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What to Know Before Using Bitcoin ATMs

Guest Post | Aug 1, 2022

Bitcoin and bank atm - What to Know Before Using Bitcoin ATMs

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.

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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.


NCFA Jan 2018 resize - What to Know Before Using Bitcoin ATMsThe 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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