Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
What Are the Pros and Cons of Bitcoin ATMs?
Jul 22, 2022
Almost 30% of Canadians have made the great choice to start using cryptocurrency. If you're one of them or are thinking about joining their ranks, using a Bitcoin ATM is one of the most accessible, simple, and secure ways to begin your journey.
These kiosks are ultimately enormously beneficial to crypto users, but it's important to have all the facts before booting up a Bitcoin ATM near you. Read on to learn the pros and cons of these machines and to get some information on when to use one.
The Basics of Crypto ATMs
Cryptocurrency ATMs are kiosks that you might find at several different venues in your area. These locations may include grocery stores and department stores. They also can almost always be found at banks.
Basically, if you can find a regular ATM in a specific location, you can probably find a Bitcoin one there as well. You can also locate them using kiosk locators online such as ByteFederal's website.
But what exactly is a Bitcoin ATM?
On the surface, these kiosks look like regular ATMs, but they perform different functions. Instead of letting you withdraw fiat currency from a debit account, they allow you to buy Bitcoin with fiat currency. When you insert cash into the machine, the corresponding amount of crypto funds will appear in your virtual eWallet.
You also can sell Bitcoin at these kiosks in exchange for cash. You just enter the amount of money that you want to withdraw and take the cash. The correct amount of crypto funds will just vanish from your eWallet, completing the sale.
What Are the Pros of Bitcoin ATMs?
One benefit of Bitcoin ATMs is that they're extremely accessible and easy to use. The kiosks are all over the country, but they also are extremely easy to perform transactions on. All you need is a photo ID, eWallet QR code, and some cash.
Scan your ID on the reputable ByteFederal kiosk. Then scan the QR code linked to the eWallet where you store crypto. This code usually is on a smartphone screen, but you can print it and scan a hard copy if that makes you feel more comfortable.
Think links your identity to your eWallet to ensure that you are who you say you are. It keeps you safe from unauthorized users getting into your account and clearing your funds.
At this point, you'll be prompted to insert cash. Follow the prompt and wait a few minutes for the corresponding amount of crypto to appear in your account. You can then log out of the machine and be on your way.
This easy transaction is a welcome shift from more challenging online exchanges. If you use a crypto exchange, you need to locate something reputable, look into its credentials, enter personal information, link your account, and wait to find a seller that meets your needs. You also would need to wait for about a week for funds to appear in your crypto wallet, which is inconvenient.
Speedy Transactions
Waiting for a week to get the Bitcoin that you buy is annoying since you can't spend it immediately. However, it also is risky when it comes to actually getting what you pay for.
If you buy Bitcoin online, even a direct exchange is risky. If you don't see your funds appear for a week, you won't know if you've been jilted. You also don't know if the other person accidentally sent funds to the wrong place and will be stressed out until you see the funds appear.
In addition, you have little recourse if you don't get the crypto you're owed. It's more challenging to complain to a stranger a week after the transaction than it is to call an ATM company 10 minutes after a transaction.
Bitcoin ATMs give you peace of mind with their immediate transactions. You can also instantly load funds onto a Bitcoin debit card or begin to make online purchases. This lets you make the most out of the crypto that you purchase.
More Control Than Alternatives
Another issue with online exchanges is the lack of control. Most exchange websites randomly pair up a buyer with a seller. You won't even know any information about the person that you're making a transaction with.
This can be stressful for many Bitcoin buyers since they have 0 control over the transaction. There's no way to confirm that the trader is trustworthy. There's no chance to even establish a baseline level of trust with a conversation.
Some people turn to direct exchanges to do this where they meet someone online and buy Bitcoin from them. However, this also isn't without its risks. You still don't actually know the person and whether they're trustworthy, so the stress is still partially there.
Bitcoin ATMs give you full control over who you buy from. You know that you're working with a reputable company assuming that the kiosk is clearly labeled. There's no need to worry about being jilted or running into security issues.
High-Level Security
Speaking of security, Bitcoin ATMs are extremely secure. They make you verify your identity before a transaction, ensuring that others can't steal your funds. However, they don't save any of the documents that you scan.
This means that in the unlikely event of a data breach, there will still be nothing for hackers to steal. The Bitcoin ATM network is also secured by encryption and firewall technologies to make penetration difficult for cybercriminals.
Perfect for On-the-Go Crypto Enthusiasts
When you travel abroad, exchange rates can be challenging to navigate. You also would need to find ATMs, pay conversion fees, and occasionally worry about foreign transaction charges on credit and debit cards.
This isn't the case for those who use cryptocurrency. If you like to travel, you can use cryptocurrency to avoid these fees and inconveniences. If you're traveling within the US and Canada, you can find crypto ATMs everywhere you go and buy Bitcoin with no frills.
Are There Any Cons of Bitcoin ATMs?
While Bitcoin ATMs are largely positive, there are pros and cons to them just as there are with any technology. Some disadvantages include:
- Transaction fees (about 9%-30% every time you use the kiosk)
- Harder to locate than traditional ATMs despite their accessibility
- Occasional errors and shutdowns, though no more than you would find with traditional ATMs
- Require an eWallet that is compatible with the machine
- Some are not reputable, though this is avoidable when you work with top providers like ByteFederal and seek out their machines
Besides the transaction fees, none of these cons present more problems than a traditional ATM would. Most of them are easily avoidable. You have the power to locate reputable kiosks, install an appropriate eWallet, and locate an ATM near you.
When it comes to fees, it's understandable that Bitcoin ATM providers use them to get compensation. However, fees are decreasing as demand for crypto grows. This con may be annoying, but it also likely is a short-lived disadvantage.
When Should You Locate and Use a Kiosk?
You can find a Bitcoin ATM whenever you need to trade cash for crypto or vice versa! There are no rules about when you should locate them. They're usually available during regular business hours at whatever venue you find them.
One good reason to locate a kiosk is when you want to perform more secure transactions. You can sign up for gambling sites online without giving out any financial information. You can make purchases from eCommerce vendors that you don't want accessing your banking data.
See: Decentralization and Resilience are Key to Bitcoin’s Value
The possibilities are limitless for users, but they also are vast for investors. If you like to invest and make money over time, you should find a Bitcoin ATM when you want to diversify your portfolio. This is a great way to get something that will accrue value over time so that you can sell it back for more money later.
Convert Cryptocurrency to Cash and Back
Crypto kiosks are emerging as one of the most secure and convenient ways to access Bitcoin. While they do have a few downsides, they're by a landslide the best option for buying Bitcoin. Now that you know when to find a Bitcoin ATM and make a withdrawal, it's time to get started.
Check out the "invest" tab on our home page to learn more about why Canadians - and worldwide consumers - should invest in Bitcoin. You'll get portfolio diversification tips and some hacks on how to make the most out of each investment. You also may be interested in our "build" section for some information on growing a business with crypto.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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