Over the past few years, Bitcoin and crypto-focused automated teller machines (ATMs) have risen to popularity with the United States, Canada, Australia, Spain and Poland having the highest number of Bitcoin ATMs in the world as per the data from Coin ATM Radar.
Multiple Bitcoin ATM providers are trying to expand operations as the crypto space is recovering from its bearish phase in 2022. Interestingly, Bitcoin Depot, a Bitcoin ATM company founded in 2016 has become the first ever crypto firm of its kind to go live on the Nasdaq, making history.
What are Bitcoin ATMs?
Bitcoin ATMs, also known as Bitcoin kiosks or BTMs, are physical machines that allow individuals to buy or sell Bitcoin and sometimes other cryptocurrencies using cash or debit/credit cards. These ATMs function similarly to traditional bank ATMs, but instead of dispensing or accepting fiat currency, they facilitate transactions involving cryptocurrencies.
How do Bitcoin ATMs Work?
Here’s a general overview of how Bitcoin ATMs work:
Verification: Users are typically required to verify their identity through a KYC (Know Your Customer) process, which may involve providing personal information and sometimes presenting identification documents.
Wallet setup: Users need to have a cryptocurrency wallet to store their purchased Bitcoin. Some Bitcoin ATMs generate a new wallet for users, while others require users to provide an existing wallet address.
Transaction selection: Users can choose between buying or selling Bitcoin. Buying transactions require users to deposit cash or use a debit/credit card, while selling transactions involve sending Bitcoin from their wallet to the ATM’s address.
Transaction processing: Bitcoin ATMs communicate with cryptocurrency exchanges to determine the current exchange rate and execute the transaction. The ATM will calculate the amount of Bitcoin to be purchased or sold based on the user’s input and the current market rate.
Confirmation and receipt: Once the transaction is processed, the Bitcoin ATM generates a receipt or sends a confirmation to the user’s email or mobile phone. The receipt typically includes transaction details such as the amount of Bitcoin purchased/sold, exchange rate, fees, and wallet addresses.
It is also important to note that Bitcoin ATMs may have different fee structures, which can include transaction fees and exchange rate markups. These fees can vary depending on the operator and the specific ATM location.
Benefits of Bitcoin ATMs
Accessibility: Bitcoin ATMs make it easier for individuals to access and acquire cryptocurrencies, especially for those who may not have access to traditional online exchanges or banking services. ATMs provide a physical and intuitive interface for buying and selling cryptocurrencies.
Convenience: Bitcoin ATMs provide a convenient way to buy or sell Bitcoin quickly. Users can complete transactions in real-time, avoiding the potentially lengthy process of setting up online exchange accounts or waiting for transactions to be processed.
Anonymity and Privacy: Bitcoin ATMs often offer the option to complete transactions without the need for extensive personal information or identity verification. This appeals to individuals who value privacy and wish to maintain anonymity in their crypto transactions.
Instant Transactions: Bitcoin ATMs allow users to instantly convert cash into Bitcoin or Bitcoin into cash, providing immediate access to funds without waiting for bank transfers or withdrawal processing times.
Cash-based Transactions: Bitcoin ATMs offer the ability to buy Bitcoin with cash, catering to individuals who prefer using physical currency over digital payment methods.
Financial Inclusion: Bitcoin ATMs can play a crucial role in providing financial services to the unbanked or underbanked populations, allowing them to participate in the crypto economy and access digital assets.
Education and Awareness: Bitcoin ATMs act as tangible touchpoints that introduce cryptocurrencies to individuals who may not be familiar with them. They raise awareness and serve as educational tools for those interested in learning about cryptocurrencies and their usage.
Integration with Traditional Financial Systems: Some Bitcoin ATMs provide the ability to link crypto wallets to traditional bank accounts, enabling seamless transfers between digital assets and fiat currencies.
Diversification of Crypto Services: Bitcoin ATMs are evolving to support other cryptocurrencies beyond Bitcoin, offering users access to a wider range of digital assets and promoting the adoption of alternative cryptocurrencies.
