Looking at the name, most people think that a Crypto ATM works like any other ATM. You enter some details, choose the amount you need, cash comes out, and your crypto wallet balance is deducted. However, this is not what a Crypto ATM does. These ATMs actually have a very different function and work more like a crypto exchange.
Confused? What are Crypto ATMs and how do they work? Let’s know.
Table of Contents
- 1 What is a crypto ATM?
Crypto ATMs are machines that allow you to buy bitcoins or other cryptocurrencies using cash or debit cards. Therefore, the term Crypto ATM can be a misnomer; The only similarity between crypto ATMs and their cash counterparts is how they look and the need for a debit card.
Now you might think that these machines only exchange with a physical location. Crypto ATMs are stalls connected to a cryptocurrency network and are usually not controlled by financial institutions. However, the primary way they differ from any cryptocurrency exchange is that the crypto you buy is redirected to the digital wallet address of your choice.
In a cryptocurrency exchange, the crypto you buy is transferred to your exchange-hosted wallet, where the exchange controls your private keys. These wallets are known as hot wallets. You can also transfer your tokens from your exchange wallet to your digital wallet. However, this will require you to take additional steps.
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How does a crypto ATM work?
A Crypto ATM includes a QR scanner, monitor, debit card acceptor, and a bill dispenser, and in some cases, cash. On the back end is the software that makes it possible to buy and sell Crypto.
When you approach the ATM, you must verify your identity. While the identification process may vary from one ATM to another, most require you to enter your phone number. Once you do this, you will receive a verification code that you will need to enter to proceed. Now your phone number is verified and registered with the ATM.
In the next step, you have to enter your wallet address. The easy way to do this is to generate a QR code from your wallet’s mobile app. Simply place the QR before the code scanner at the ATM, and it will verify the address in a matter of seconds. This is much better than manually entering the wallet address – as a digit or alphabet here or there, and your crypto is lost forever. Then you have to enter the number of coins you want to buy and input cash or debit card to buy your desired cryptocurrency.
After purchasing Crypto, it may take few minutes to complete the transactions. In rare cases, it may even take an hour. After the transaction is completed, check your wallet to see if the transaction was successful.
Most crypto ATMs charge a percentage of the transaction value as a fee. This percentage is usually between 9 and 12 percent depending on the ATM you choose. Historically, this fee would be over 4 percent or 20 percent.
Crypto ATMs are easy to use and have the same experience as regular ATMs. They are best suited for those who are not tech-savvy and prefer a streamlined way to buy Cryptocurrency. They are also a great introductory tool for beginners to crypto trading for the first time.
For starters, crypto ATMs have high transaction fees. They also limit how much you can buy due to anti-money laundering regulations. Lastly, customer support will find it difficult to find if anything goes wrong with your transaction.
But the biggest issue with crypto ATMs is their accessibility. While the number of these machines has increased dramatically over the years, their coverage is still minimal. For example, at the beginning of 2021, there were around 14,000 crypto ATMs. But by the end of the year, that number had more than doubled, reaching 34,000. Still, there are only two crypto ATMs in India, and both of them are in Delhi
ATM locations that offer users the option to buy and exchange cryptocurrencies with fiat money are known as Bitcoin ATMs.
Bitcoin ATM is one of the most secure ways to buy, send or sell bitcoins. First, instant transactions protect you from the volatility of bitcoin. Secondly, password and 2-factor authentication protect your account from others, according to the Bitcoin ATM company source.
Data accessed by coinatmradar.com shows that 33,896 Bitcoin ATMs were installed worldwide as of December 2021. About 90 percent of the total bitcoin ATMs in the world are operating in the US (29,801), followed by Canada (2,133), Europe (1,384), Spain (168), Austria (144), Switzerland (137) and the UK (101).
There are already two Bitcoin ATMs/tellers in and around Delhi in India. Earlier, in 2018 a bitcoin ATM was arrested by Karnataka Police in Bengaluru as it was illegal and installed without any approval from the concerned authorities.