An Easy Guide to Cryptocurrency ATMs – How Do They Work?

Posted byRobert RyersonPosted inUncategorized

Newcomers to cryptocurrency might think buying cryptocurrency can be a hassle. Plus, most people don’t love the idea of linking their bank accounts to an online platform.  

This is where cryptocurrency ATMs come in handy. They’re not exactly like ATMs you use to withdraw and deposit your money, but their user interface is easy to learn.  

Cryptocurrency ATMs can be a great starting point for managing crypto. This guide will help you understand what they are and how they work.  

Cryptocurrency ATMs Explained 

Cryptocurrency or Bitcoin ATMs are kiosks you can use to buy and sell crypto for cash. Following the boom of cryptocurrency’s popularity, more than 34,000 crypto ATMs are already operating worldwide.  

Bitcoin ATMs are not your ordinary bank ATMs. You don’t need to connect one to your bank account, and it’s easy to withdraw your funds from these machines. Most users prefer these ATMs to their bank account for buying crypto because they are convenient.  

Instead of a bank account, crypto ATMs are connected to a cryptocurrency exchange. With this, you can buy and sell crypto using fiat currency, including Euros, Canadian dollars, and US dollars. 

One limitation, however, is that these electronic kiosks do not support all cryptocurrencies. Normally, cryptocurrency ATMs only support the most common cryptocurrencies, such as Bitcoin, Litecoin, Ethereum, and Bitcoin Cash.  

How Cryptocurrency ATMs Work 

As mentioned, cryptocurrency ATMs connect to a particular type of crypto exchange. They convert the cash you deposited into the cryptocurrency of your choosing.  The blockchain, the digital financial transaction ledger for crypto, processes all transactions.  

The step-by-step guide on how the process works: 

  1. You deposit your cash.  
  1. You scan a QR code that directs the crypto ATM to your digital wallet. 
  1. The converted cryptocurrency is transferred directly to your wallet.  

A few crypto ATMs permit redeeming of vouchers via a crypto exchange app. The app allows users to deposit funds, select their crypto of choice, and then print the voucher, which they can scan using a mobile app to deposit funds to their digital wallet. 

Additionally, not all crypto ATMs allow you to both buy and sell crypto. Some are limited to buying. 

The Step-by-Step Guide to Using Cryptocurrency ATMs 

Different providers can have varied processes for using cryptocurrency ATMs. But, in general, the following steps can summarize your user experience.  

Step 1: Open a Cryptocurrency Wallet 

Before using a crypto ATM, you need to have a crypto wallet. It’s what you’ll be using in buying or selling crypto funds. Various mobile apps can help you get started in setting up a crypto wallet, but you can also use specialized hardware.  

Some ATMs require you to set up a specific wallet app before making any transaction. This wallet is where the ATM sends your crypto.  

Step 2: Look for the Nearest Crypto ATM 

The easiest way to do this is via an online search. Bitcoin ATMs are located in gas stations, cafes, convenience stores, airport terminals, and downtown hubs.  

Step 3: Look at the ATM’s On-Screen Instructions and Follow Them 

ATM screens will need to verify your identity, often via a code sent by text message. After confirming your identity, the electronic kiosk will guide you in making your first transaction.  

Step 4: Wait for Transaction Success 

Transactions via cryptocurrency ATMs will undergo blockchain verification, which can last from 10 minutes to an hour. You will know the transaction is complete once you see the funds in your crypto wallet. 

The Benefits of Cryptocurrency ATMs 

1. They Are Decentralized and private 

One of the goals of cryptocurrency is to allow transactions without going through financial institutions. Anyone can use cryptocurrency ATMs, meaning you can use these electronic kiosks to buy cryptocurrency even when you don’t have a bank account.  

2. Highly Accessible 

With the rise of crypto, more Bitcoin ATMs are being installed worldwide. This makes crypto more accessible to everyone. Cryptocurrency ATMs are also great entry points for getting started on crypto investing.  

3.Faster than wiring funds 

        The process of buying or selling cryptos in exchange for cash is much faster than a bank wire, or ACH, which can take 24 hours or more to show up in your bank account.  

The Risks of Cryptocurrency ATMs 

1. High Fees 

The most common complaint about crypto ATMs is the high fees. If you’re unlucky, you might encounter a machine charging more than 10 percent in one transaction. This is much higher than the conventional crypto exchange of around 1 percent to 4 percent.  

2. Transaction Limits 

Cryptocurrency ATMs come with minimum and maximum transaction limits. These limits are usually set by the company that owns the ATM. Limits usually come in the range between $10 to $10,000.  

3. Increasing Fraud and Scam Risks 

Due to the ATM’s high anonymity, it’s easier for criminals to defraud victims and make illegal crypto transactions. This is because everything is nonrefundable and hard to trace.  

Scams are also common, especially when someone forces you to send funds into their account using a crypto ATM. One way to avoid this is by using an online research tool for locating ATMs and checking their legitimacy by reading reviews.  

Published by Robert Ryerson

A financial professional with more than three decades of experience, Robert Ryerson works closely with clients in the Freehold, New Jersey, area to meet their financial planning needs. As a Certified Financial Planner (CFP) at New Century Planning, he focuses on retirement income planning, as well as estate administration, regularly assisting his clients with legacy and estate planning. He also advises them on health and disability insurance, including Medicare, Medicaid, and Medicare Supplement Plans. Mr. Ryerson’s many years helping his clients navigate the complexities of retirement planning gave him a deeper understanding of the healthcare costs that retirees face. In 2013, he drew upon this knowledge to co-author the book What You Don’t Know About Retirement Will Hurt You. Outside of his work at New Century Planning, Robert M. Ryerson is a regular fixture at workshops and seminars on retirement. He has delivered several keynote speeches on the often-confusing topic of required minimum distributions. Mr. Ryerson continues to share his financial expertise as a facilitator of online courses for Certified Public Accountants through The Society for Financial Awareness. In the early 2010s, Mr. Ryerson became concerned about the threat of identity theft after noting the many cybersecurity breaches suffered by major companies. He became a Certified Identity Theft Risk Management Specialist (CITRMS) in 2014. He has since taught identity theft recovery courses at local community colleges. Mr. Ryerson also wrote a book on the topic entitled What’s the Deal with Identity Theft: A Plain English Look at Our Fastest Growing Crime. A graduate of Rutgers University with a degree in economics, Mr. Ryerson began his career in the financial services industry as a stockbroker. He obtained his CFP designation in 1991 and began working as an independent financial planner a few years later. In addition, he is a notary public.

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