Entrepreneurial Opportunities: The deployment and operation of Bitcoin ATMs create entrepreneurial opportunities for individuals and businesses interested in becoming operators or hosting ATMs at their establishments.
Disadvantages of using a Bitcoin ATM
Higher fees: Bitcoin ATMs typically charge higher fees compared to online cryptocurrency exchanges. The fees can vary significantly between different machines and operators, but they are generally higher to cover the costs of operating and maintaining the physical ATM.
Limited functionality: Bitcoin ATMs usually offer a limited range of services compared to online exchanges. While you can typically buy and sell Bitcoin, the options for other cryptocurrencies may be limited. Additionally, advanced trading features such as limit orders or margin trading are not usually available through Bitcoin ATMs.
Lower liquidity: Bitcoin ATMs may have lower liquidity compared to popular online exchanges. This means that the volume of available Bitcoin for buying or selling may be limited, leading to potentially higher prices or lower selling rates.
Security risks: While Bitcoin ATMs aim to provide secure transactions, there is still a risk of fraud or hacking. Some malicious individuals may tamper with Bitcoin ATMs or use phishing techniques to steal user information. It’s important to ensure that you are using a reputable and secure Bitcoin ATM.
Potential for technical issues: Bitcoin ATMs are physical machines, and like any technology, they can experience technical glitches or malfunctions. This can result in transaction failures, delays, or loss of funds. It’s crucial to double-check the details of your transaction and contact customer support if any issues arise.
Geographical limitations: Bitcoin ATMs may not be available in all areas or countries. The accessibility of Bitcoin ATMs varies significantly depending on your location. If there are no Bitcoin ATMs nearby, you may need to travel to access one, which can be inconvenient and time-consuming.
The First Ever Bitcoin ATM Company Went Public on July 3, 2023
Bitcoin Depot displayed spectacular performance as on its opening day and the stock of the company rose by more than 12%. The Bitcoin ATM claimed to be well-positioned with the largest market share in North America having 6,440 kiosk locations in the region. The Atlanta, Georgia-based company currently has a market capitalization of $110 million.
Bitcoin Depot debuted on Nasdaq following a merger valued at $885 with special purpose acquisition company (SPAC) GSR II Meteora (GSRM) in August 2022. The stock of the company, which has around 20% of the entire Bitcoin ATM market share, trades under the ticker “BTM.”
It is also crucial to mention here that the crypto ATM operator which was once anonymous is now regulated by the Financial Crimes Enforcement Network (FinCEN) in the US.
Biggest Players in the Game
With Bitcoin Depot going live on Nasdaq on July 3, 2023, there are other firms that might soon file for public listing on a stock exchange in the United States and across the world. Here are some of the leading Bitcoin ATM operators worldwide:
CoinCloud: Recently filed for bankruptcy but is currently only surpassed by Bitcoin Depot in terms of the number of Bitcoin ATMs operated.
CoinFlip: Headquartered in Chicago, CoinFlip was founded in 2015 by Daniel Polotsky.
Bitstop: One of the earlier Bitcoin ATM operators founded in 2013 and is based in Miami, US.
RockItCoin: A crypto ATM operator providing privacy-centric crypto ATMs, online purchases, and OTC trading.
Coinhub: ATM operator that recently launched a mobile wallet with 2FA and biometric login.
Athena Bitcoin: Installed its first Bitcoin ATM in Chicago in 2015 and also the first ATM in South America in 2018.
Byte Federal, Inc.: Crypto ATM operator which is known for providing the highest daily limits.
Localcoin: Toronto-based crypto ATM operator which has more than 800 kiosks operating globally.
Cash2Bitcoin.com: Bitcoin ATM operator whose kiosks are open 24/7 and operators in compliance with federal authorities.
15 Ways in Which the Crypto Space Benefit from Bitcoin ATM Firms Going Live on NASDAQ
Depending on the market performance and the regulatory clarity in the crypto sector, Bitcoin ATMs going live on Nasdaq and other stock exchanges can have several benefits:
Increased visibility and credibility: The listing of Bitcoin ATM firms on a major stock exchange like NASDAQ provides increased visibility and credibility to the entire crypto industry. It demonstrates that cryptocurrencies and related services are becoming mainstream and recognized by traditional financial markets. This can attract more institutional investors and traditional businesses to the crypto space.
