Before starting, If you don’t know how these ATMs work? here is our guide to learn how to use a Bitcoin ATM.
There are some benefits of using a Bitcoin ATM in particular situations.
- Travelers can avoid the high currency exchange rate while traveling aboard and live off using Bitcoin ATMs.
- Bitcoin ATMs can be used for remittance vehicles.
- These ATMs attracts people’s attention, so they are good for adoption and awareness.
- People without Bank accounts or looking to bypass traditional financial systems.
Bitcoin ATM market is growing fast, but they are not convenient for normal commercial activities. They are slow and takes a high transaction fee.
High Transaction Fee
One of the biggest problems with Bitcoin ATM is that ATM operators charge a ridiculous amount of fees. These transaction fees range from 5% to 20% based on the country you live in. A person can pay a 20% transaction fee happily if he/she is trying to launder the money 😃.
Here is a CBS article in which it says that Bitcoin ATMs charge an average transaction fee of 8.93 percent.
Here is a Bitcoin ATM ticket showing a 14.9% transaction fee.
Other than the high Transaction fee, these Bitcoin ATMs markup the Bitcoin price from 8–15% from the current market price. If you are buying Bitcoin from these ATMs, you are paying a high (5-20%) transaction fee on an (8-15%) marked-up price. This doesn’t make sense for normal commercial activities.
You can check the listing price on these ATMs on CoinATMRadar. For example, here is a list of Bitcoin ATMs in Newyork.
Almost all the Bitcoin ATM operators have to follow “Know your customer” and AML compliance. That’s why you need to register on Bitcoin ATMs before using it.
The ATM registration process often requires your Government-issued identity, mobile number, and photo. Once you put this information, the registration process also takes some time.
Because of this, many people hesitate to use these ATMs. It’s pretty strange for a currency that became popular for privacy reasons.
Scams are also a problem with Bitcoin ATMs. This is mostly because of the lack of awareness and public education.
A phone by a Government agency or Electric company asking you to send money and people went to the nearby Bitcoin ATM and inserted cash. Yes! This really happened.
In the case of Bitcoin scam, there is no victim recourse because Bitcoin and other cryptocurrencies are non-refundable, which means no one can reverse the transaction (Well, a 51% attack can, will talk about it some other day).
Most of the Crypto ATMs are most used by investors to get more bitcoin or having the experience to try a Bitcoin ATM.
Bitcoin ATMs are good for increasing public awareness, and the growing popularity of Crypto ATMs is excellent for crypto adoption. As the market will grow and technology will improve, we think these ATMs will be used widely.