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 to Know Before Using Bitcoin ATMs
Guest Post | Aug 1, 2022
Before you buy Bitcoin (BTC), your first step is to create a crypto exchange account, along with buying or downloading a crypto wallet for storing your cryptocurrency. As cryptocurrency and the tech associated with it have developed, there's another easy and convenient way of buying Bitcoin, which doesn't involve a computer or cryptocurrency exchange. This method is using a Bitcoin ATM.
What Is a Bitcoin ATM?
Bitcoin ATMs (or crypto ATMs) are cryptocurrency kiosks where people deposit cash (fiat currency) or use credit cards to buy Bitcoin. Some ATMs support other cryptocurrencies. Bitcoin ATMs aren't like fiat currency ATMs where you can manage your account's funds. They're simply tools through which you can buy Bitcoin without requiring users to create an account. You'll just need to complete a few steps as directed in the ATM and complete the transaction.
You can find these Bitcoin ATMs or kiosks in your local areas, such as grocery stores, department stores, or local banks. If you don't see one in your local area, you can use an online locator to find one within your region. While Bitcoin ATMs are not a growing part of cryptocurrency, their use still strikes many people as strange.
How Do Bitcoin ATMs Work?
You can't withdraw fiat currency from a cryptocurrency ATM as you would from your debit account. They only allow you to buy Bitcoin using fiat currency or credit card or sell your crypto funds for cash. You insert cash or credit card into the machine and follow a few steps, and then it displays the corresponding amount of Bitcoin (or crypto) funds in your crypto or virtual eWallet.
In the Bitcoin ATM, there's a QR code that will prompt you to download a specific crypto wallet that the ATM machine supports. Coinbase crypto wallet is popular for many Bitcoin ATMs, but you can choose a wallet from the list in the machine. You can also sign in to your Netcoins eWallet here if you already have one.
The wallet you created will generate a particular Bitcoin address where the ATM will now send your purchased coins after you confirm and complete the transaction. Generally, Bitcoin ATMs are intuitive for anyone; if you've used an ATM before, you'll just follow instructions and steps on the screen.
See: Payments without banks goes mainstream with Twitter on Bitcoin Lightning Network
If you need cash, you also can sell your Bitcoin funds at the ATMs in exchange for cash. You'll enter the given amount of fiat currency you want in figures and take cash. The amount of crypto (Bitcoin) funds deducted will vanish from your eWallet, after you complete the sale.
Are Bitcoin ATMs Safe?
Bitcoin ATMs are potential targets for scammers, fraudsters, cybercriminals, and money launderers to defraud unsuspecting victims. Due to their lack of identification verification, it's easier to anonymously and instantly convert fiat currency to Bitcoin or other cryptocurrencies. This is both a risk to money laundering and complicates anti-fraud investigations of money launderers.
Scammers might also use the Bitcoin ATMs as their payment points for goods or services advertised on eBay or craigslist and sold at much lower prices. They may lure buyers to private communication, instruct them to pay via Bitcoin ATMs then fail to deliver the goods.
Endnote
Overall, Bitcoin ATMs are a great way of buying Bitcoin if you want to buy in a private manner and without going through an exchange. However, you need to make sure there's one in your locality, along with being aware of scammers and money laundering schemes.
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