How to Buy Bitcoin from a Bitcoin ATM

Photo: www.nasdaq.com

Knowing how to buy Bitcoin from a Bitcoin ATM is a good skill to have as the digital currency goes mainstream.

Today about 82,000 merchants accept Bitcoin - more than double the number just one year ago.

As more merchants accept Bitcoin, there's a growing need to buy Bitcoin "on the go." That's why the number of Bitcoin ATMs has exploded over the past year.

At the start of 2014, there were just four Bitcoin ATMs on the entire planet. Now there are 350. Almost half of those are in North America (105 in the United States, 60 in Canada, 4 in Mexico).

And Bitcoin ATMs aren't just clustered in places like New York and San Francisco. Both of those cities do have six Bitcoin ATMs. But so does Kansas City.

You can find a Bitcoin ATM in Birmingham, Ala., as well as Boise, Idaho.

Bitcoin ATMS are turning up in bars, restaurants, and shopping malls across America.

Baltimore, where Money Morning makes its home, has one in historic Fells Point at a bar called Bad Decisions. And people are using it.

"When I first put it in here I thought it would just collect dust, but we get about three transactions per day," said Bad Decisions owner John Reusing. He installed the Bitcoin ATM at the urging of the Baltimore Bitcoin Meetup group, which gathers once a month at the bar.

Most of those who use the Bitcoin ATM at Bad Decisions do so regularly. Some buy as much as $1,000 worth of bitcoin at a time, Reusing said.

Bad Decisions also accepts Bitcoin as payment for the food and drinks its sells. But rather than convert the Bitcoin to U.S. dollars, as most merchants do, he's kept all of the cryptocurrency.

"I'm mining Bitcoin by trading it for beers," Reusing joked. So far he's accumulated about three bitcoins, worth more than $750 at the current Bitcoin price of about $255.

While just one example, Bad Decisions shows that the Bitcoin ecosystem is taking root. But as Bitcoin becomes more mainstream, people need to know that using a Bitcoin ATM is not quite like using a traditional bank ATM.

That's why Money Morning has put together this primer on how to buy Bitcoin from a Bitcoin ATM ...

Not All Bitcoin ATMs Are Created Equal

The first challenge for anyone who wants to buy Bitcoin at an ATM is finding the Bitcoin ATM. Bank ATMs are everywhere, with more than 425,000 in the U.S. alone. To find a Bitcoin ATM, you'll need an interactive map.

The best of these at the moment is Coin ATM Radar . It's searchable and gives the address as well as hours of the location of each Bitcoin ATM.

Buying Bitcoin is the next step, and it's not quite as easy as you might expect.

For one thing, because you're not using a card issued by a financial institution as you would at a bank ATM, the process often requires more verification.

Worse still, Bitcoin ATMs are in no way standardized. More than half a dozen companies are building Bitcoin ATMs right now.

Some Bitcoin ATMs can only sell you bitcoins; others can sell you bitcoins or buy bitcoins, spitting out cash like a bank ATM.

Other than a verification step, you need to have a Bitcoin address so the machine knows where to send the bitcoin you've bought. Having a smartphone with a Bitcoin wallet app simplifies this process. Otherwise you'll need a QR code printed on paper.

How to Buy Bitcoin with an ATM

In general, the process of how to buy Bitcoin from an ATM goes like this:

  • Select an option to buy Bitcoin from a touchscreen.

  • Present the ATM with a Bitcoin address in the form of a QR code produced by a Bitcoin wallet app on your smartphone or a paper wallet you already have.

  • Insert your paper money into a slot that resembles the ones on vending machines.

  • Confirm the transaction on the touchscreen.

  • The ATM sends the bitcoin to your wallet.

A few models, such as those made by Lamassu (the most widely installed in the world), Skyhook, and CoinOutlet (pictured here) are pretty much as simple as the steps described above.

Other Bitcoin ATM companies add verification steps that some users might consider intrusive or annoying.

BitAccess machines, for example, require users to type in their mobile phone number. The machine then texts a verification code to the phone that must be entered on the ATM's touchscreen.

Genesis Coin machines use the phone number/verification code tool, but add one more. After entering the code, users need to scan their fingerprint.

But RoboCoin machines require customers to jump through the most hoops. On the first visit to a RoboCoin ATM, users need to create an account. This process starts with the mobile phone number/code sequence. You need to create a PIN. Then you need to scan in a photo ID and let the machine take a picture of you to compare the two. At that point, you need to wait several minutes for the RoboCoin system to create and verify your account.

To buy Bitcoin from the RoboCoin machine, you need to first enter your phone number and your PIN code. Then you scan your palm. Once the machine is satisfied you're you, you can buy bitcoins.

Experience and the marketplace will sort out how complicated the process of buying bitcoins really needs to be.

Until then, the question of how to buy Bitcoin from an ATM won't have a simple answer.

Wall Street Jumping on Bitcoin: One telltale sign that Bitcoin is gaining traction is the rising interest from Wall Street types. So far the list includes such names as former Citigroup CEO Vikram Pandit and former Thompson Reuters CEO Tom Glocer. But you know Bitcoin has arrived when you see one of Wall Street's most venerable institutions sinking money into it...

Follow me on Twitter @DavidGZeiler .

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By: Money Morning
Source: NASDAQ

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