Cryptocurrencies are more popular as tradable assets on centralized and decentralized exchanges. But did you know that you can trade your crypto for cash directly and pay for items using crypto ATMs?
There are over 30,000 crypto teller machines worldwide, and they allow you to easily buy, sell, and swap your coins for your local currency. So, if you have cryptocurrency holdings and are wondering how this innovation works, this article explains everything related to Bitcoin ATMs and how they work. Business owners will also learn how to build one if they desire.
What Are Crypto ATMs?
A cryptocurrency automated teller machine (ATM) is an internet-run device that allows users to deposit and withdraw crypto funds in exchange for real cash. Users can use the kiosk to trade the money in their credit or debit cards for cryptocurrencies like Bitcoin.
Besides being able to buy and sell crypto, Bitcoin ATMs are used for instant conversions from fiat to crypto. That means they are on-ramp crypto gateways that individuals and businesses can leverage to bridge traditional and blockchain transactions.
However, it is crucial to understand that not all crypto teller machines allow users to buy and sell Bitcoin and other cryptocurrencies. In some cases, you can only buy crypto assets.
How Do They Work?
Unlike conventional ATMs that are connected to your bank account and process transactions using your account or card balance, crypto ATMs connect to your digital wallet to initiate and process transactions.
They are owned by private businesses offering crypto-related services. In other words, the success of your crypto transaction depends on your exchange platform and coin network.
All transactions on the machine are stored and maintained using blockchain. So, the first step to using such an ATM is to link it to your wallet using a provided QR code. Then you can either take out some money in the wallet as cash or buy more cryptos and store them in it.
Interestingly, some exchanges have partnerships with crypto ATMs to provide users with their exchange apps for seamless transactions and purchases.
These built-in apps allow you to scan vouchers with your phone camera for quick transactions. Once the code is properly scanned, you’ll receive your cash within minutes.
Importance of Crypto ATMs to Individuals and Businesses
Bitcoin ATMs are crucial in the online payments ecosystem because they make crypto transactions more accessible. Though traders and investors can buy Bitcoin and other assets using exchanges, beginners may find these trading platforms complicated.
However, Bitcoin ATMs have a similar user experience as conventional ones, making them easier to use – especially if you’re not a heavy trader and just want to use your funds from time to time.
Similarly, Bitcoin ATMs provide additional privacy to their users. If you don’t want crypto transactions to be public, you can convert your crypto to cash on ATMs. These transactions are not stored on the machine, as typically found on exchanges.
Another reason crypto enthusiasts choose Bitcoin ATMs is their high-level security. Though they run on the internet like exchanges, they are non-custodial. That means they do not hold your assets and if they ever get hacked, you’ll not lose a dime.
The integration application programming interface (API) that connects the machines to crypto wallets or exchanges is safe and secure. They also don’t require you to provide detailed personal information or submit identity documents. Only your name and phone number will do.
If you use your crypto funds for everyday spending, a Bitcoin ATM allows you to access money almost instantly.
The average machine completes a transaction in 3 minutes or less. So, you don’t have to wait for hours or days when there’s an exchange downtime or other issues plaguing cryptocurrency exchanges.
On the business side, you can leverage Bitcoin ATM solutions to enhance financial inclusion and cater to a broad range of customers. Crypto transactions also come with lower fees than what traditional financial institutions offer.
Moreover, you can create a tech-savvy and crypto-friendly brand that attracts more users, ultimately leading to better customer acquisition and revenue.
Risks of Crypto ATMs to Users
Despite the numerous perks highlighted above, crypto ATMs aren’t devoid of downsides. Here are some of the cons to consider before choosing teller machines for your personal or business needs.
High Transaction Fees
The fees for using crypto ATMs are extremely high compared to what you will find on exchanges. Some charge as high as 10% for each transaction, while some others go as high as 20% to 30%.
Conversely, some exchanges don’t charge transaction fees. Others that charge also have relatively low fees between 1% to 4%. So, unless you’re in urgent need of cash and don’t mind paying more, you may rethink using a crypto ATM for transactions.
