A Bitcoin ATM is a standalone machine that allows users to deposit fiat currency and exchange it for Bitcoin (BTC -0.14%) or other cryptocurrency. The internet-connected kiosks are a way for people to bypass traditional financial institutions to buy and sell cryptocurrency.
What is a Bitcoin ATM?
A Bitcoin ATM allows users to buy cryptocurrency by directly depositing cash into a machine.
While the machines may resemble an ATM from a traditional bank, they don't operate the same way. A traditional ATM will connect to your bank account to authorize the withdrawal of cash from your account. Many Bitcoin ATM machines only allow cash deposits to purchase Bitcoin or other cryptocurrencies. Newer machines may allow you to exchange Bitcoin for fiat currency and provide cash. While traditional ATMs can complete transactions in seconds, it can take anywhere from 10 minutes to an hour for a Bitcoin ATM to complete a transaction.
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All Bitcoin ATM operators in the U.S. must register with the Financial Crimes Enforcement Network (FinCEN) and comply with the anti-money laundering provisions of the Bank Secrecy Act. That means strict limits on the amount of cash users can deposit and the number of transactions they can make, as well as other restrictions. Users making big transactions will need to verify their identity with a government-issued ID and may need to provide additional information.
How Bitcoin ATMs work
Using a Bitcoin ATM is fairly straightforward. First a Bitcoin ATM will likely prompt you to enter your phone number. It uses that phone number to identify you and register your transaction. You'll receive a verification code via text that you must enter to proceed.
Next you'll input your blockchain wallet's address. The easiest way to input your address is via QR code, which most mobile wallets will generate for you. Be sure that you're using a wallet specifically for the cryptocurrency you plan to buy. This is where the Bitcoin ATM will send your crypto after completing the exchange.
Now you're ready to insert your cash into the machine. The machine will inform you how much you've deposited and how much you can exchange it for in cryptocurrency. If the rate is acceptable, you can push a button to proceed with the exchange. It may print out a receipt of the transaction, but it's not necessarily completed. For Bitcoin, it takes six confirmations on the blockchain to verify a transaction, which can take around one hour. Once the transaction completes, you'll see the cryptocurrency deposited in your wallet.
What are Bitcoin ATM fees?
Unlike regular bank ATMs that may charge a small flat dollar value fee for using an out-of-network ATM, Bitcoin ATMs charge a fee based on a percentage of the value of a transaction. And the fees are quite high at that.
Most Bitcoin ATMs charge a fee between 9% and 12% to buy Bitcoin. You might find fees as low as 4% and as high as 20%, though.
By comparison, many online cryptocurrency exchanges will charge less than 1.5% on transactions in highly liquid currencies such as Bitcoin.
Where are Bitcoin ATMs located?
There are more than 35,000 Bitcoin ATMs installed around the world, the vast majority of them in North America. You may be able to find one in a cafe, gas station, airport terminal, or some specialty shops. There are websites dedicated to collecting data on the location of Bitcoin ATMs and the fees they charge. Checking a site such as coinatmradar.com is the best way to find Bitcoin ATMs near you.
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Benefits and drawbacks of using a Bitcoin ATM
There are several benefits to using a Bitcoin ATM:
- There's no need to go through a traditional financial institution to buy Bitcoin or cryptocurrency. This can allow the unbanked to gain access to decentralized finance and convert their fiat currency into cryptocurrency.
- It's often faster to buy Bitcoin from a Bitcoin ATM than to deposit it in a bank, transfer those funds to an exchange, and then buy Bitcoin.
- Bitcoin ATMs can offer more privacy than a centralized exchange that's required to perform a full know-your-customer check for any account.
There are drawbacks, however, including:
- Bitcoin ATMs charge extremely high fees and may not offer the best pricing for buying or selling. As a result, your money doesn't go as far.
- Due to anti-money-laundering rules, Bitcoin ATMs have set transaction limits.
- You may not be located near a Bitcoin ATM.
Bitcoin ATMs can work for some people
A Bitcoin ATM is an easy way for anyone to turn cold hard cash into cryptocurrency. It can bypass traditional financial institutions, making the world of cryptocurrency and decentralized finance available to almost anyone.
The machine's certainly have their drawbacks, namely the high fees associated with transactions. But if the idea of staying off the grid appeals to you, it might be worth looking at Bitcoin ATMs where you live and work. Most people, however, will benefit from setting up an account at a centralized cryptocurrency exchange and buying and selling their cryptocurrency there.
Adam Levy has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
FAQs
A Bitcoin ATM (automated teller machine) is a kiosk that allows a person to purchase Bitcoin and other cryptocurrencies by using cash or debit card. Some Bitcoin ATMs offer bidirectional functionality, enabling both the purchase of Bitcoin and the sale of Bitcoin for cash.
