability is another issue that has been addressed many times. Users report some machines as non-functional. Due to relatively compact size (some models) a bitcoin machine might be easily taken out for a short while, e.g. to be provided/displayed at bitcoin meetup. As the spread of bitcoin ATMs is still low, some users visit machines which are located at a remote distance, e.g. couple of hours driving. In this situation it is very important to have all services up and running. Also it is important to have both buy and sell operations supported if the machine declared to do both.
Manufacturers try to follow up with this problem and develop custom fixes, e.g. remote administering and restarting the machine in case of bugs / hangings, so that operator doesn’t have to be present at location just to relaunch ATM.
Another aspect of reliability is the business attitude of operators. Some of them run machines as connected to bitcoin exchanges, and whenever operation is done by a customer this transaction is mirrored on exchange. However, some machines are run based on bitcoins in hot wallet of operator, which means operators bares the currency risk. And it was quite a broad problem when the price of bitcoin fluctuated a lot, e.g. sharp rise, operators were not providing services in full, because there is much more incentive to keep bitcoins and gain because of price increase, rather then sell it to customers and then replenish the wallet at a higher price.
Hard to locate
Bitcoin machines are still something new even for people from bitcoin community. People still get amazed when see them in wild and many report there is still unfortunately no bitcoin machine around. It might be difficult to find out where is the closest working bitcoin ATM located, even if there is one.
In order to simplify the process one can use bitcoin machines location map on our site. Alternatively, there is a Bitcoin ATM Android app and iOS version as well. Keeping the list up-to-date is a daily job, and customer’s feedback helps a lot.
Just to mention some other features which you can find useful— filter machines if they allow buy bitcoin only, or sell transactions also, for most machines online rates are available (just click “Check online” on particular listing).
So do you think bitcoin ATMs are good or bad in general? Any other pros and cons? Write about it in comments.
PS: Follow @coinatmradar on Twitter for bitcoin ATM news
