How Crypto ATMs Work?
A crypto ATM is an automated teller machine that supports users to buy and sell cryptocurrency in exchange for cash or through a debit card. All ATMs sell Bitcoins, but a few offer other cryptocurrencies like Ethereum. But the important question is – how crypto ATMs work?
Crypto ATMs work almost on the same lines as traditional machines; the only difference is that these ATMs connect with a user’s digital wallet instead of your bank account to process the transaction. Moreover, there are thousands of crypto ATMs worldwide, with the majority in the United States.
Although understanding how crypto ATMs work is not a difficult query, as most of us have already experienced using traditional ATMs, so, let us explore further the mechanics behind crypto ATMs.
So, let’s us get start!
Crypto ATMs Working
Let us get straight to our main topic as to how crypto ATMs work.
In simple terms, crypto ATMs convert deposited cash into cryptocurrency by connecting to a crypto exchange. At the same time, transactions are processing through blockchain, which are distributed digital ledgers to store cryptocurrency transactions.
Here are the key transactions methodology of the crypto ATMs.
- Major crypto ATMs only offer one-way transactions – purchasing of cryptocurrencies. However, few ATMs offer two-way transaction facilities, meaning users can buy and sell cryptos through these machines. Users will scan their digital wallet’s QR code, select the amount they want to sell, and receive cash from ATM after a transaction is approved.
- Buying Cryptocurrency is an easy task. All users need to do is visit an ATM, insert fiat money like USD, and receive cryptocurrency in their digital wallet. However, one important point to consider is to choose the right machine; for instance, if you want to purchase Ethereum, select an ATM that supports ETH.
- Certain crypto ATMs use a crypto exchange app that supports redeeming a voucher purchased for cash. For instance, users can select crypto by depositing funds in the ATM and printing a voucher instead of receiving coins. Later, they can use this voucher by scanning it with a QR reader to deposit funds directly into the user’s wallet or make a payment.
In short, crypto ATMs are easy to understand and manage, and they have added value to crypto trading and have supported cryptocurrencies to reach out to more customers.
How To Use Crypto ATM?
Users will need a mobile phone, phone number, picture (optional), and access to a digital wallet. Here are common steps to transact with a crypto ATM.
- Sign up with a digital wallet. Since crypto ATMs connect to the user’s digital wallet to complete a transaction, you will need one. Numerous famous digital wallets are available in the market, while all major crypto exchanges also provide digital wallets.
- Locate crypto ATM. The next step is to find a nearby crypto ATM, and you can search them on Google or through Coin ATM radar.
- Verify your identity. Most ATMs will require a phone number to verify your identity. However, few ATMs require further information like social security number or a valid photo ID.
- Scan your wallet. Users will have to scan their wallets to buy Bitcoin or other cryptocurrencies since most digital wallets can display a QR code easily scanned with a crypto ATM.
- Make a purchase. Now enter the purchase details, like which crypto you want to buy and the amount to complete the transaction. However, you must deposit cash and pay through other supported payment methods.
- Complete the transaction. A transaction may take some time since it is run on a blockchain. The transaction as completes once the funds are receiving in the user’s wallet. You will get a receipt from the crypto ATM.
In addition, some ATMs also provide a redeemable voucher in the future, while few require users to install an app to use ATM. So, always read on-screen instructions before starting a transaction.
Risks of Crypto ATM
Although crypto ATMs are an ideal way to convert cash into cryptocurrency swiftly, certain risks are there, which are discussed below.
- High Fees
Crypto ATM may charge as high as 10% for transaction fees. On the other hand, crypto exchanges charge about 1% to 4%.
Crypto ATMs are in few quantity and difficult to locate; although the USA has the most crypto ATMs, many countries still do not.
- Transaction Limits
Crypto ATM companies have set maximum and minimum per-day transaction limits. Although it helps to avoid scamming, users may still find it tough.
- Un-insured funds
Transactions made through crypto ATMs does not secure with insurance; thus, you will lose your cryptocurrency in case of loss or theft while transacting through crypto ATMs.
Frequently Asked Questions
Are crypto ATMs safe?
Crypto ATMs are inherently secure as they use blockchain technology. All transactions are saved and recorded on the blockchain network while funds are transferred to the user’s digital wallet.
What are crypto ATM fees?
Crypto ATMs charges are high. Transaction fees are as high as 20% (or more), and although there are ATMs that charge 2% to 4%, the average transaction fee on crypto ATMs is 15%.
Are crypto ATMs legal?
Crypto ATMs are legal since many countries have started regularizing cryptocurrencies; thus, legal bindings support these ATMs.
How do crypto ATMs execute transactions?
Crypto ATM connects your digital wallet to process a transaction instead of a bank account. The rest of the process goes the same.
That’s it with learning – how crypto ATMS work.
The process is simple and somewhat similar to traditional ATMs. Crypto ATMs connect users’ digital wallets to complete transactions by engaging blockchain to record the transaction. However, fees are high compared to buying crypto from an exchange.
Moreover, crypto ATM support all major cryptocurrencies, including Bitcoin and Ethereum. Users are required to provide their identities like social security numbers, a picture and other IDs to complete a transaction. However, a few ATMs only require the user’s phone number.
Despite the ease of use, crypto ATMs are vulnerable to scamming, and since these are not backed by insurance, this adds uncertainty to transactions. Moreover, locating a crypto ATM will require a thorough search since these are not everywhere.
Please let us know if you have used crypto ATM and share your experience in the comments section.