How Does a Bitcoin ATM Work? All Your Questions Answered Here

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Bitcoin saw adoption rates of 880% from 2020 to 2021 for numerous reasons. For one, it’s an asset that has seen remarkable gains in a relatively short time span.

And two, the use of bitcoin in our daily lives has become much more common. It’s a currency that you can use to pay for goods and services that doesn’t rely on the banking system.

And while many new crypto investors and users are buying bitcoin online, smart buyers are using bitcoin ATMs to get their hands on bitcoin even faster.

So how does a bitcoin ATM work? Is it different than a traditional ATM? And why would you want to use one?

Keep reading our bitcoin ATM beginners guide below to learn why and how you can turn cash into bitcoin in just a few minutes. 

What are Bitcoin ATMs?

So what is a bitcoin ATM? It looks and feels just like a standard ATM (automated teller machine). 

But its primary function is a bit different. With a traditional ATM, you insert your debit card in order to withdraw cash. That cash is deducted from your checking account. And you pay a small fee for the convenience.

If your bank owns the ATM, you can also use it to deposit cash into your bank account, and they are free to use.

But a bitcoin ATM doesn’t deal with bank accounts at all. Instead, you insert cash and buy bitcoin.

You don’t even need to have a bank account in order to use one of these machines. In fact, many people use bitcoin ATMs because they don’t want to deal with their banks when buying crypto since banks generally frown upon crypto purchases.

When buying crypto online through a cryptocurrency exchange, you’ll typically send funds from your bank account to the crypto exchange, which can upset your baking institution. 

How Does a Bitcoin ATM Work?

So how do bitcoin teller machines work? The ATM connects to a cryptocurrency exchange. 

When you insert cash into the machine, you are purchasing bitcoin at the current exchange rate from an actual crypto exchange. 

You’ll pay a fee to make a transaction using the ATM, similar to using an out-of-network ATM with your debit card.

The process is very simple and intuitive. Choose how much bitcoin you want to buy, insert the corresponding amount of cash, and complete your purchase.

The thing to be aware of is storing your bitcoin. You can’t just buy bitcoin and walk away. It’s a digital currency. You need a place to store it.

You’ll need a crypto wallet to actually store your digital cryptocurrency. Luckily, these are free mobile applications that you can download onto your smartphone. 

Before heading out to a bitcoin ATM, download a crypto wallet onto your phone, and set it up. When using a bitcoin ATM, you’ll scan the QR code provided by your crypto wallet.

Once your ATM purchase is complete, the bitcoin will be sent to your crypto wallet.

Be aware that crypto transactions can take a few minutes to complete. You can leave the ATM once you’ve followed all the prompts on the screen, but you might not see the cryptocurrency in your wallet until a few minutes later. 

Why Use Bitcoin ATMs?

So what’s all the fuss about bitcoin anyway? Why should you be investing in this new, risky asset class?

Because bitcoin started at the bottom. When it was first released in 2009, it was basically given away for free by the thousands. Bitcoin didn’t have a price associated with it. 

Eventually, people wanted it, and the value rose to a few cents apiece, then to a few dollars apiece, and so on.

In November 2021, at the height of the recent bull market, the price of an individual bitcoin nearly reached $70,000 before falling back down to $20,000. 

If you bought bitcoin way back in the day, or even just two years ago, you would’ve made some outsized returns. 

But back then, buying bitcoin was more difficult. It was reserved for the tech nerds who spent way too much time on computers.

Today, however, bitcoin can be bought and sold by anyone. And bitcoin ATMs are a big part of this since laptop computers and bank accounts aren’t necessary.

People who don’t have a bank account can put cash into a bitcoin ATM and store bitcoin on their phone. This saves a lot of steps, where you might normally have to put cash into your bank account, then send it to a crypto exchange, and then buy bitcoin. 

Bitcoin ATMs simplify the process. And yes, you can sell bitcoin and receive cash on the spot, too. 

Using a Bitcoin ATM for the First Time

Are you ready to buy some bitcoin for yourself? Want to do it the fast and easy way, converting cash to bitcoin? Here are the simple steps you need to take to get started.

After your first visit, it gets a lot faster and easier. 

Find a Bitcoin ATM

The first step in buying bitcoin with an ATM is finding an ATM that sells bitcoin. This is easier than ever before.

Byte Federal is one of the largest providers of bitcoin ATMs in the US. You can find their machines all over the place. For example, if you’re in Columbus Ohio, you can discover more about their available locations here. 

Companies like Byte Federal have machines that are focused primarily on crypto.

But if you don’t find an ATM-like this near you, fret not. Most new models of traditional ATMs are also bitcoin compatible. So if you find a standard ATM near you (not a bank-owned ATM), there’s a good chance you can use it to buy bitcoin.

But there might be some limitations with these ATMs. For example, you might have to pay using a debit card rather than inserting cash. 

Set Up a Crypto Wallet

Now that you found a bitcoin ATM nearby, it’s time to set up your crypto wallet. It’s much easier than it sounds.

