Bitcoin. Cryptocurrency. Blockchain. Nodes. Altcoin. Digital wallets. Litecoin. Ethereum.
The world of bitcoin and cryptocurrency uses a language that seems to be straight out of a science fiction movie. And for both consumers and those in the ATM industry that have not yet ventured into this world of cryptocurrency, just trying to understand the whole process can seem like something from another galaxy.
How do you explain a currency that is not physical but digital and that requires a bank but can give you immediate buying power? How is the currency stored in a wallet that’s not a real wallet but a digital one?
Although talking through it may seem like something conjured up from the mind of author Steven King or the “Star Trek” writers, the truth is Bitcoin ATMs are all over the United States and in countries around the globe. But how is this currency gaining such momentum, who wants it and how did it come to be?
It all started with Bitcoin
Approximately 12 years ago, Bitcoin came on the payments scene but didn’t exactly cause a major stir.
“Bitcoin is an innovative payment network and a new kind of money,” according to Bitcoin.org, which means that it’s a decentralized digital currency and doesn’t require a central authority or bank. It actually enables a new payment system but one that uses completely digital money.
Without a central bank, Bitcoin can be sent from user to user, which means users power the payment network. Bitcoin transactions are verified through network nodes, which uses cryptography or a specialized form of encryption to keep data confidential. The cryptography is recorded in a public distributed ledger — a blockchain — a consensus of shared digital data that can be spread across multiple sites.
Bitcoins were created as a reward for a process known as mining, or record-keeping done through the use of computer processing. The beauty of Bitcoin is it can be exchanged for other currencies, products and services.
“Cryptocurrency offers a lot of opportunities for people that don’t have access to traditional financial services, like banks,” said Brandon Mintz, CEO and president of Bitcoin Depot, a Bitcoin ATM provider based in Atlanta.
“Our kiosks allow them to essentially self-bank through the digital wallet on their phone, by turning their cash into cryptocurrency which can be used to transfer money, pay bills or invest,” he said in a press release.
Since the pandemic, Bitcoin ATMs and cryptocurrency in general have caused a great deal of buzz in the ATM industry. Digital currency prior to 2020 was not as well recognized with the exception of investors, but during the COVID-19 pandemic, cryptocurrency not only gained recognition in the payments industry, but took a strong foothold as well.
“Digital Currency Machines provide more options for consumers: more currencies, more functionality and more familiarity,” said Chris McAlary, CEO of CoinCloud, a Bitcoin ATM and digital currency machine provider based in Las Vegas.
CoinCloud machines carry over 30 digital currencies with buy-and-sell functions at each location have an easy interface, McAlary said in an email interview with ATM Marketplace.
“All of these things have helped drive industry growth, and that growth is based primarily on consumer demand,” he said. “As various digital currencies enjoyed mainstream acceptance, digital wallets saw mass adoption and consumer behavior changed and retailers responded to fill that need. And as demand grew exponentially, more machines entered into mainstream retail.”
And for people like McAlary, who were among the early digital currency pioneers, it’s satisfying that Bitcoin ATMs and DCMs are finally getting the recognition they deserve.
Betting on digital currency
In 2014, long before many of the current digital currency players were involved in Bitcoin, CoinCloud put its first machine on the Las Vegas strip.
“I had a vision and a belief that someday everybody would use digital currency in their daily lives, McAlary said. “Not just bitcoin, but also all the other innovative coins and tokens that people use for savings, investments, payments and more.”
And that vision is coming true — PayPal, Square, Robinhood, Facebook, Amazon, Tesla and so many other major corporations are jumping on the trend.
“So, it’s pretty cool to be able to say that we saw this potential, way back then,” McAlary said. “We knew it was only a matter of time, and today we see digital wallets natively installed on every mobile device. That’s a great sign indicating mainstream adoption.”
As Bitcoin continues to hit record highs and other digital currencies gain momentum, consumer demand continues to increase for Bitcoin ATMs and DCMs. By installing machines where people have easy access, thereby lowering the barriers to entry, digital currency is coming right into the hands, or digital space as the case may be, to the masses.
With digital wallet apps giving users a new way to access money and handle personal finances, Bitcoin ATMs are transforming the way people access cash in the mobile wallet economy.
Coming soon to a retail outlet near you
Cash2Bitcoin CEO Ayman Rida has watched the industry grow since the company launched in 2017 in Detroit. His team has installed Bitcoin ATMs in 10 states, and Rida believes one of the draws of Bitcoin ATMs is its seamless user experience.
“With cash and checks a transaction could take days going through a chain of compliance,” Rida told ATM Marketplace. “Cash has to be backed by a central authority, Bitcoin doesn’t. That’s what makes it more attractive than cash. Even if you deal with an exchange, the approval process takes a while and you don’t have access or control of the money for five days. When a customer uses a Bitcoin ATM, there is no delay waiting for compliance. We do the compliance right on the spot so the customer gets an automatic transaction in the moment and they get the coins in just minutes.”
Traditional ATM transactions go through networks known as rails, which could include Star, Pulse, Visa and Mastercard, and depending on what country you are in requires varying degrees of regulation.
“Bitcoin is not regulated by any of the ATM networks so the entire process is smooth and seamless, said Rida, who thinks the Bitcoin ATM is a benefit not only for customers but for independent sales operators and merchants as well. “With traditional ATMs, the merchant collects money on transactions so if they don’t get a lot of transactions, they don’t make a lot of money. With Bitcoin, there’s a lot of ways to get money.”
McAlary agreed, pointing out that in exchange for letting Bitcoin ATMs and DCMs use 1.9 square feet of floor space, merchants benefit through targeted foot traffic, repeat customers, increased revenue and a monthly rental fee.
“And we make the entire process easy,” Rida said. “Our partners are not responsible for compliance, we take care of it and they have access to an online portal so they can access their own machine and sales data for that machine.”
It also helps, in terms of the ISO, Rida said, to work with a company that understands the ATM landscape as well as the Bitcoin landscape.
“We have been in the ATM space and we know the history,” he said. “We have been in their shoes and understand what it takes to operate an ATM, to be an ISO so our experience is relatable. We provide them operational support and work with them on the speed of deployment, which is really fast. Because, Bitcoin never sleeps, it’s a 24-hour operation.”