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Ten years ago, the world welcomed the first Bitcoin ATM at Waves Coffee House in Downtown Vancouver, B.C.
Since then, Bitcoin ATMs have grown exponentially. According to Coin ATM Radar, there are currently 37,056 Bitcoin ATMs globally and 31,006 in the U.S. alone. Despite the popularity of online exchanges, these ATMs continue to increase in locations such as gas stations, shopping malls and grocery stores.
Bitcoin ATMs are critical to accelerating crypto adoption and generating revenue for the retailers hosting them. They also present a lucrative money-making opportunity — the Bitcoin ATM market is projected to grow to $16.85 billion by 2033.
Related: A Bitcoin Hot Girl Summer — Will Bitcoin’s Success Continue?
The significance of Bitcoin ATMs
Bitcoin ATMs are essential to the crypto economy. They serve as an onramp for fiat (dollars) to enter the crypto ecosystem, accelerating crypto adoption and giving unbanked or anti-bank consumers access to financial services. Some Bitcoin ATMs offer the sale of crypto for cash, serving as a fiat offramp and offering fast access to money.
Bitcoin ATMs are neighborhood crypto access points. People can purchase crypto while filling a gas tank or shopping for food. The sign “Bitcoin Sold Here” invites curiosity about this new asset class and elicits interest in learning more about crypto.
Digital currencies like Bitcoin were developed to create a new kind of electronic cash, and Bitcoin ATMs allow people to purchase this new currency and use it for digital payments, remittances, or as a store of value. Imagine if someone made traditional assets like stocks available for purchase in fractional amounts at physical locations with cash. Bitcoin ATMs represent a financial opportunity as Bitcoin’s deflationary store of value is unprecedented.
Related: What Is a Cryptocurrency ATM And How Does It Work?
The use cases of Bitcoin ATMs
There are a myriad of reasons why people have utilized Bitcoin ATMs. People consider Bitcoin and other cryptocurrencies a speculative store of value or a more efficient medium of exchange. Two digital currencies are popular for these use cases: Bitcoin and USDC. USDC, a U.S. dollar-backed stablecoin, is available through Bitcoin ATMs and is backed one-to-one with the U.S. dollar. Their utilities are highlighted in the following examples of how people use Bitcoin ATMs:
- In 2014, Bitcoin was valued at only a few hundred dollars each. The people who purchased it at the first licensed Bitcoin ATM in the U.S. launched the same year in Seattle, Washington, have potentially captured significant upside, with Bitcoin now trading closer to $70,000 per coin.
- A mother sent money to her daughter, who was studying abroad in Italy and needed money ASAP to fix her car. She had found a mechanic but didn’t have enough cash to pay him. The mechanic accepted Bitcoin, so she asked her mom to use a Bitcoin ATM to send her the funds. The mechanic was paid within minutes.
- Immigrants in the U.S. can purchase USDC with cash at ATMs to send money back home, where the recipient can pick up the money in their local fiat currency.
Related: 8 Reasons Why Bitcoin is Better than Conventional Currency
The opportunities of Bitcoin ATMs
Bitcoin ATMs are an excellent opportunity for businesses with a physical retail location. Retailers can earn rent on hosted ATMs and drive additional foot traffic to locations. Alternative arrangements allow retailers to receive a percentage of each transaction fee. Retailers should only work with licensed, insured operators and have proper AML policies and procedures.
The most significant benefit of hosting a Bitcoin ATM is the draw of customers to retail locations. Websites like Coin ATM Radar list ATM locations, which is essentially free advertising. Bitcoin ATMs are also searchable via Google Maps and often co-listed at the hosting business. Customers who purchase crypto at ATMs will likely make return visits and buy other items. In this way, they create a win-win partnership between the retailer and the bitcoin ATM operator.
Related: The Senate of Mexico installs its first Bitcoin ATM
The future of Bitcoin ATMs
The crypto winter contributed to consolidation within the bitcoin ATM industry and reduced the number of bitcoin ATM operators down to a few key players at the beginning of 2024. However, since the consolidation of bitcoin ATM installations is beginning to increase again, and with analysts touting an optimistic outlook for crypto in 2024, Bitcoin ATMs will likely remain a key pillar for the crypto economy — but what about five to ten years from now?
Despite the rapid adoption of digital payment methods, cash is still one of the most utilized payment types in the United States. More than 18% of all transactions in the U.S. are still processed in cash. Additionally, money is unique in that there is no charge-back risk. People who use a Bitcoin ATM can access purchased Bitcoin instantly and then send it on-chain as a form of remittance or payment.
While Bitcoin ATMs provide a valuable service, their high cost is the best argument against them. Hardware, retailer rent, software, cash logistics and servicing, among other things, can make operating a profitable Bitcoin ATM very expensive. It can be more cost-effective to crypto-enable existing ATMs and kiosks to let people exchange crypto with cash.
This can be done through an API, removing the requirement of deploying crypto-native hardware. Over time, we will see more legacy financial institutions working with the crypto industry to offer crypto purchases and sales to their customers to remain competitive and meet market demand.
It’s important to remember that Bitcoin ATMs replaced the humble beginnings of crypto when strangers met in person to trade USB sticks of Bitcoin for cash. In a multi-currency digital currency world, physical and digital channels will be combined to cash in and out of crypto, enabling a seamless experience and removing barriers to a blockchain-based financial system. Bitcoin ATMs will continue to expand in popularity and serve as a vital aspect of this ecosystem for years.
Related: How Blockchain Will Transform Traditional Finance As We Know It
