What is a Crypto ATM?
Crypto ATM is a mechanism that allows you to buy bitcoins or other cryptocurrencies using cash or debit cards. Therefore, the term crypto ATM could be a misnomer. The only similarities between crypto ATMs and ATMs are their looks and debit card requirements.
Now you can think of these machines as exchanges for physical locations. Not quite. Crypto ATMs are booths connected to a cryptocurrency network and are not usually controlled by financial institutions. However, the main difference with cryptocurrency exchanges is that the purchased cryptocurrency is redirected to your preferred digital wallet address.
Cryptocurrency purchased on a cryptocurrency exchange is transferred to a wallet hosted by the business, where the deal controls your private key. These wallets are called hot wallets. You can also transfer tokens from your exchange wallet to your digital wallet. However, additional steps must be taken.
How do Crypto ATMs Work?
Crypto ATMs consist of a QR scanner, a monitor, a debit card acceptor, a billing machine, and in some cases, cash. In addition, the backend has software for buying and selling cryptocurrencies.
When accessing an ATM, you must verify your identity. The identification process can vary from ATM to ATM, but you must enter a phone number in most cases. After completing the task, you will receive a verification code that must be entered to continue. Your phone number is now verified and registered at the ATM.
In the next step, you have to enter your wallet address. A simple way to do this is to generate a QR code in your wallet’s mobile app. Place your QR code opposite the ATM code scanner, and it will verify your address in seconds. This is much better than entering your wallet address manually. Your password is lost forever if you enter single digits or letters here and there. You then need to enter the number of coins you want to buy and enter cash or a debit card to buy the cryptocurrency you wish.
After purchasing cryptocurrency, it may take a few minutes for the transaction to complete. In rare cases, it can take an hour. After completing the transaction, check your wallet to ensure the transaction was successful.
Crypto ATM Fees
Most cryptocurrency ATMs charge a percentage of the transaction amount as a fee. This percentage is usually between 9% and 12%, depending on the ATM chosen. Historically, these fees have been as low as 4% or 20%.
Advantages of ATMs for Crypto
Crypto ATMs are designing to be easy to use and offer a similar experience to regular ATMs. It is suitable for those who are not tech savvy and prefer a streamlined method of buying cryptocurrencies. They are also great introductory tools for amateurs to get into cryptocurrency trading for the first time.
Disadvantages of Crypto ATMs
First of all, crypto ATMs have substantial transaction fees. They also limit the amount you can buy due to anti-money laundering regulations. Finally, it is difficult to find customer service when there is a problem with the transaction.
However, the biggest issue with crypto ATMs is range. These machines have increased dramatically recently, but their coverage is still minimal. For example, there were around 14,000 crypto ATMs in early 2021. By the end of the year, however, that number had more than doubled to 34,000. However, there are only two cryptocurrency ATMs in India, both in Delhi.
Judging by the name, most people think crypto ATMs work like any other ATM. Just enter a few details, select the amount you need, the money will be spending, and your crypto wallet balance will deduct. However, this is not what crypto ATMs do. Instead, these ATMs have different functions and work more like crypto exchanges.