Complete Guide on What is Bitcoin ATM and How Does it Function?

Bitcoin automated teller machines (ATMs) are physical shops where users can buy and sell their crypto assets. They permit users to interact with Bitcoin and carry out various transactions.

The Bitcoin ATMs are mainly designed for BTC. However, operators can decide to have those that support other cryptocurrencies.  

Conventional ATMs behave like dispensers, giving out money after inserting a card and entering a personal identification number (PIN). BTMs work with cryptocurrencies, permitting people to deposit cash to purchase BTC or sell Bitcoin in their digital wallet to withdraw regular money.

The two types of Bitcoin are: 

Bidirectional: The machines allow both the purchase and sale of digital currencies.

Unidirectional: The machines allow either the purchase or sale of digital currency, but not both.

Finding a Bitcoin ATM

One can locate a nearby BTM in the following ways:

• Mobile applications like Bitcoin ATM Map
• Websites such as CoinFlip that offer maps and directions
• Crypto exchanges that list affiliated BTMs
• Local listings through search engines or local business directories

Purchasing Crypto Using a Bitcoin ATM

After locating the BTM, one must follow the steps below to ensure a seamless transaction. For you to engage in the buying and selling of crypto assets you must own a crypto address. 

The user should create a Bitcoin wallet to proceed with the buying of crypto through the BATMs. At the account creation process the user should complete the authentication process by completing the phone verification step. 

Consecutively the user will be required to provide additional documents for verification purposes. At the final account creation stage, the user will be required to download a Bitcoin wallet and scan the wallet QR code to prove ownership of the account.

After completion of account creation, the user will be required to enter the amount of Bitcoin to be purchased and initiate the transaction.

Selling Bitcoin Using a Bitcoin ATM

The steps involved are as follows: 

1^st step: Type the phone number to receive a code through text message.

2^nd step: The ‘Sell’ option should be selected and the Bitcoin amount to be sold must be entered.

3^rd step: The wallet should be used to scan the QR code on the screen and move the Bitcoin. 

4^th step: The BTM dispenses the cash.

Cost of Utilizing Bitcoin ATMs

As of July this year, more than 38000 BTMs were operational globally. The cost of utilizing a BTM differs based on the location, operator, and transaction type.

The fee ranges from 7-20%. The costs address the maintenance, installation, and regulatory adherence costs. Extra costs entail exchange markup and transaction fees. 

Advantages of Bitcoin ATMs

• BTMs are accessible and convenient. They are located in high-traffic areas for easy access and operate 24/7.
• They utilize advanced security measures and adhere to Anti-Money Laundering guidelines, ensuring security.
• Their user-friendly interface eases Bitcoin purchases and sales.
• BTMs ensure instant transactions, benefiting users requiring instant access.
• Offer banking services to the unbanked and underbanked. 

Drawbacks of BTMs

• High transaction fees compared to online exchanges.
• They have restricted functionality.
• They have regulatory and security concerns.

Bitcoin ATM’s Safety

The measures taken to ensure security include:

• Using modern encryption technology to ensure security. They safeguard sensitive information during transactions.
• Adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) guidelines.
• Using real-time monitoring systems to identify and solve possible security risks. 
• Incorporating advanced security features to avert vandalism and theft, for instance, reinforced casings and security cameras.

Bitcoin’s Legality

BTMs’ legal status varies by nation, illustrating the changing regulatory environment concerning cryptocurrencies. For instance, in the U.S. and Canada, they are quite common, with operators being required to adhere to KYC and AML guidelines.

In Europe, most nations allow BTMs if they adhere to the EU’s Anti-Money Laundering Directive 5 (AMLD5). 

Bitcoin’s Future

BTMs are anticipated to proliferate, closing the gap between conventional banking and digital currencies. As guidelines change, future Bitcoin ATMs could integrate with conventional banking systems and feature improved security measures such as biometric authentication.