Low Transaction Limits
As you’ll find on the average crypto exchange, there’s a limit to how much you can deposit or withdraw at a go when using Bitcoin ATMs. On average, the transactions are pegged to a minimum of $10 and the maximum is $10,000 daily.
The amount is quite low for heavy spenders and traders who use their crypto for activities like trips, hotels, and premium restaurants.
Conversely, exchanges like KuCoin have significantly higher limits of $50,000 daily for buying crypto with fiat. This can go as high as $100,000 per day if you purchase crypto with your bank card.
No Funds Insurance
Another risk of using crypto ATMs is non-existent insurance. Notable crypto exchanges insure their funds with the Federal Deposit Insurance Commission (FDIC) and other responsible agencies. The money is set aside to pay customers if the exchange ever goes bankrupt.
However, since crypto teller machines require that you deposit your assets in an external wallet, your fund’s safety is entirely your responsibility. That means there’s no insurance if your wallet gets hacked or you lose your private keys.
Limited Availability
There are just about 31,000 crypto ATMs all over the world. With a projection of over 900 million cryptocurrency users by 2028, it’s evident that the existing Bitcoin ATMs cannot cater to these users.
Moreover, the majority of the teller machines are in the US, so people in other countries may be unable to access them unless they travel.
How to Find and Use a Crypto ATM
As stated earlier, crypto teller machines are available in different parts of the world. You’ll find them in countries like the USA, Canada, Spain, and Australia.
However, since they are spread across every part of these countries, the best way to find one near you is to use crypto ATM locators like Coin ATM Radar or Google Maps. After locating the closest machine, follow the steps below to get started:
Create a Self-Custodial Crypto Wallet
Unlike traditional ATMs that let you slot in your card and get funds, crypto ATMs require your crypto wallet to facilitate transactions. So, if you don’t have one, you need to first create it to buy crypto via the teller machine. Note that software wallets are the best for this use case.
You can read our guide on how to set up a crypto wallet before you begin.
Locate the Nearest Crypto ATM
Find a Bitcoin teller machine near you by using ATM location tools or Google Maps.
Complete KYC
The average crypto ATM needs only your name and phone number to work. However, some require users to verify their identities before they can execute transactions. If your preferred machine requires additional verification, scan your identification document or enter your social security number (SSN) to complete the Know Your Customer (KYC) process.
Scan the Wallet Address
Upon successful verification, you need to scan your wallet address with the machine. Generate a QR code for the address and scan it with the device to connect them.
Buy Crypto
After connecting your wallet to the machine, choose the coin you want to buy and the quantity. Select how you wish to pay between cash or card and complete the transaction. Typically, you should receive the coins in your wallet within a few minutes, barring any blockchain network issues or congestion.
If you want to sell your crypto for cash, the process is similar. Once you have the coin in your wallet, follow the steps above and transfer the asset to the address provided by the ATM. Some machines allow instant cash pickups. If the one closest to you does not, visit one that allows you to get instant cash.
Conclusion
Since the first crypto ATM was created in 2023, thousands more have launched worldwide. These crypto ATMs are effective alternatives to cryptocurrency exchanges because they let you buy and sell various cryptocurrencies.
They also have an edge with their direct cash deposit and pickup, which allows you to convert crypto to cash and vice versa without hassles. However, before using a crypto teller machine, ensure you check its fees and research properly to avoid scammers.
If you’re a business owner looking to incorporate Bitcoin ATMs into your offerings, contact Zypto for cryptocurrency payment gateway development, white-label solutions, and custom development for your Web3 and blockchain needs.
Have you ever used a crypto ATM in the past or seen one in your location? If yes, tell us about your experience below.
FAQs
What do you need to use a crypto ATM?
The average Bitcoin ATM requires you to provide your name and phone number. However, in some cases, you may need to submit proof of identity like an ID card or passport.
How much does a Bitcoin ATM charge for transactions?
The fees at Bitcoin ATMs vary from one machine to another. However, you should expect relatively high fees between 10% to 30% per transaction.
How long does Bitcoin ATM verification take?
Ideally, the KYC process at a crypto ATM should be completed within minutes. But in some cases, it may be longer. If your verification was unsuccessful, contact the ATM provider’s support for help
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