Enhanced accessibility to cryptocurrencies: Bitcoin ATMs play a vital role in making cryptocurrencies more accessible to the general public. By going live on NASDAQ, Bitcoin ATM firms can potentially expand their operations and increase the number of ATMs globally. This would allow more people to conveniently buy and sell cryptocurrencies using cash, thereby promoting adoption and increasing liquidity in the crypto market.
Regulatory compliance and investor protection: Being listed on NASDAQ requires companies to meet certain regulatory standards and comply with reporting requirements. This can bring a higher level of transparency and regulatory oversight to Bitcoin ATM firms. It can also provide investors with greater confidence, as they can rely on the regulatory framework and investor protection measures associated with companies listed on a reputable stock exchange.
Market validation: The listing on a reputable stock exchange like NASDAQ validates the viability and potential of the Bitcoin ATM industry, attracting more entrepreneurs and investors to enter the market.
Market expansion and innovation: The listing of Bitcoin ATM firms on NASDAQ can attract more capital into the crypto space, enabling these companies to expand their operations, invest in research and development, and drive innovation. This can lead to the development of more advanced and user-friendly ATM technologies, as well as the integration of additional cryptocurrencies and services. Overall, it can contribute to the growth and maturation of the crypto industry.
Integration with traditional financial services: The listing of Bitcoin ATM firms on NASDAQ can foster collaboration between the crypto space and traditional financial institutions. It can encourage partnerships, acquisitions, or investments from traditional banks, payment processors, or other financial service providers. This integration can lead to the development of hybrid financial solutions that bridge the gap between traditional banking and the crypto ecosystem.
Ecosystem development: The success of Bitcoin ATM firms on NASDAQ can stimulate growth and development within the broader crypto ecosystem, attracting entrepreneurs, developers, and businesses to build complementary products and services.
Enhanced user experience: With additional resources, Bitcoin ATM firms can invest in improving user interfaces, customer support, and overall user experience, making it easier and more convenient for individuals to interact with cryptocurrencies.
Employment opportunities: The growth of Bitcoin ATM firms can create job opportunities within the crypto industry, contributing to economic development and attracting talent to the space.
Education and awareness: The listing on NASDAQ can serve as an educational opportunity, raising awareness about cryptocurrencies and their potential benefits among a broader audience.
Increased competition and innovation: The presence of Bitcoin ATM firms on NASDAQ can stimulate competition and innovation within the crypto ATM sector, resulting in better products, services, and pricing for users.
Increased liquidity for altcoins: The expanded reach and liquidity of Bitcoin ATMs can benefit altcoins by providing more avenues for users to acquire and sell these digital assets.
Support for a broader range of cryptocurrencies: Bitcoin ATM firms may expand their offerings to include a wider variety of cryptocurrencies, allowing users to buy and sell a diverse range of digital assets.
Integration with decentralized finance (DeFi): Bitcoin ATM firms could explore partnerships or integrations with DeFi platforms, enabling users to access decentralized financial services directly from ATMs.
Creation of a Global Operation: Since blockchain technology is available globally without any boundaries, it will become easier for people to initiate transactions and send money without any hurdles that the traditional banking industry presents. If all the ATMs are interconnected, it will become a lot easier for crypto users to send and receive payments via Bitcoin ATMs.
Bitcoin ATMs have been used since the beginning of the crypto industry more than a dozen years ago. Additionally, Bitcoin Depot being the first firm to go live on Nasdaq is the first towards the adoption of crypto ATMs and their acceptance in the United States and around the world. While regulators have pointed out that the BTC kiosks might be used for money laundering or for scamming investors, the integration of KYC measures will soon drive out these concerns.
However, the crypto sector has yet to grow but a Bitcoin ATM operator being officially allowed by regulators to be traded on a major stock exchange followed by an incredible first-day performance confirms the interest shown by customers and investors in the developing crypto ATM industry.