How does a Bitcoin ATM work?

A Bitcoin ATM is an Internet-connected kiosk that allows customers to purchase bitcoins and/or other cryptocurrencies with deposited cash.

A Bitcoin ATM is not the same as an automated teller machine (ATM) that allows bank customers to physically withdraw, deposit, or transfer funds in one’s bank account. Rather, bitcoin ATMs produce blockchain-based transactions that send cryptocurrencies to the user’s digital wallet, often via the use of a QR code. A Bitcoin ATM is an Internet-connected kiosk that allows customers to purchase bitcoins and/or other cryptocurrencies with deposited cash.

Bitcoin ATM

While some of the early versions of Bitcoin ATMs (and the majority of those in operation today) did not allow its users to sell Bitcoin as well, Coin Cloud ATMs allow users to both buy Bitcoin using cash and sell Bitcoin for cash, safely and securely.
A monitor, QR scanner, bill acceptor, and dispenser are all part of a Bitcoin ATM. These components are connected via software on the backend to make buying and selling Bitcoin quick, easy, and secure.

Before You Go to the Bitcoin ATM

Get a digital wallet

You’ll need a digital wallet to store your digital money, just like we need physical wallets to store our physical money. Your digital money has to “go” somewhere, and your Bitcoin wallet gives you a place to “store” it, figuratively speaking.
In reality, all bitcoins are stored in the blockchain, which is an online ledger. So, while your digital wallet does not contain bitcoins per se, it does store your balance and allows you to keep track of your cryptocurrency in the same way that a physical wallet does.
Digital wallets are available in a variety of formats, including web-based, hardware devices, and desktop software, but if you’re interested in Bitcoin ATMs, a mobile app or web-based digital wallet will likely suit you best. You can determine what digital wallet works for you via Bitcoin.

Set up your digital wallet and have easy access to it

Before going to a Bitcoin ATM, make sure your wallet is ready. If you use a mobile app as a wallet, it’s as simple as setting up the app.
Otherwise, depending on the wallet type you have, mobile access varies. To secure your cryptocurrency, all wallets have “keys,” which are typically alphanumeric characters. This key may need to be written down or a QR code downloaded. Follow the instructions provided by your wallet.

How to Buy Bitcoin at a Bitcoin ATM

Here’s how a Bitcoin ATM works to purchase Bitcoin. The process is simple and relatively similar across operators.

  1. Create an account with the Bitcoin ATM operator, privately establishing your identity.
  2. You need a Bitcoin wallet that will securely store the records of all of your Bitcoin transactions, and this can be done easily with a downloadable app for your smartphone.
  3. Insert cash into the ATM and indicate which Bitcoin wallet address you want to send it to. Let’s say you insert $100. The Bitcoin ATM operator then sells you $100 worth of Bitcoin at the market price at that moment, minus their own operating fee. 
  4. You will receive confirmation that your Bitcoin wallet now holds the secure record of this transaction, proving that you own that $100 worth of Bitcoin, minus the fees.

How to Sell Bitcoin at a Bitcoin ATM

Looking to convert your Bitcoin to cash? Some Bitcoin ATMs work to sell Bitcoin as well. Here’s how:

  1. If you don’t already have an account with a Bitcoin ATM operator, you will need to create one.
  2. Then, using one of their kiosks, you log in to your account, and indicate how much Bitcoin you want to sell, and which wallet address you want to sell from.
  3. This transaction needs to be verified on the Bitcoin network, or blockchain, and you will receive a notification when it has been verified and you can withdraw your cash. This takes longer than buying Bitcoin, and different operators require more time than others.
    NOTE: Different operators also have different levels of customer service, if any, so it pays to do your research in advance and do business with a Bitcoin ATM operator who is reputable, and has fast, reliable customer service.
  4. As with buying Bitcoin, the ATM operator will charge a fee for the transaction, so the cash you collect will be minus the operator’s fee and possibly also the miner’s fee.

Bitcoin ATM Fees

A service fee is charged to customers who use a bitcoin ATM. Rather than a fixed dollar amount, this fee is usually charged as a percentage of the transaction. The Consumer Financial Protection Bureau (CFPB) has warned that fees for using Bitcoin ATMs can be extremely high and that the exchange rates offered may not be as good as those available elsewhere.

Consulting Services with Kelly+Partners Accountants

If you’re seeking expert guidance in handling your cryptocurrency transactions and addressing other financial aspects of your business, look no further than Kelly+Partners Accountants Burbank. With a rich history spanning over 20 years of dedicated service to Burbank, CA, and its neighboring regions, our team specializes in providing comprehensive forensic accounting and business management solutions customized to meet your specific requirements.

For further details, we invite you to visit our offices, where you can explore the full spectrum of services we offer and arrange a consultation to discuss your needs in depth.

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