Bitcoin ATM makers see an opening as digital currencies come to stores
Traditional ATMs are vanishing in the U.K. and other parts of the world, but there may be a growing market for their crypto counterparts.
While the growth of mobile wallets and contactless card payments have reduced many people's need for cash access, the cryptocurrency world still faces the hurdle of bringing new people into the system — especially in locations where bitcoin and other currencies are meant to be used for payment.
Thus, bitcoin ATMs and kiosks have been taking on more importance — and growing in number in the U.S. and globally. Coin ATM Radar, a website that charts the number of cryptocurrency ATMs in place globally for buying and selling bitcoins and other cryptocurrency, reports that 6,760 machines are in place worldwide across 73 countries. Approximately 549 operators are involved in crypto ATMs or teller/kiosk devices, the site reports.
In 2018, the number of bitcoin ATMs globally was 4,100, which was 2,000 more than the previous year, according to Coin ATM Radar.
Whether investors or consumers are showing more interest in bitcoin or something new like the Tether Gold Coin that had a burst of popularity just before the holiday season, it helps to have machines available to gain access to the coins.
Bitcoin Depot ATM feels it is boosting that exposure with its cryptocurrency ATMs, of which the company now has 500 globally and across 30 states in the U.S. It claims to be the fastest growing such network in the world, noting it has 100 of those machines in Atlanta, where it has its headquarters.
The company has a goal to have 1,000 ATMs in place by the end of the year. It says its reach is expanding because more consumers are seeking in-person cryptocurrency transactions — and its machines allow users to buy bitcoin, Litecoin and Ethereum instantly.
"People buy bitcoin at our machines for a variety of reasons," said Brandon Mintz, president and CEO of Bitcoin Depot. "For some, it is a speculative investment into what continues to be the world's most profitable asset class."
Other consumers buy digital currencies because they don't have bank accounts, but would still like to be able to make purchases online or send money across vast distances, Mitnz added.
"Then, there are also those who buy bitcoin and other coins for educational reasons," he said. "These are people seeking a hands-on way to learn more about blockchain technology."
By contrast, Facebook's Libra cryptocurrency has faced many hurdles in its efforts to come to market. Most of the traditional payments companies that had initially showed interest in Libra have since dropped out. With Facebook's project hitting a brick wall, the most well-known cryptocurrencies of bitcoin and Ether are likely to benefit.
Facebook is hoping to possibly salvage some form of Libra with a strategy that sounds similar to that by which bitcoin ATMs operate — the cryptocurrency is essentially supported through other currencies used, and even exchanged at some ATMs.
Indeed, Facebook now wants to appease regulators by backing Libra with stablecoins in other markets, such as the dollar in the U.S. and pound in the U.K.
Bitcoin Depot ATM did not disclose the average value of transactions at its machines, nor did it elaborate on the business or marketing data it uses to determine future ATM locations.
It would be easier to hop on the bitcoin ATM bandwagon if the companies involved released transaction or dollar volume statistics, said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group.
"My top-level concern is that an ATM solution has all the same challenges as any exchange, in that it will be a honeypot for criminal hacks, so it has to be well protected," Sloane said.
Just last summer, Spanish law enforcement officials were warning that the use of bitcoin ATMs was suspected of being part of an illegal drug payments scheme. Essentially, Spain's bitcoin ATMs were not operating under the same rules that seek to keep money laundering from unfolding at traditional ATMs, according to police.
"All that said, an ATM is generally a convenient way to access and deposit funds, assuming it's in proximity of a customer," Sloane said. So far, having 500 ATMs across 30 states may not yet meet "that proximity metric" for widespread use and increased adoption, he added.
Right now, Bitcoin Depot ATM focuses on regions of the country in which cryptocurrency has been a more popular form of payment than in other parts of the country. Most of its machines are placed in California, Florida and Georgia.
"The expansion of bitcoin ATMs increases the acceptance and use of bitcoin for financial transactions and makes everyday transactions easier for everyone," Mintz said. "We are excited about the impact this network has had, and will continue to have, in creating additional awareness of our industry and easing the access to digital finance for underbanked communities around the U.S."