As defined by Wikipedia, “A Bitcoin ATM is a kiosk that allows a person to exchange Bitcoin and cash. Some Bitcoin ATMs offer bi-directional functionality enabling both the purchase of Bitcoin as well as the sale of Bitcoin for cash. In some cases, Bitcoin ATM providers require users to have an existing account to transact on the machine.”
Financial references identify Bitcoin machines as not ATMs in the traditional sense and probably use the wording ATM as a neologism.
“Bitcoin kiosks” are machines that are connected to the Internet, that allow exchanging cash with Bitcoin in the form of paper receipts, or through moving money to a public key on the blockchain network.
Use and Expenses
From outside, they look identical to traditional ATMs, however, Bitcoin kiosks are not connected to a bank account. Instead, they connect the user directly to a Bitcoin exchange. As per an advisory issued by the Consumer Financial Protection Bureau, “they may also charge high transaction fees, which can reach as high as 7%, in addition to an exchange rate of $50 over rates you could get elsewhere.
The machine only accepts cash and requires some actions to confirm the identity of the user.
It does not give out physical Bitcoin, as it is a digital currency anyway.
It is better to make sure a bitcoin wallet is installed first, in order to secure bitcoins.
A bitcoin wallet is a software program that plays the role of a bank account for bitcoins. It allows receiving, storing and send bitcoins to others.
Every BTM has the option to register the wallet on-the-spot, but it is strongly recommended to take care of that in advance so that the bitcoin wallet is as reliable and convenient to use as possible.
The Deal of a Bitcoin ATM
Bitcoin machines do not require having a credit card or bank account with any of the banks involved in order to carry out a transaction of Bitcoin.
They are faster than online bitcoin exchanges in processing transactions on the other hand.
When it comes to making transactions, those machines were reported to have fewer complications, in comparison to those online systems.
Bitcoin ATM investors look at the barriers to entry as being much lower in comparison to most bitcoin business models, and not restricting that to bitcoin exchanges only.
So they see that instead of coding an app and developing infrastructure, purchasing a full cycle solution proposed by a bitcoin ATM manufacturer is better.