In the early days of Bitcoin, when it was still a fringe interest item on obscure forums, it was difficult to find a place to spend these mysterious coins.
Beyond a few dubious merchants and Silk Road dealings, it wasn't really clear what to do with the relatively new mode of currency. Fast forward a few years and Bitcoin is now a mainstream phenomenon. There are now more than 4,000 Bitcoin ATMs around the world, and their popularity is only increasing. So what's changed? Why are businesses starting to see Bitcoin ATMs as a viable investment option? Keep on reading to find out.
What Exactly Are Bitcoin ATMs?
Before we get into why these ATMs are so popular nowadays, let’s first discuss what they are.
In a nutshell, Bitcoin ATMs are machines that allow you to buy and sell Bitcoin and other cryptocurrencies using the familiar interface of an automated teller machine. Thanks to their quick and easy operation, the network of these machines is expanding rapidly.
However, it’s worth noting that these are not real ATMs as many machines don’t support the deposit or withdrawal of cash. The more appropriate term is a kiosk that lets you buy bitcoin, although some machines also support the sale of bitcoin.
How Do Bitcoin ATMs Work?
A Bitcoin ATM does exactly what it promises. Every machine supports the purchase of bitcoin using a fiat currency like the U.S. dollar. At the same time, many machines also support the sale of Bitcoin and withdrawal of cash too. Whether the ATM near you supports this depends on the individual machine.
But how exactly do these machines convert cash into Bitcoin and vice versa? To understand that, you first need to understand a bit about how Bitcoin works.
Bitcoin is a digital asset that uses peer-to-peer technology to enable instant payments. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million. This limits the ability of governments and banks to inflate the currency by printing more bitcoins.
So when you deposit money into one of these ATMs to buy bitcoins, what happens is that the machine transfers your money to the operator and initiates a transaction to transfer the equivalent value in bitcoins to your wallet. This transaction, like any other crypto transaction, is recorded on the blockchain.
Are Bitcoin ATMs Better than Typical ATMs?
While the jury may still be out on the long-term potential of Bitcoin and other cryptocurrencies, there's no denying that Bitcoin ATMs are gaining in popularity. In fact, there are now more than 4,000 Bitcoin ATMs worldwide.
So what's the big deal? Why are businesses flocking to them?
Well, for one thing, Bitcoin ATMs allow businesses and their customers to easily and quickly convert fiat into bitcoins. This can be a huge advantage for establishments that want to accept the “digital gold” for payment but don't want to go through the hassle of setting up a digital wallet and integrating it into their checkout process. Bitcoin ATMs also tend to have lower fees than traditional ATMs, which is another big draw for businesses.
For individuals, it's simply another way to get their hands on bitcoins without having to go through a cumbersome third-party process. Exchanges like Coinbase require users to pass a lot of verification, KYC, and AML checks to successfully use their platform. Whereas a Bitoin ATM allows anyone to buy their first fraction of a bitcoin using the U.S. dollar or another fiat currency.
In short, it seems like Bitcoin ATMs are here to stay—and they're only going to become more popular in the years to come!
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