Does Motley Fool recommend Bitcoin? ›
The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Is a Bitcoin ATM a good investment? ›
The demand for Bitcoin and other cryptocurrencies has been skyrocketing, and along with it, the need for easy and accessible means to transact in these digital currencies. Bitcoin ATMs meet this need, making them a potentially profitable venture in today's economy.
What are the disadvantages of Bitcoin ATM? ›
Pros and Cons of Using a Bitcoin ATM
| Pros | Cons |
|---|
| Bitcoin ATMs operate 24/7, providing access to cryptocurrencies at any time. | Some Bitcoin ATMs may be susceptible to theft, fraud, or tampering. |
8 more rowsJan 15, 2024
How Much Does a Bitcoin ATM Charge for $1,000? It depends on the vendor. Byte Federal claims its ATMs might charge between 10% and 25%, while CoinFlip ATMs charge between 4.99% and 21.90% of the total transaction amount.
Can I use a Bitcoin ATM like a regular ATM? ›
Traditional ATMs act like cash dispensers, giving out money when you insert your card and enter a personal identification number (PIN). Bitcoin ATMs work similarly, but with cryptocurrencies, allowing you to deposit cash to buy BTC or sell Bitcoin in your digital wallet to withdraw regular money.
How long will it take Bitcoin to reach $100,000? ›
Thakral believes that Bitcoin reaching $100,000 in 2024 is more feasible now than ever before due to several key factors. The approval of the spot Bitcoin ETF has spurred significant interest from institutional investors, fundamentally transforming the crypto investment landscape in favor of Bitcoin.
Does Motley Fool outperform the market? ›
Motley Fool Stock Advisor has a strong track record of stock recommendations with investment returns that have outperformed the broader market over the long term. Investors are still advised to diversify their portfolios with more than just Motley Fool Stock Advisor's picks.
Is Motley Fool respected? ›
Is Motley Fool legit? Yes, The Motley Fool is a premier provider with almost 30 years worth of data showing its outperformance (though past performance is no guarantee of future results).
Do Bitcoin ATMs charge a fee? ›
When using a Bitcoin ATM to buy or sell Bitcoin, you will come across fees ranging from 5% to 23%. Depending on factors such as the location of the ATM, the ATM provider, and the transaction fee, these fees can differ. Note that buy fees differ from sell fees when using a Bitcoin ATM.
Starting a Bitcoin ATM business is easy if you follow the basic preparation steps. You need to get acquainted with the regulation in your area and find a banking partner. Open a hot wallet and find a good spot for your machines. While operating bitcoin ATM business you need to organize cash service.
Are Bitcoin ATMs trustworthy? ›
People may use Bitcoin ATMs for legitimate reasons, but scammers may use them to try and steal your hard-earned money. Once someone converts or sends money through cryptocurrency, it is difficult for law enforcement to recover the funds. Follow our tips to avoid being scammed when you use Bitcoin ATMs: Read carefully.
What is the problem with Bitcoin ATMs? ›
New data from the Federal Trade Commission shows a massive increase in the amount of money consumers report losing to scammers involving Bitcoin ATM machines. Since 2020, the amount consumers reported losing has increased nearly tenfold to over $110 million in 2023.
Are Bitcoin ATMs illegal? ›
Therese Chambers, joint executive director of enforcement and market oversight at the FCA said: “Our message today is clear. If you're illegally operating a crypto ATM, we will stop you. “If you're using a crypto ATM, you are handing your money directly to criminals.
Why are Bitcoin ATMs so expensive? ›
A: Bitcoin ATM fees are charges applied by ATM operators for converting your cash into Bitcoin. These fees vary due to factors like operational costs, geographical location, and the specific operator. They typically range from 10% to 23%.
Can you get money from Bitcoin ATM? ›
Bitcoin ATMs are a way to get immediate access to cash using your bitcoins. Bitcoin ATMs do not operate like traditional ATMs. In order to make a cash withdrawal and sell your Bitcoin from the ATM, the machine provides a QR code to which you send your Bitcoin. You simply wait a couple of minutes and receive your cash.
How does Bitcoin convert to cash? ›
Yes, you can convert cryptocurrency to cash (like USD or INR) using various methods. Popular options include cryptocurrency exchanges, peer-to-peer marketplaces, and Bitcoin ATMs. Always choose a reputable platform and be aware of potential fees and withdrawal times when converting your crypto holdings to cash.
Does anyone use Bitcoin ATM? ›
People may use Bitcoin ATMs for legitimate reasons, but scammers may use them to try and steal your hard-earned money. Once someone converts or sends money through cryptocurrency, it is difficult for law enforcement to recover the funds.
