Bitcoin ATMs: Everything You Need To Know
Bitcoin ATMs are internet-enabled kiosks that allow users to buy Bitcoin or altcoins through debit cards and other traditional finance methods. Most Bitcoin ATMs are used to purchase the asset although some now offer bidirectional ability of selling crypto assets.
The mass adoption of cryptocurrencies in the last few years has led to an increase in Bitcoin ATMs globally. Currently, there are over 14,000 machines and counting. Aside from the growing number of hardware, companies in the space are recording an uptick in the number of users.
Operators are usually crypto companies to rent spaces at malls, petrol stations, and shops to place the hardware.
How it Works?
Bitcoin ATMs are not like traditional automated machines that give users cash after a transaction as it predominantly used in buying Bitcoin and other cryptocurrencies. To use an ATM, a person must have a crypto wallet and will scan a QR code to transfer Bitcoin. However, if a user has no wallet, one can be generated.
The transaction data appears in the wallet within minutes of the transaction. As a result of regulatory requirements, some Bitcoin ATMs in certain jurisdictions have a cash limit while others need additional details like a phone number to process a larger transaction. Modern practice also involves uploading government ID for identification on some transfers.
Fees and Regulations
Transactions with Bitcoin ATMs have gained popularity but some crypto commentators have flagged cost compared to traditional exchanges and regulatory hurdles as potential drawbacks. It is more expensive to use most Bitcoin ATMs because of the average 7% fee compared to cheaper rates on centralized exchanges. This is because companies pay for the hardware, rent prices, and other associated costs in running the service.
Despite this, a growing number of users troop to the service for other benefits. This is seen in the reports of most service providers. However, a downtrend remains in the activities of bad actors who benefit from the system.
Reports show a rising rate of Bitcoin ATM scams as some scammers utilize the model to commit crimes. This has prompted global regulators to roll out several measures including Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. In the United States, companies must register and comply with the Financial Crimes Enforcement Network (FinCEN) and the Bank Secrecy Act.
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