How To

How Bitcoin ATM Works?

Bitcoin ATMS are basically internet machines which enable you to exchange Bitcoin for cash and vice versa. Most of these ATMs are bi-directional and allows you to purchase Bitcoin and at the same time, exchange Bitcoin for fiat currency. In some cases, Bitcoin ATM owners need you to have an account in order to make transactions on the ATM machine.

These kiosk machines are not like traditional ATMs and use the term simply as a buzzword. These are connected to the internet and allow the insertion of cash in order to vend out Bitcoin in the form of paper receipts. These look similar to conventional ATMs but the major difference lies in the fact that these are directly linked to a Bitcoin exchange instead of a bank account. Often times, these charge hefty transaction fees which may go up to 7%.

In simple words, Bitcoin ATMs allow users to purchase and sell Bitcoin for fiat currency. Nonetheless, there are a few things you should probably know about Bitcoin ATMs.

1. Bitcoin ATM is costly

The benefits of using Bitcoin ATMs come with a ‘price’. And this can very well be a hefty one, even though it is mainly determined by the amount you wish to purchase or sell. The average transaction fee is around 5%. This is because these kiosks themselves are costly to set up and the owner of the kiosk also needs to make a profit- hence the premium charges on Bitcoin transactions.

2. One cannot be anonymous

The rules and regulations of almost all the countries need you to verify your identity. Thus, you cannot remain anonymous and withdraw cash for BTC from such ATMs. These are essentially currency transmitting tools and come under the FinCEN rules. They have no choice but to comply with the KYC and AML policies.

3. Many Bitcoin ATMs run on QR codes

In case you want to buy Bitcoin, the ATM will initially request for money and then produce a QR code which includes the private key and the address where your BTC are held. This is essentially known as Bitcoin paper wallets.

4. Bitcoin ATM is good for tourists as well as the unbanked

Bitcoin ATMs come in really handy for travelers who need to exchange Bitcoin for a regional currency. Many citizens of developing countries are considered underbanked or even unbanked. This means they do not have access to contemporary financial services which are so easily accessible to people of developed countries. This is where Bitcoin ATMs can serve as a stepping stone to the world of modern financial services and allow users to send and receive money from all across the globe.

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