The Rise of Bitcoin ATMs
The Bitcoin boom shows no sign of slowing down. As JPMorgan backs Bitcoin as the new gold and CBOE plans to trade Bitcoin futures, many speculate that widespread adoption of virtual currency is within sight. Bitcoin ATMS are popping up in droves to meet demand, but they are meeting some challenges.
What Is a Bitcoin ATM?
A bitcoin ATM is not your typical automated teller machine, but it functions in a familiar way. In most cases, they are known as bitcoin kiosks. This internet-connected machine facilitates the exchange of bitcoins and cash using blockchain technology. There are two different types of bitcoin ATMS: one-way and two-way. Some kiosks allow bi-directional functionality, allowing both the purchase of Bitcoin and the redemption of Bitcoin for cash. The other type of kiosk only allows the one-way purchase of Bitcoin by depositing cash into the machine.
Different kiosks have different requirements, some even require the user to have an existing Bitcoin exchange account in order to conduct transactions using the machine. While a bitcoin kiosk looks a lot like your run of the mill ATM, they don’t connect to your bank account. Instead, they connect you with the Bitcoin exchange. When you use the machine to purchase Bitcoin, you insert cash and the machine moves the money to a public key on the blockchain, giving you virtual Bitcoins in exchange. The transaction does not run through a bank or a traditional bank account.
The first known bitcoin ATM popped up in Vancouver, Canada in late 2013. The original Robocoin machines ceased operations in 2016 and many have been converted to run other bitcoin ATM software. The United States received their first machines in late 2013 and early 2014 in New Mexico and Las Vegas. In 2017, the United States is now home to over 800 bitcoin kiosks and rising.
The Rise of Bitcoin ATMS
Just 4 short years after the first bitcoin ATMs made their debut, there are now over 8 million Google search results for “bitcoin ATM near me.” Demand for Bitcoin continues to climb, bringing demand for Bitcoin ATMs with it. Three bitcoin ATM manufacturers lead the market. Genesis Coin holds about 44% of the market share, General bytes claims 26%, and Lamassu enjoys a 16% stake. The bitcoin ATM manufacturers and providers make money on the convenience fees associated with using the handy machines.
The bitcoin ATM provider is actually more important than the manufacturer in most cases. This is because the provider determine the location of the machine and the majority of the transaction fee the machine will charge. In the US, CoinSource appears to be the leading provider with roughly 127 kiosks in the country. In Canada, InstaCoin is the main bitcoin ATM provider with roughly 55 kiosks.
This year, bitcoin ATMs are popping up at breakneck speeds. In the state of Georgia, Coinsource just executed it’s largest bitcoin ATM installation ever with 20 new machines. 18 of these machines are in Atlanta and 2 are in Athens. Coinsource now lists 136 total bitcoin ATMs in 12 states across the US. In Atlanta, 16 of the machines are one-way and 4 are two-way or bidirectional. This brings the total number of bitcoin ATMs in Georgia to 102, making the state the third largest US market for bitcoin ATMs behind only New York and Chicago.
Coinsource CEO Sheffield Clark notes in a recent news release, “Atlanta is one of the most mature bitcoin ATM markets in the country so it’s exciting to provide our services to people already showing accelerated adoption of the technology. Our goal is to give everyone the equal ability to access bitcoin, particularly in times of record demand, and participate in this soaring new economy.”
This is a huge win for Atlanta’s unbanked population as bitcoin is hailed as a facilitator of financial inclusion. According to FDIC reports, Atlanta ranks as a top ten most unbanked city in the country. More than 1 out of 10 Atlanta households have no traditional banking relationship and around 30% classify as underbanked, relying on alternative financial services to bridge the gaps in their access to banking services.
Bitcoin ATMS aren’t just beneficial for bitcoin investors and bitcoin-related businesses. Small business owners are able to rent space for bitcoin ATMs, creating passive monthly income. Bitcoin is a relatively young technology. When you think about how long it took for the internet to bloom into a widely adopted technology (25 years from the debut of ARPANET), Bitcoin is far from the end of its runway.
Bitcoin ATM Cash Logistics
As bitcoin ATM operators expand their networks across the country, they are facing a logistical nightmare. The continued threat of derisking is leaving many bitcoin kiosk operators without a local, or even regional, financial institution. Rotating working capital relies on access to a depositor institution since bitcoin ATMs accept, and in some cases dispense, cash.
Bitcoin operators rely on access to banking services, including armored cash logistics to keep their businesses up and running. When they are dropped from a bank and driving hours to the closest one isn’t feasible, bitcoin ATMs have to shut down. With bitcoin’s recent explosion in popularity, this means bitcoin-related businesses are missing out on revenue and growth.
BankLine stepped in to solve this problem with innovative coast to coast cash logistics for bitcoin ATM operators in the United States. BankLine forged a partnership with TransGuardian and Rapid Armour to ferry funds using the USPS. Every box is fully insured and highly trackable using TransGuardian’s RADAR service. Rapid Armour handles the deposit and/or credit of funds into the operator’s business bank account.
BankLine facilitates the transfer of cash to and from any bitcoin kiosk in the United States, as long as the USPS can reach them. This frees up your time so that you can focus on running and expanding your business. BankLine also supports their clients with real bitcoin business bank accounts and expert compliance consulting. As regulations continue to change, it’s important to understand what’s coming down the pipe.
Bitcoin is gaining steam and recently surpassed Goldman Sachs Group Inc. in value, hovering around $100 billion in total “market cap.” Is your bitcoin business ready to meet increasing demand? Call us today to open your bitcoin bank account and gain access to our exclusive banking services, including bitcoin cash logistics.