What is a Bitcoin ATM?

An ATM stands for "Automated Teller Machine". A Bitcoin ATM is just that: an ATM, but for Bitcoin. There are about a thousand Bitcoin ATMs in the European Union and around 40 in the Netherlands. In this article, we will discuss what one can do with these ATMs and where they can be found.

What is the function of a Bitcoin ATM?

Bitcoin ATMs provide a convenient way to buy and sometimes even sell Bitcoin. Think of them as very small physical crypto exchanges.

Using Bitcoin ATMs, it is possible to use cash or perform a bank transaction to purchase Bitcoin, which is then sent to a Bitcoin wallet of your choice. This can be your own wallet or another person's. In addition, many of these machines offer the ability to sell Bitcoin and withdraw cash.

How does buying Bitcoin at a Bitcoin ATM work?

The process of buying Bitcoin at a Bitcoin ATM is simple and can be summarised in the following steps:

1. Find a local Bitcoin ATM: Use resources like CoinATMradar to find the latest information on Bitcoin ATM locations. For example, some Primera stores in the Netherlands have such ATMs. Some also offer support for Ethereum.
2. Connect a wallet: Link your Bitcoin wallet to the ATM by scanning a QR code from your wallet app. This step ensures that the Bitcoin you purchase will be sent to the correct address. Some ATMs offer the option to generate a new wallet if you don't already have one.
3. Enter cash or bank details: Insert the desired amount of cash into the ATM or provide your bank account information, depending on the options available. The ATM will display the equivalent amount of Bitcoin you will receive.
4. Confirm and receive Bitcoin: Confirm the transaction and receive Bitcoin worth the amount entered, minus any transaction fees. The transaction through a Bitcoin ATM takes the same amount of time as a regular blockchain transaction, which can range from a few minutes to a few hours.

Note that using a Bitcoin ATM often incurs higher fees compared to online exchanges. For instance, most Bitcoin ATMs in the Netherlands have trade fees above 9% at the time of writing. In contrast, the trades fees at Blockrise are 0.4%.

Differences between Bitcoin ATMs

There are important differences between Bitcoin ATMs, as different brands or providers of these machines have varying features. Very few Bitcoin ATMs operate completely anonymously, most require a verification process, such as identification documents, residence and financial information. Not all Bitcoin ATMs offer the ability to convert Bitcoin into fiat currency such as euros or dollars. This varies by manufacturer and region.

Besides the high cost, there is an additional disadvantage: there have been several hacks of these types of machines in the past. Therefore, it is always at your own expense and risk to use a Bitcoin ATM.