What are and how do the Bitcoins ATMs work?

When you start buying Bitcoins, the usual procedure is to register on an exchange platform, making an identity verification and then providing funds by card or bank transfer to purchase Bitcoins. However, in recent years, companies in the industry have been offering a network of ATMs (Automatic Tender Machines) where you can buy and sell Bitcoins and other classic cryptocurrencies.
Source: criptotendencias

What are Bitcoins ATMs?

These are machines similar to bank machines in which Bitcoins and other cryptocurrencies can be bought and sold preferably using cash. They are also called BTMs (Bitcoin Tender Machines). 

Since the first Bitcoin ATM was installed in the Canadian city of Vancouver in 2013, many years have passed since then and BTMs have proliferated around the world as more and more users have needed this service.

Source: bitcoinist

How do BTMs work?

Obviously there are many models of BTMs but their operation is very similar for both the purchase and sale of bitcoins, and the two operations are done with cash in both cases similar to the conventional cash machines. In this case the mobile phone is essential to be able to receive or send bitcoins after scanning the Qr code that corresponds to the bitcoin address both to receive and to send them. If the scan is not done, it would be very difficult to copy the address hash (the alphanumeric code of the BTC wallet address) by typing the characters.

The BTC ATM or BTM is connected online to a specific cryptocurrency exchange, which allows them to withdraw the crypto funds to be sent to the user's wallet after the cash has been deposited in the machine, and also to send bitcoins to the exchange's deposit wallet and then release the cash from the slot in the machine enabled for this purpose. There are cases in which the cryptocurrencies are stored in the device itself as well as a specific amount of cash exactly the same as a conventional cash dispenser.

How can we withdraw or send money in a Bitcoin ATM?

Basically, making a purchase of bitcoins, which would be similar to depositing money, or making a sale of bitcoins, which would be similar to withdrawing money from the cash machine or BTC ATM.

The following is a brief explanation of the procedures for selling or buying BTCs or other cryptocurrency.

Procedure for selling BTCs using a BTM

So if you want to sell BTCs, the first thing to do is to select the amount you want to sell, then the machine shows a Qr code with your address either on the screen or on a printed ticket, then we proceed to scan the code and send the desired amount, so that when the device detects that they have been sent when consulting the blockchain, the machine releases the cash minus a commission for the service, which can be between 1% and 5% or even more depending on the amounts, so that the user are charged more when the amount is lower.

Procedimiento para comprar BTCs por BTM

Si por el contrario se desea comprar, primero seleccionamos la cantidad en moneda fiat que queremos convertir en BTC, a continuación se solicitará la introducción de los billetes, introducirá su dirección de BTCs para lo cual el cajera podrá escanear su código Qr donde esté codificada la dirección BTC del usuario. Una vez que se confirma este proceso que es correcto, la cantidad de bitcoins es enviada a la dirección provista y se imprimirá un ticket con la información de la operación realizada.

Buying and selling Bitcoins and other major cryptocurrencies can be as easy as entering or withdrawing money from an ATM and will soon become routine operations

How can you locate a Bitcoins ATM?

According to the latest count, there are currently more than 10,500 BTMs distributed worldwide, and there are applications and software, both mobile and web based, that allow us to locate geologically them in each country and city where they have been installed. One example is Coin ATM Radar which locates the BTMs closer to an user location and even knows what type of model the ATM is, as well as the commissions for selling and buying cryptocurrencies.

As it can be seen in the table of Bitcoins ATMs or BTMs by country showed at one side, Spain is in fifth place in terms of the number of ATMs with 111 locations, right after Austria, the United Kingdom, Canada and the USA, where there are more than 9,400 locations with BTMs.

This table shows the impact of each country on the need for this type of direct service so the user is able to buy or sell cryptocurrencies.

BTM rank by countries

The applications or websites work as directories that can give us all sorts of details about the following aspects apart from their location:

  • The cryptocurrencies that are available for both buying and selling as well as the operational limits,
  • The fees for both selling and buying are usually different,
  • The machine models that we can find,
  • The distance from the point we are or have been introduced,
  • and even a score on the service provided by the users.

Here is an example of the results that a search for Bitcoins ATMs in a specific area of the Spanish capital can produce:

BTM search

There are more than 10,500 Cryptocurrency machines or BTMs around the world, the vast majority of them are in the USA, Canada and Western European countries such as the UK, Austria and Spain

Security and identification

In many countries and as it ruled by anti-money laundering legislation, it is necessary to go through an identification process known as KYC (Know Your Customer), particularly in countries such as the USA and the UK. This requires data to be entered and may even involve scanning an identity card or passport. In other cases, by linking the mobile number, the data recorded in the phone utility contract is already available.

For the moment in Spain, most BTM cash dispensers do not require such identification, but when a proper legislation is passed about the cryptocurrency industry, it is likely that it will become obligatory. 

In conclusion, given the many advantages of buying and selling cryptocurrencies at a BTM or Bitcoin ATM, they will soon become more popular and common in places such as shopping centres, supermarkets and shops in many countries such as North America and Europe. The relative easiness and speed when making the transactions is one of the advantages of this system although commissions or margins may still be high since the cost of the machines represents a considerable investment.