What’s a Bitcoin ATM? The Ultimate Guide
In November 2021, when bitcoin reached an all-time high, the overall market cap of the cryptocurrency was equal to 3% of the world’s money.
When it comes to global finance, bitcoin is a major player, whether we’re going through a bull market or sitting in a bear. While most of 2022 has been marked by a harsh bear market, that often poses the best time to buy.
If you’re new to bitcoin, there are a few different ways you can buy some. One of the easiest is by using a bitcoin ATM. What is a bitcoin ATM?
It’s the only way you can buy bitcoin using cash. It’s safe, it’s fast, and there’s one near your home. Keep reading below to learn why bitcoin ATMs are important and how to use a bitcoin ATM today.
What Is Bitcoin?
Bitcoin is the world’s first cryptocurrency. It launched in 2009, and the original founder is still unknown today.
Bitcoin leverages cryptography to create a super secure financial network that doesn’t rely on banks or financial institutions. Instead, it’s a peer-to-peer currency.
As a decentralized currency, it’s not subject to one particular government, banking institution, or country. No one can make it go away, ban it, or devalue it through inflation.
This makes it a particularly attractive investment in times when governments are inflating fiat currencies at alarming rates like the US has been in recent years.
Of course, bitcoin and all other cryptocurrencies aren’t perfect. Their value is more volatile than any other investment class. But the returns are unmatched for the patient investor.
Those who bought bitcoin years ago for pennies on the dollar could’ve sold at the all-time high of $68,000 for some unheard-of ROI.
Benefits of Buying Bitcoin
So why should you buy bitcoin? There are a few reasons people and institutions globally are stocking up on bitcoin.
Many buy it as an investment. They believe that bitcoin’s value is going to rise over time, as it has over the past decade. They plan to either keep it forever or sell it once they can generate a healthy profit.
Some just want to hedge against inflation. Rather than store their cash in a bank account, where it loses 9% of its value thanks to inflation, they store it in crypto where they hope to see their funds increase in value.
Others buy bitcoin to use in their daily lives. Purchasing goods and services with bitcoin is becoming more and more common. These transactions are simple to complete and don’t require the use of a credit card or too many personal details.
This makes it especially attractive in philanthropy. For example, if someone was making a large donation to a non-profit and wanted to remain anonymous, it’s very difficult when paying via credit card, check, or even cash.
While the non-profit can keep the donor’s identity a secret, the non-profit itself knows who provided the funds.
With bitcoin, you can send donations that are truly anonymous. No personal details are required to send it, as a credit or debit card requires.
What Is a Bitcoin ATM?
Wondering how to buy bitcoin today, so you can start experiencing the many benefits of the original, decentralized, digital currency?
Bitcoin ATMs have sprung up in nearly every part of the country and in many parts of the world. Functionally, they are very similar to a bank ATM.
With a bank ATM, you insert cash to deposit into your bank account, or you withdraw cash from your bank account.
Bitcoin ATMs don’t connect to bank accounts. Instead, you insert cash and receive bitcoin. You can also sell bitcoin at an ATM and receive cash on the spot.
It’s a one-step process for turning cash into crypto and vice versa.
If you didn’t use an ATM to trade bitcoin, you would first have to send money to your bank account, then send that money to an online cryptocurrency exchange.
Once in the exchange, you could buy bitcoin or other cryptocurrencies.
Bitcoin ATMs make it possible to buy crypto without the need for a bank whatsoever.
How Bitcoin ATMs Work
Bitcoin is a digital currency. So when you put cash in, you won’t get anything but a receipt.
The bitcoin that you purchase goes to your virtual wallet. This is most often an app on your smartphone, designed specifically to hold crypto.
When you insert funds into the ATM, you’re actually tapping into a cryptocurrency exchange. You’ll be shown the live trading rate of bitcoin at that moment.
The rate fluctuates by the second, so make sure to confirm the rate before it jumps.
Aside from cash, the only thing you need to bring is your smartphone, so you can scan your wallet address and receive the deposit.
You’ll pay two fees when using a bitcoin ATM. The first is unavoidable, no matter where you buy bitcoin. It’s a network transaction fee.
Those who mine bitcoin and keep the blockchain secure receive payment for their service through transaction fees. This is often very low unless the network is very busy at the time you buy.
There are also bitcoin ATM fees. You’ll pay a small amount to the ATM operator in exchange for their service.
Again, even if you were to use an online crypto exchange, you would pay a commission on each purchase as well.
Using a Bitcoin ATM; Step by Step
Before showing up at an ATM location, you need to know how to use a bitcoin ATM. There are a few things you need to do beforehand, as well as specific items to bring.
Here’s what to expect when using a bitcoin ATM for the first time.
1. Find a Bitcoin ATM
The good news is that bitcoin ATMs are a dime a dozen. They’re everywhere in the US these days.
There’s probably one very close to your home. They are typically located near gas stations, grocery stores, and convenience stores. The only place you won’t find them is in front of a bank.