Just head to the app store on your mobile device. Search for crypto wallets and choose one that is rated highly. Most are free. Purchasing a paid wallet isn’t necessary for most crypto newbies. 

Some wallets might request personal information, while others don’t collect any information. All wallets will give you a seed phrase, however.

This is essentially your ultra-secure password. Write this down on paper (not on your phone or computer). Save that paper in a safe, dry place.

If you ever lose your phone and need to gain access to your wallet (and your bitcoin), you can use the seed phrase to retrieve your wallet on a new device. 

Before visiting the ATM with your new crypto wallet, get familiar with the app. There should be a button to press called “Receive.”

When buying crypto at an ATM, you’ll press this button to display your wallet address in the form of a QR code. You can scan this at the ATM to ensure your bitcoin goes directly to your wallet. 

Create an Account at the ATM

Now comes the fun part. When you visit a bitcoin ATM for the first time, you’ll need to create an account. And this requires personal information.

Crypto providers are heavily regulated in the US. And they are required to collect lots of information from their customers before allowing them to buy or sell crypto.

This is known as “Know Your Customer.” The laws around this are aimed at preventing money laundering. 

So don’t be surprised when you need to provide your name, phone number, address, and social security number. Unfortunately, that’s what it takes to start buying crypto in the US. 

It’s not the bitcoin ATM provider being nosy. It’s Uncle Sam being nosy.

When setting up your account, make sure to include your cell phone number. Each time you visit the ATM in the future, you can speed up the process by accessing your account via text message to your cell phone. 

Begin Your Transaction

With an account created, you can start your transaction to buy bitcoin. This is the easiest part. Just follow the prompts on the ATM screen.

First, select which cryptocurrency you want to buy. Some ATMs only offer bitcoin, while others also offer altcoins like Ethereum or LiteCoin. 

Then, choose how much you want to purchase. You’ll insert your cash into the ATM.

It will display the current exchange rate for bitcoin, as well as how much you’re actually going to get. You’ll pay a commission to the crypto exchange as well as a fee to use the ATM. 

All of this should be displayed on the screen for you. If the amount of bitcoin you will be receiving looks good, you can confirm the purchase.

At this point, you are done and can walk away. However, as mentioned earlier, it might take a few minutes for the bitcoin to hit your wallet.

That’s because the blockchain (the network that powers bitcoin) might be congested. If a lot of people are making transactions, it could slow to process down. It usually doesn’t take more than a few minutes.

Selling Bitcoin at an ATM

Yes, you can also sell bitcoin using a bitcoin ATM. The process is very similar to making a purchase.

You’ll start your transaction on the screen and choose what you want to sell and how much.

Then, you need to send the bitcoin from your wallet to the ATM. The ATM should display a QR code containing the wallet address. 

You’ll initiate a transfer from your bitcoin wallet, and have the option to scan the receiving wallet address. Scan the QR code and confirm the transaction.

In an ideal world, the transaction on the blockchain is completed right away and you receive your cash on the spot. But it’s common to have to wait a few minutes for the transaction to hit the blockchain.

In these instances, rather than cash, you’ll get a receipt. You can then step aside and let the next person use the ATM.

When the transaction clears, you’ll get a text message notifying you. You can then revisit the ATM, insert your receipt, and receive your cash.

Because this can take a few minutes (somewhere between two and 30), it’s best to find an ATM at a grocery store or other location you need to visit anyway.

That way, you can go inside and take care of business while waiting for your transaction to complete. 

Helpful Tips when Buying Bitcoin

The topic of cryptocurrency is a big one. There’s a lot to learn, a lot to say, and a lot to be aware of when making a purchase or investment. Here are some helpful tips to keep in mind.

Know Why You are Buying

There are two main reasons people buy bitcoin. They are either buying it as an investment, so it can increase in value before they sell it.

Or they are buying it to use it. You can use bitcoin to purchase goods online or in person, or you can send it to friends and family members across the globe. 

It’s important to know why you are buying it in the first place. If you are buying and holding as an investor, know that cryptocurrency is an extremely volatile asset class. 

The value will go up and down by the hour, sometimes in dramatic fashion. You need to weather out this volatility and avoid panic selling. Otherwise, you lose a lot of money. 

Educate Yourself

Cryptocurrency is complicated. It’s also very controversial.

It’s revolutionary finance designed to overthrow the existing financial system. Most people aren’t aware of why bitcoin exists or how it’s poised to change the way we handle money.

But it’s important to learn the basics of how it works, why it exists, and where it’s going. Knowledge is power when it comes to new technology and investments.

Bitcoin for Everyone

So how does a Bitcoin ATM work? It works by allowing you to insert cash to purchase bitcoin using their trading software.

The bitcoin is then sent to your digital wallet, where you can store it, spend it, or send it elsewhere. These machines are easy to use and make it possible for just about anyone to bit cryptocurrency for themselves.

Looking for more crypto tips and tricks like this? Visit the rest of our blog now to keep reading.