A Bitcoin ATM (BTM) is an ATM machine that lets you buy and sell Bitcoin (BTC), transfer Bitcoin (BTC) to someone else, and some even let you sell Bitcoin (BTC) and withdraw cash. Surprise!
A Bitcoin ATM is very similar to a traditional bank ATM, in that you can deposit and withdraw fiat money.
To buy Bitcoin,
- You put money into the BTM.
- You then enter or scan your cryptocurrency wallet address from your wallet app. Sometimes a QR code is used to make this easier.
- The BTM calculates any fees, converts your cash to a cryptocurrency of your choosing, and then sends the digital asset to your wallet.
To sell Bitcoin,
- You send Bitcoin from your digital wallet to the address provided as a QR code by the BTM
However, you only deposit money into a BTM when you’re interested in buying Bitcoin. Withdrawals of cash require you to first sell your Bitcoin.
Bitcoin ATMs, like their banking counterparts, are connected to a financial network.
In this case, the BTMs are connected to the Bitcoin network. The connection is needed in order to facilitate the buying or selling of BTC.
In the U.S., Bitcoin ATMs are federally regulated by FinCEN. the Financial Crimes Enforcement Network, which operates under the U.S. Department of the Treasury.
They monitor financial networks, including Bitcoin, for money laundering and other financial crimes.
While Bitcoin is often thought to be completely anonymous, if you want to use a BTM, you’ll need to give up some personal information.
In the U.S., at minimum, you’ll need to provide a mobile phone number if your transaction amount stays below a certain amount.
If you go above this amount, you may be required to provide an email address or a copy of a government-issued ID, such as a driver’s license or passport.
Most BTMs in countries that regulate financial markets, like the U.S., have a minimum purchase amount (USD $20) and daily purchase and withdrawal limits (USD $10,000).
The daily limits are put into place because of anti-money-laundering (AML) regulations.
The most important aspects of using a Bitcoin ATM are that you:
- DYOR on the company that owns the BTM. Don’t use the BTM if you haven’t researched the company to the point that you would trust it with your money
- Confirm the service fees charged by the BTM to complete your transaction. Service fees can range anywhere from 5% to 25% of the total transaction amount. If you want to buy USD $100 worth of Bitcoin, if could actually cost you USD $125 to do it at the BTM!
- Some BTMs let you use your bank debit card to buy Bitcoin. Again, DYOR on the company operating the BTM. There’s always a chance that the BTM has been compromised and could steal your bank account number and PIN.