When buying Bitcoin, cash may be king (Bitcoin) Because recent data shows Encrypted ATM installations surge in 2021, Showing an increase of 71.3% from January 1, 2021 to the time of reporting. Specifically, there are currently more than 24,000 encrypted ATMs lie in within the globe. The data further shows that the installation speed of encrypted ATM is about 52.3 machines per day.
Although the cryptocurrency industry is clearly growing, the reason behind the surge in crypto ATMs may be due to the demand for using cash to buy bitcoins. Alona Lubovnaya, Director of Product Operations, Bitcoin Warehouse — a Bitcoin ATM operators — Tell Cointelegraph that more and more people from all walks of life are becoming interested in encryption, especially in underfunded communities. “We have entered a new era where digital wallets can replace traditional bank accounts. Therefore, more and more people choose to buy cryptocurrencies with cash.”
Cash is simple and familiar to the mainstream
Although there are many reasons why some people want to buy cryptocurrencies from ATMs instead of exchanges, most common use cases seem to focus on easy and fast access to cryptocurrencies.
For example, a study Claim There may be more than 50 million Americans buying cryptocurrency next year. The survey results also show that lack of understanding is the biggest obstacle facing new investors. Specifically, 20% of respondents said they still don’t understand how to buy cryptocurrency.
Derek Muhney, director of marketing and strategy at Bitcoin ATM provider Coinsource, told Cointelegraph that many people who want to start using cryptocurrency value the tactile elements of physical machines (such as ATMs). According to Muhney, Bitcoin ATM is the best way to buy Bitcoin for an increasing number of target groups without bank accounts and insufficient bank accounts. Although this may be obvious, Muhney further pointed out that baby boomers and millennials have become the case, noting that these users accounted for the largest share of Bitcoin ATM transaction volume to date.
Ben Weiss, CEO of Chicago Bitcoin ATM operator CoinFlip, responded to Muhney. He told Cointelegraph that the main function of Bitcoin ATM is to allow new users to understand and obtain cryptocurrency. These new users may not understand cryptocurrency or blockchain technology. Complexity. To prove this, CoinFlip Implement A Twitter poll to find out how many people on Crypto Twitter have used Bitcoin ATMs. A CoinFlip survey shows that 72.2% of people have never used a Bitcoin ATM, while only 27.8% said they have used it.
Weiss explained that he was not surprised by these results, noting that Crypto Twitter is made up of people who are passionate about cryptocurrencies and have a relatively deep understanding of the technology. Therefore, Weiss commented that mainstream users are the main customers of Bitcoin ATM:
“Using encrypted ATM is the easiest way to buy encryption. You don’t have to wait weeks or months for verification, you usually receive your encrypted currency before you get back in the car. People understand ATM, and the concept of encrypted ATM does not It’s too different.”
Alex Mashinsky, CEO and co-founder of Celsius, a centralized cryptocurrency lending platform, further elaborated on this point, noting that there are many customer groups in the crypto space. For example, Mashinsky explained that hodlers will never sell their cryptocurrency, and the goal of speculators is to time the market. However, Mashinsky pointed out that “tourist” users may use Bitcoin ATMs. Masinsky added:
“For temporary workers and 25% of people who don’t have a bank account, Bitcoin ATMs are cheaper than Western Union or bank wire transfers. This segment will continue to grow and seize the market from traditional financial companies that charge customers exorbitant fees. Share.”
Bitcoin ATM will grow, but security issues still exist
consider In fact, more than 6% of American households, or a total of 14.1 million American adults, currently do not have a bank account, and Bitcoin ATMs will undoubtedly increase exponentially. Muhney further supported the estimate, Suggest “By 2025, more than 100,000 Bitcoin ATMs will be installed, and the industry will grow to more than $1.7 billion.”
While this is notable for the growing cryptocurrency space, security challenges may hinder adoption. John Jeffries, chief financial analyst at CipherTrace, a cryptocurrency intelligence company, told Cointelegraph that just last year, Bitcoin ATMs operating in Canada did not require any form of knowing your customers or KYC processes. “None of these Bitcoin ATMs require KYC, which makes these the wild west,” Jeffries said. As the crypto space matures, Jefferies pointed out that most Bitcoin ATMs in the United States now require user KYC:
“KYC is essential for these currency service companies to become part of the traditional financial system. We now see many Bitcoin ATM vendors (suppliers that manufacture hardware) and operators focusing on compliance.”
Jefferies added that due to inspections by entities such as the Internal Revenue Service or IRS, the situation has also become like this: “Similar to traditional money service businesses, Bitcoin ATM providers will be visited by inspectors. The IRS serves as a financial crime enforcement network like this Do.”
In addition, Jefferies pointed out that CipherTrace is beginning to see Bitcoin ATM providers interested in solutions that comply with travel rules. The travel rules of the Financial Action Task Force (FATF) will take effect for virtual asset service providers (VASP) in 2020. Travel rules require regulators and VASP Collect and share customer data during the transaction.
According to Jefferies, CipherTrace is working with six Bitcoin ATM operators to apply a travel rules solution called “Traveler” to specifically resolve the due diligence of the counterparty VASP as required by the FATF guidelines.Although the Traveler tool is Recently implemented by some exchanges Like Binance and Crypto.com, Jefferies shared that CipherTrace is making the product more viable and making Bitcoin ATM operators compliant.
Although this may be the case, some industry experts believe that Bitcoin ATMs are as secure as traditional ATMs. Jonathan Ovadia, CEO and co-founder of the South African cryptocurrency exchange Ovex, told Cointelegraph that, based on the company’s research, “we don’t think Bitcoin ATM will be used for very large transactions.” Therefore, Ovadia pointed out that compared with conventional ATMs, no special security measures are required in terms of physical security or network security.
Eric Grill, CEO of Bitcoin ATM maker Chainbytes, told Cointelegraph that the company runs HippoAtm.com and charges a high fee of 17% per transaction. Grill shared that the average transaction amount on the HippoAtm.com machine was US$1183.92 in July 2021 and US$1,325.98 in June 2021.
This is an important point to consider in terms of safety. Jefferies stated that Bitcoin ATMs that process large transactions may be suspicious.For example, Jefferies mentioned that in August 2019, Kunal Kalra, also known as “shecklemayne”, was operating an unlicensed currency service business, where he exchanged Convert USD to Bitcoin and vice versaAccording to Jefferies, Kalra does commission work and only deals with customers who are willing to exchange at least $5,000 per transaction.
Despite these concerns, Bitcoin ATM providers remain optimistic. Muhney stated that Coinsource end users have invested “hundreds of millions of dollars” in Bitcoin. “This is why we are very optimistic about the next phase of peak adoption, similar to 2017/2018, which we expect to appear in the second half of 2021.”