There are many companies that provide bitcoin ATMs, some more reputable than others. Byte Federal is one of the leaders in bitcoin ATMs across the US. You can shop here to see where the nearest ATM is.
2. Download a Crypto Wallet
Before visiting the ATM, you’ll need to have a mobile crypto wallet set up on your smartphone. Crypto wallet addresses are very long and complex.
With a crypto wallet app, you can scan a QR code at the ATM rather than spending five minutes typing in your wallet address.
There are many mobile wallet apps to choose from. You can use anyone. The bitcoin ATM provider may also have an app of its own to streamline the process.
If there’s one app that you want to have password protected, it’s a crypto wallet app. Make sure to keep it secure so no one can touch your crypto, even if you lose your phone.
3. Bring Your ID and Smartphone
When visiting the ATM for the first time, you’ll need both your smartphone and your photo ID card. The first time you use a bitcoin ATM, you’ll need to create an account and verify your identity.
This is true with every company, whether online or as an ATM provider, that sells cryptocurrency in the US. The process is called KYC (Know Your Customer) and helps to fight fraud, money laundering, and other financial crimes.
As you set up your ATM account, you’ll type in your phone number, scan your ID, and provide personal details. Your phone number will be used on each subsequent visit to verify your account, but you only need your ID the first time.
Next time you visit the ATM, type in your phone number. You’ll get a code sent as a text message. Type that code in on the ATM, and you’re ready to buy or sell bitcoin.
4. Purchase Bitcoin
Once you have accessed your account on the bitcoin ATM, you can start your transaction. ATMs function a bit differently depending on the brand. But in general, you’ll start by choosing to buy or sell, then select the appropriate cryptocurrency.
Bitcoin is the most common, but some ATMs offer additional cryptocurrencies like Ethereum.
You’ll then select how much you’d like to purchase (based on the number of dollars you’ll be inserting). You’ll insert your cash; then you’ll be shown how much bitcoin you’ll receive, at what rate, and with what fees.
If everything looks good, you can confirm the purchase. You’ll scan the QR code from your crypto wallet app to give the bitcoin a final destination.
Then, you’ll get a receipt. The crypto will show up in your wallet within the next few minutes.
It’s usually not instant because network activity fluctuates, and your transaction essentially has to “wait in line” before it’s finalized. Most bitcoin transactions are finished in under five minutes, but you don’t need to wait at the ATM until it hits your wallet.
5. Selling Bitcoin
The process of selling bitcoin is very similar, with one key difference. You’ll follow the same steps to access your account via text message.
Then, choose the option to sell, choose your cryptocurrency, and choose how much you’d like to sell or how much cash you wish to receive.
You’ll initiate the transaction from your mobile crypto app, as you have to authorize the funds to be sent from your wallet. You’ll use your phone’s camera to scan the QR code on the ATM, which is the receiving address.
Confirm the transaction, rate, and fees. Once complete, you’ll get a receipt. Keep this.
You might not get your cash right away. You have to wait for the transaction to complete on the blockchain. As mentioned earlier, this can take a few minutes – potentially up to 30, depending on how congested the network is.
Once it’s ready, you’ll get a text message. Head back to the ATM, insert your receipt, and receive your cash.
Because there is often a waiting period when selling crypto at an ATM, it’s best to do so at a location you need to visit anyways. For example, an ATM at a grocery store makes sense because you can shop while waiting for the transaction to finalize and collect your cash on the way out.
Are Bitcoin ATMs Safe?
Bitcoin ATMs are very safe to use. As long as you understand how crypto transactions work, there’s not much that can go wrong.
The one thing you do need to worry about is scams. Most scams involving crypto ATMs start to involve a conversation with a stranger, typically where they are asking for help for whatever reason.
If you notice this, it’s best to pass on by and use another ATM that day.
Don’t engage, don’t open your wallet app, and don’t send crypto to anyone you don’t know.
Storing Bitcoin for the Long-Term
Are you buying bitcoin that you plan to hold for a long time? It’s a smart move. Those with patience, who can hold for years, often make the biggest returns.
If so, you can take one extra step to keep your bitcoin as secure as possible. You can purchase a hardware wallet, which keeps your funds secure offline.
When funds are in a software wallet, they are typically always connected to the internet. This poses a threat, should your device ever fall to scams or malware.
The safest place your funds can be kept is a hardware wallet. These little devices plug into a computer when you need to use them. To remove crypto from a hardware wallet, you need to plug it in, type a passcode, and press physical buttons on the hard drive to confirm each transaction.
It makes it impossible for anyone to steal or siphon your crypto without having your hard drive in hand, as well as knowing your password.
You can get a good hardware wallet for less than $80. It’s an affordable tool that can keep your investment safe, no matter how large or small.
The Best Type of ATM
So what is a bitcoin ATM? It’s just like a bank ATM, but better, because you are buying a decentralized currency that doesn’t rely on middlemen like banks.
They are easy to use and make it quick to convert cash to crypto, and vice versa.
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