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Cryptocurrency ATMs are electronic kiosks that allow users to pay cash for cryptocurrency or sell cryptocurrency for cash on the spot. Also often called Bitcoin ATMs, cryptocurrency ATMs are popping up in nearly every U.S. state and internationally, with 14,000 ATMs operating worldwide as of 2021.
Unlike conventional bank ATMs, cryptocurrency ATMs don't connect to your bank account and many only allow you to withdraw funds. They can be a convenient way to buy cryptocurrency with cash, but their limitations may leave many buyers better off investing through an online exchange platform. Here's what you need to know.
How Cryptocurrency ATMs Work
Cryptocurrency ATMs connect to a digital ledger to produce blockchain-based transactions that send or receive cryptocurrency to your cryptocurrency wallet. The primary appeal of buying cryptocurrency at an ATM is that you can pay with cash, thus bypassing the need to connect your transaction with a traditional bank or financial institution.
Cryptocurrency ATMs can be unidirectional (one-way) or bidirectional (two-way). One-way cryptocurrency ATMs, which are more common, only allow cryptocurrency to be purchased. Two-way cryptocurrency ATMs also allow you to sell your cryptocurrency for cash.
Users typically provide the cryptocurrency ATM with their wallet address by scanning a QR code displayed in an app on their phone. Transactions are often limited to just Bitcoin, but some ATM operators support other popular digital currencies (or "altcoins") including Ethereum, Dash and LiteCoin.
How to Use a Cryptocurrency ATM
Cryptocurrency ATMs connect to a digital ledger, allowing you to buy digital currencies and deposit them into your cryptocurrency wallet. Altogether, the process of using one to buy or sell crypto can take as little as 10 minutes or as long as an hour.
Steps vary from provider to provider, but here's a general guide to buying cryptocurrency through an ATM:
- Sign up for a cryptocurrency wallet (if you don't already have one). You'll need to have a cryptocurrency wallet to buy or sell cryptocurrency through an ATM. If you don't already have one, you can set one up via an app or by using specialized hardware. Some ATM operators require you to sign up for a specific wallet app before you make a trade through one of their kiosks. This wallet is where the ATM will send your cryptocurrency.
- Locate a cryptocurrency ATM. You can find cryptocurrency ATMs near you through an online search. Bitcoin ATMs are commonly located in gas stations, convenience stores, cafes, downtown hubs and airport terminals.
- Follow the on-screen instructions. The kiosk screen will prompt you to verify your identity, typically through a text to your phone. The cryptocurrency ATM will then guide you through your transaction. To withdraw or deposit your funds, you'll link your cryptocurrency wallet by scanning a QR code within your wallet app or by entering a code.
- Wait for the transaction to complete. Cryptocurrency ATM transactions must go through a process of blockchain verification, which can take anywhere from 10 minutes to one hour. Once complete, buyers will see the funds in their cryptocurrency wallet and sellers will be able to receive the proceeds as cash.
Pros and Cons of Cryptocurrency ATMS
Cryptocurrency ATMs may be a convenient and secure way for some people to buy cryptocurrency, but they aren't without drawbacks. Here's a look at the key pros and cons of trading with a cryptocurrency ATM.
Cryptocurrency ATM Benefits
- Decentralized: Since the initial launch of Bitcoin, a core cryptocurrency goal has been to facilitate peer-to-peer transactions without the need to go through a financial institution. While buying digital currencies through an online broker will usually require you to have a bank account, cryptocurrency ATMs can allow everyone, including those without a bank account, to buy cryptocurrency.
- Private and secure: Cryptocurrency ATMs keep your transaction private and anonymous. And thanks to the blockchain technology that makes cryptocurrency possible, you can also feel safe that the transaction will be processed securely.
- Accessible: Cryptocurrency ATMs are one way to get started with cryptocurrency investing. Since they allow you to sign up for an account and link to a wallet app on your phone on the spot, they could serve as a convenient entry point into crypto trading.
Cryptocurrency ATM Drawbacks
- High fees: Cryptocurrency ATMs have high transaction fees, often ranging from 7% to as much as 20%. Coinsource, one of the most popular Bitcoin ATM operators, charges an 11% fee per transaction nationwide, for example. You can buy cryptocurrency at a lower cost through an online exchange.
- Limitations: Cryptocurrency ATMs don't offer all the same features online crypto exchanges do. Online exchange platforms have other perks ATMs lack: a diverse selection of altcoins, short settlement times, low transaction fees and the convenience of not having to leave your house.
- Risk of scams: Criminals may use cryptocurrency transactions to defraud victims because crypto offers an anonymous, hard to trace and often nonrefundable way for cryptocurrency scammers to steal your money. If someone pressures you to pay them by navigating to a cryptocurrency ATM and sending funds to their wallet, it's likely a scam. You should verify the legitimacy of a cryptocurrency ATM by seeking one out through an online ATM map search tool and looking up reviews of the operator online.
The Bottom Line
Cryptocurrency ATMs may be a convenient way to buy and sell digital currencies, and bypassing traditional banking may be a plus for those drawn to decentralized technology.
But cryptocurrency ATMs aren't necessarily more convenient than trading crypto through an online exchange. And they aren't an adequate replacement for the spectrum of online cryptocurrency investing platform offerings: easy buying and selling, the ability to exchange a diverse range of digital currencies, and a bird's eye view of your portfolio's overall value in one neat hub.