If you follow the latest cryptocurrency news, you might have read that in September 2021 Honduras opened the country’s first Bitcoin ATM. The goal is simple, to make cryptocurrency more accessible to its residents and address the high demand in the region for bitcoins. Previously, the only way for citizens to buy the currency was via unregulated peer-to-peer trading platforms or in person.
With the number of Bitcoin ATMs across the world on the rise since their creation in 2013, looking into how these machines function, what their key purpose is, and how they differ from regular ATMs is vital to better understand how the cryptocurrency landscape is evolving.
How do cryptocurrency ATMs work?
Like with our current ATMs, Bitcoin ATMs allow users to carry out financial transactions including buying and selling BItcoins and other popular cryptocurrency using cash. Usually there is a limit on how much people can buy and sell at these machines – in Honduras for example, customers can only purchase up to $380 of Bitcoin from the ATM at one time.
There are two types of Bitcoin ATM, unidirectional or one way (aka just purchasing Bitcoin), and bidirectional or two way (aka purchasing and selling Bitcoin). Bidirectional Bitcoin ATMs are less common than their unidirectional counterparts.
The machines look very similar to regular ATMs the only key difference being that they have QR scanners as these are necessary to help complete the financial transactions.
For instance, to buy Bitcoin, a user feeds cash into the machine or inserts their credit card to complete the purchase. This generates a QR code from their cryptocurrency wallet on their mobile device. After, this is then scanned to receive their purchased Bitcoin. And, to sell Bitcoin the user sends crypto from their digital wallet to the QR code provided by the Bitcoin ATM machine.
What is the purpose of a cryptocurrency ATM?
Ultimately, the purpose of these machines is to provide a service in demand. As cryptocurrency gains more acceptance as a form of payment, users need a way to easily and conveniently get hold of their currency. El Salvador, for example, will start accepting Bitcoin as legal tender on September 7th 2021.
What’s more, Bitcoin transactions online can take days to be verified and confirmed but trades made via Bitcoin ATMs are generally instant and require less personal information to complete than those online.
Security wise, there is also very little to worry about. There’s no risk of your digital wallet getting hacked or broken into, especially given that you need to prove your identity before each transaction.
How do Bitcoin ATMs differ from regular ATMs?
There are two major differences between Bitcoin ATMs and regular ATMs. The first of these is that when using a Bitcoin ATM a user needs to verify their identity. This can be done in a number of ways and depends on the machine being used but will normally involve the user inputting their mobile number to receive a verification code to enter into the machine, or, it can be done by scanning ID documents. Once confirmed, a user can proceed with the transaction.
Bitcoin ATMs also differ from regular ATMs in that they are not connected to a bank account or financial institution but a cryptocurrency exchange via the internet. This is why you need to verify your identity and cryptocurrency account, as mentioned above, as unlike with a regular ATM your details are not stored on a credit card that connects you to an account.
You can find your nearest Bitcoin ATM using this website.
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