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Ten years ago, the world welcomed the first Bitcoin ATM at Waves Coffee House in downtown Vancouver, BC
Since then, the number of Bitcoin ATMs has grown exponentially. According to Coin ATM Radar, there are currently 37,056 Bitcoin ATMs worldwide and 31,006 in the US alone. Despite the popularity of online exchanges, there are more and more ATMs at gas stations, shopping centers, and grocery stores.
Bitcoin ATMs are critical to accelerating cryptocurrency adoption and generating revenue for the retailers who operate them. They also offer a lucrative way to make money – the Bitcoin ATM market is expected to grow to $16.85 billion by 2033.
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The Importance of Bitcoin ATMs
Bitcoin ATMs are essential to the crypto economy. They serve as an on-ramp for fiat (dollars) into the crypto ecosystem, accelerating crypto adoption and enabling unbanked or anti-banking consumers to access financial services. Some Bitcoin ATMs offer selling crypto for cash, serving as a fiat exit and providing quick access to money.
Bitcoin ATMs are neighborhood crypto access points. People can buy crypto while filling a gas tank or shopping for groceries. The “Bitcoin Sold Here” sign creates curiosity about this new asset class and sparks interest in learning more about crypto.
Digital currencies like Bitcoin were designed to create a new type of electronic cash, and Bitcoin ATMs allow people to purchase this new currency and use it for digital payments, transfers, or as a store of value. Imagine if someone offered to purchase traditional assets like stocks in fractional amounts in physical locations with cash. Bitcoin ATMs represent a financial opportunity because Bitcoin’s deflationary store of value is unparalleled.
Related: What is a Cryptocurrency ATM and How Does It Work?
The Use Cases of Bitcoin ATMs
There are countless reasons why people use Bitcoin ATMs. People view Bitcoin and other cryptocurrencies as a speculative store of value or a more efficient medium of exchange. Two digital currencies are popular for these use cases: Bitcoin and USDC. USDC, a stablecoin backed by the US dollar, is available through Bitcoin ATMs and is backed one-to-one with the US dollar. Their utility is highlighted in the following examples of how people use Bitcoin ATMs:
- In 2014, each Bitcoin was worth just a few hundred dollars. People who bought it at the first licensed Bitcoin ATM in the US, which opened in Seattle, Washington that same year, may have seen significant upside as Bitcoin is now closer to $70,000 per coin.
- A mother sent money to her daughter who was studying abroad in Italy and needed money as quickly as possible to repair her car. She had found a mechanic but didn’t have enough money to pay him. The mechanic accepted Bitcoin, so she asked her mother to transfer the money to her at a Bitcoin ATM. The mechanic was paid within minutes.
- Immigrants in the US can purchase USDC with cash from ATMs to send money home, where the recipient can collect the money in their local fiat currency.
Related: 8 reasons why Bitcoin is better than traditional currencies
The possibilities of Bitcoin ATMs
Bitcoin ATMs are an excellent opportunity for businesses with a physical retail location. Retailers can earn rent from hosted ATMs and increase customer traffic to the locations. Alternative arrangements allow retailers to receive a percentage of each transaction fee. Retailers should only work with licensed, insured operators and have proper AML policies and procedures in place.
The biggest advantage of hosting a Bitcoin ATM is attracting customers to retail locations. Websites like Coin ATM Radar list ATM locations, which is essentially free advertising. Bitcoin ATMs can also be found via Google Maps and are often listed by the hosting company. Customers who purchase crypto from ATMs are likely to come back and purchase other items. In this way, they create a win-win partnership between the retailer and the Bitcoin ATM operator.
Related: Mexico Senate Installs Its First Bitcoin ATM
The Future of Bitcoin ATMs
The crypto winter contributed to consolidation within the Bitcoin ATM industry, reducing the number of Bitcoin ATM operators to a few key players at the start of 2024. However, consolidation in Bitcoin ATM installations has been picking up again since then, analysts say given the optimistic outlook for Crypto in 2024 Bitcoin ATMs will likely remain a mainstay of the crypto economy – but what about in five to ten years?
Despite the rapid adoption of digital payment methods, cash is still one of the most commonly used payment methods in the United States. More than 18% of all transactions in the US are still conducted in cash. Additionally, Money is unique in that there is no chargeback risk. People using a Bitcoin ATM can instantly access purchased Bitcoin and then send it on-chain as a remittance or payment method.
Although Bitcoin ATMs offer a valuable service, their high cost is the best argument against them. Hardware, merchant rental, software, cash logistics, and maintenance, among other things, can make running a profitable Bitcoin ATM very expensive. It may be more cost-effective to equip existing ATMs and kiosks with cryptocurrencies so that people can exchange cryptocurrencies for cash.
This can be done via an API, eliminating the need to provide crypto-native hardware. Over time, we will see more and more established financial institutions partner with the crypto industry to offer crypto buying and selling to their customers in order to remain competitive and meet market demand.
It’s important to remember that Bitcoin ATMs replaced cryptocurrency’s humble beginnings, when strangers met in person to exchange USB flash drives containing Bitcoin for cash. In a multi-currency digital currency world, physical and digital channels for cryptocurrency deposits and withdrawals are combined, enabling a seamless experience and removing barriers to a blockchain-based financial system. Bitcoin ATMs are becoming increasingly popular and will be an important part of this ecosystem for years to come.
Related: How Blockchain Will Change Traditional Finance as We Know It