Home Business Insights & Advice What is a bitcoin ATM? Drawbacks of using it!

What is a bitcoin ATM? Drawbacks of using it!

by John Saunders
23rd Aug 22 3:09 pm

Companies accept payments from small local shops to multinational corporations in many currencies, offering different rates. Therefore, if you want to trade using bitcoin, you may use a safe and efficient trading platform like Bitcoin Loophole. This ubiquity can allow companies to evaluate their exposure to global fluctuations in exchange rates.

Bitcoin ATMs are machines that allow you to deposit cash and receive bitcoins simultaneously. They are also called BTMs (bitcoin machines) or BTC ATMs (bitcoin automated teller machines). Unfortunately, Bitcoin ATMs do not typically have any way of checking your identity before providing you with bitcoins so that people can use them for nefarious purposes such as illegal tax evasion or money laundering. Let’s discuss some of the drawbacks of bitcoin ATMs in detail.

What is a bitcoin ATM?

A bitcoin ATM is a machine that people can use to convert cash into bitcoins or vice versa. There are two variations of bitcoin ATMs: the first one accepts fiat currency but can also sell bitcoins; they are often referred to as “bitcoin kiosks” or “bitcoin trading machines”. The second variation of the bitcoin ATM accepts only bitcoins and is often referred to as a “bitcoin ATM” (or BTMs for short). Bitcoin ATMs offer a relatively easy way to acquire bitcoins at any time of day and from anywhere in the world. It requires no hardware or software installation, just a physical presence.

The Bitcoin ATM is a confluence of these forces. The first Bitcoin ATM in the US was installed in 2014, and there are over 10,000 ATMs spread across the country. In Canada, there are over 3000of these kiosk-type machines.

Bitcoin ATMs work by letting you insert dollar bills and giving you a corresponding amount of bitcoin in return. You can also withdraw bitcoins from your account in exchange for cash or vice versa when your phone is registered with the machine’s system and has internet connectivity.

Drawbacks of using bitcoin ATMs

Expensive fees

Bitcoin ATMs are often referred to as “high fee machines” because they do not have an internal transaction fee but a very high fee for users. As an institution or government does not back bitcoins, they have meagre fees when you execute any trade from an ordinary cryptocurrency exchange or a wallet. Still, in the case of bitcoin ATMs, the cost of executing transactions is high, and maintenance of kiosk machines providing these services is a bit expensive.

Of course, some bitcoin ATMs charge a substantially lower rate than others, but the fees you pay at any ATM are usually quite high. Bitcoin ATMs typically charge 1% – 3% (0.0001 – 0.003 BTC) for deposits and withdrawals. That’s higher than usual fiat currency ATM fees range from 0.25% to 0.4%.

Not easily available

As bitcoin ATMs do not have official regulations, you cannot find them all over the world. Most people are unaware that these machines even exist. Even if you will find a bitcoin ATM and pay the fee, it doesn’t mean that your local store has ever heard of bitcoins, let alone accepted them as a payment mode. You will have to pay a hefty fee to convert your fiat currency into bitcoins to buy some stuff. Most of the bitcoin ATMs are found in developed countries with a positive stance towards cryptocurrencies like bitcoin. Recently El Salvador installed many bitcoin ATMs because BTC is now a national currency in this country.

Bitcoin ATMs are not easy to use

The processing power of bitcoin ATMs is quite limited, so using them for everyday transactions is not ideal. In addition, as the transaction fees are very high, it can be challenging to use your bitcoin ATM account for transactions that have a long-time span (for example, if you want to send bitcoins to your family or friends).

The other problem is that the experience of using a bitcoin ATM is not very intuitive and smooth. The process of exchanging money with bitcoins does require some technical knowledge as there can be security issues when dealing with ambiguous situations. Moreover, unlike cryptocurrency exchange, you can execute trades subjected to merely bitcoin and no other digital currencies. Beginners may find it extremely challenging to use bitcoin ATMs if they are used to a conventional cryptocurrency exchange.

Bitcoin ATMs are centred around accepting cash

A significant disadvantage of bitcoin ATMs is that they can only accept cash. This limitation severely limits their utility because conversion from cash to bitcoins entails potentially dangerous third-party services, and it can take a considerable amount of time; you are better off using an exchange for your trades rather than a bitcoin ATM.

These are drawbacks that bitcoin ATMs bring to the table. Experts advise you not to use one if you plan on trading in Bitcoins daily as it is typically not cost-effective compared to a conventional cryptocurrency exchange.

 

The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.

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