Site icon Unocoin Blog

How do Bitcoin ATMs work?

As Bitcoin gains prominence, the number and use of Bitcoin Teller Machines (BTMs) have considerably grown.

Bitcoin ATMs, also called Bitcoin Teller Machines (BTMs), aren’t really ATMs in the true sense of the term. Rather, these are physical centres where you can buy Bitcoins with fiat money and with some machines, sell Bitcoins too. Bitcoin ATMs are meant to offer access to Bitcoins to those who are not a part of the banking system.

Bitcoin ATMs also cater to the underbanked and the less tech-savvy people. Some just prefer the extra privacy that some BTMs offer when it comes to buying Bitcoin. Estimates peg the number of Bitcoin ATMs all over the world at around 1600, an exponential rise from just two years back when the number hovered around 450.

How do you use a BTM?

Buying Bitcoin

Once you’ve bought Bitcoins, you can now use them or just stay invested. The price of Bitcoin at these machines is typically 5–10% higher than the present going rates on exchanges due to added expenses such as rent, machine maintenance, regulatory requirements, charges, and volatility. Some still prefer to use these machines due to the ease of access or in the case of machines that don’t require an ID, absolute privacy.

Selling Bitcoin

The selling price offered at BTMs is also 5–10% less than the exchange rates.

The transaction process

The BTMs save Know Your Customer (KYC)/Anti Money Laundering (AMC) details, scrutinise them and report suspicious activity to the regulatory authority. After obtaining these details, the machines allow you to buy Bitcoin. The operators buy Bitcoin from exchanges and allow BTM users to withdraw Bitcoin from their wallets. One can buy as much Bitcoin as the operator holds.

Operating a BTM

In most jurisdictions, operating a BTM is a challenging task. BTM operators have to meet stringent regulatory norms. In the United States, operators have to register under the federal financial crimes enforcement network as well as obtain state-specific money transmitter licence.

Exit mobile version