Home > Learn > Are Bitcoin ATMs Safe? All You Need to Know About Bitcoin ATMs
ARE BITCOIN ATMS SAFE?
How to Buy Bitcoin Safely
Bitcoin popularity has continued to rise as more and more people are intrigued by it, but people may be wondering what they already know and what they should know about Bitcoin before diving in. One of the biggest questions you may be asking is: How do I get Bitcoin?
The answer is simpler than you think: a Bitcoin ATM. Now you may be wondering if Bitcoin ATMs are safe? Leon Luow, a Nobel Peace Prize nominee stated, “Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” Here’s a deep dive into what Bitcoin ATMs are and what you need to know regarding their safety and advantages.
What is a Bitcoin ATM ?
A Bitcoin ATM, sometimes referred to as BTMs, is an automated teller machine (ATM) that is connected to the internet and allows customers to buy and sell Bitcoin and other cryptocurrencies.
Similar to a regular bank ATM, customers will find a Bitcoin ATM to be a kiosk located in a variety of places. Bank ATMs allow customers to deposit cash or checks, withdraw money, or transfer funds between bank accounts.
With a Bitcoin ATM, you are only able to deposit cash, which then results in the purchase of cryptocurrency. (1) You can also sell Bitcoin through the Bitcoin ATM, but this still does not involve any sort of physical cash being taken out.
How Does a Bitcoin ATM Work ?
The way a Bitcoin ATM works is that it uses a QR code that is digitally connected to your Bitcoin wallet. If you have not already created a wallet, you’re able to get a paper wallet printed right there at the machine. Once connected to your wallet, you’re able to buy and sell Bitcoin right from the ATM.
These ATMs are connected to the internet, so all exchange rates displayed on the machine are current and change in real time. BTMs “connect to the bitcoin network and allow customers to purchase crypto coins with deposited cash”(2)
The Bitcoin ATM looks like a bank ATM. Once you’re standing in front of one, it will ask to verify your identity. Hermes Bitcoin ATMs allow your identity to be verified by inputting your phone number to which they send an SMS password which the machine will then prompt you for. This allows for optimal privacy and security.
The next steps are:
- Scan your QR code with your Bitcoin wallet address, which will connect you to your wallet.
- Enter what cryptocurrency you want to buy, whether it’s Bitcoin, Ethereum, or any other kind, along with the amount you wish to purchase.
- Feed your cash into the machine just as you would with a bank ATM.
- Confirm that the amount has hit your wallet and then you’re good to go.
Selling at the ATM
Selling cryptocurrency from an ATM is only slightly different from purchasing. Instead of feeding any cash, you’ll be sending Bitcoin from your wallet to the QR code associated with the BTM. Some BTMs do not have this feature.
What Do I Need to Withdraw from a Bitcoin ATM ?
Assuming the BTM you are at allows you to sell Bitcoin through it, in order to withdraw from a Bitcoin ATM, you only need a few things. These things include your digital wallet, your mobile phone, and the cryptocurrency you wish to exchange.
Sending Cash Safely Through a Bitcoin ATM
Bitcoin ATMs allow a safe and easy way to transfer funds from your wallet to someone else’s. All you need to do is insert the amount you wish to send and input the recipient’s digital wallet address. Then you can follow the easy-to-understand instructions on the kiosk to ensure the funds have been transferred.
It’s a quick and private process. Former Chairman of the Federal Reserve has stated that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
Bitcoin ATM Fees
Bitcoin ATMs do charge a fee that is added to the price of your purchase by the machine. Each ATM will implement its own charge for each transaction that is not a flat fee, but instead a percentage of the transaction itself. The average fee percentage is around 9%.
How Safe Are Bitcoin ATMs ?
Since Bitcoin ATMs are connected to the internet, you may wonder how safe and secure these ATMs are. Your digital wallet is secure through encryption and is protected by passwords and legal identification.
Due to your digital wallet being secure, using a Bitcoin ATM is safest because cryptocurrency can only be sent if you share the right passwords and security credentials, such as a QR code with someone. Most importantly, unless a hacker has your digital wallet key which allows them access, they cannot access your wallet, which ensures more security when using a crypto BTM.
While there are always threats of malware and hacking of Bitcoin ATMs, those companies that make BTMs are confident that there is no need for customers to worry.
It’s important to note that, “Bitcoin ATMs don’t have capabilities enabling the dispensing of cash or the transfer of cryptocurrencies without a payment made first,” (3 ) therefore malware technology threatening BTMs has too many technical inconsistencies.
Bitcoin ATMs are equipped with technology that protects against hardware and software malfunction. In addition, the technology that supports cryptocurrency, known as the blockchain, is virtually impossible to tamper with.
Are Bitcoin ATMs Anonymous ?
Anonymity is a major factor in the security of crypto ATMs. BTMs ensure that the transaction is done through an anonymous exchange. Crypto currencies like Bitcoin are largely anonymous; therefore, Bitcoin ATMs uphold this anonymity when being used. Smaller transactions don’t require too thorough of a verification process, which heightens anonymity that much more.
Bitcoin ATM Compliance
The Financial Crimes Enforcement Network (FinCEN), which is the government agency that oversees and safeguards the financial system, considers Bitcoin ATMs to be an MSB.
An MSB is a money services business and all MSBs must be registered with FinCEN. Bitcoin ATM owners and operators must be compliant with anti-money laundering regulations put forth by FinCEN.
One of these regulations is a set withdrawal limit. This withdrawal limit also creates another layer of security for the customer. Bitcoin ATM operators strive to uphold a safe, trusting and convenient relationship with their clients.
Hermes Bitcoin addresses the four pillars set forth by FinCEN, including:
- Creating internal controls
- Ongoing training for personnel
- Designating a compliance officer
- Annual independent reviews or audits of the anti-money laundering program
Hermes has phone support and contact form submissions to provide customers the best service in the industry.
Why is a BTM The Most Secure Way to Buy Crypto?
Aside from the safety and anonymity of Bitcoin ATMs, there are a number of other pros to cryptocurrency in general and using Bitcoin ATMs. The speed at which the transaction happens is a top pro.
When you use a traditional cryptocurrency exchange online, there are waiting periods and sometimes transactions can take a good portion of time to be completed. BTMs are able to safely start and finish the transaction in just a few minutes.
The availability of Bitcoin ATMs is largely increasing, which makes them accessible. Statistically speaking, “In 2019, the number of bitcoin ATM installations across the globe exceeded 6,000” (4) which means that the amount of Bitcoin ATMs will continue to increase. As more BTMs are installed all over, more people will be drawn to them and compelled to use them. Finding a Bitcoin ATM near you will become increasingly easier.
The thought of learning something as new and advanced as cryptocurrency may be intimidating to some people, especially those who are not as technologically savvy. Bitcoin ATMs give these people a familiarity that may push them to learn about it and get involved with the blockchain.
While different, a Bitcoin ATM resembles a regular bank ATM enough for people to understand it well. The BTMs give people who are new to the technology something they can see that they have seen before, even if the general machine function is different.
Where to Find Bitcoin ATMs
Bitcoin ATMs are a private way of doing business. Ensure you are using a compliant and established ATM such as Hermes Bitcoin. Finding a Bitcoin ATM is as simple as doing a Google search.
Hermes Bitcoin makes it even easier to locate Bitcoin ATMs in Los Angeles and Orange County with locations spanning from Northridge down to Anaheim, you can find the one nearest you using their Bitcoin ATM locator. All you need to do is:
- Input your current location
- Find the ATM shown that is closest to you
