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First Bitcoin ATM goes live next week: but does it have a purpose?

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Virtual currency Bitcoin will tick off another milestone in its remarkable year of swings and scandals next week when the first permanent ATM will open for business in a Vancouver coffee shop.

According to Wired, the ATM will go live on Tuesday, allowing anyone to walk up and stuff the machine with up to C$3,000 (about $2,900 in U.S. dollars) and receive Bitcoin in return; users can likewise trade in Bitcoins and pull cash from the machine.

The ATM, built by Nevada-based Robocoins, made an appearance at a Las Vegas convention earlier this year, and a competing version turned up at a Bitcoin event in London. The Vancouver machine, however, appears to be the first permanent ATM, and its owners reportedly plan to install four more of them throughout Canada in the near future.

If the Vancouver installation is successful (and the machine isn’t torn out and carted away by regulators), it could help further cement the legitimacy of Bitcoin: the permanent presence of the ATMs, which the owners bought for $18,500 a pop, will reinforce that Bitcoin is a valid currency just like dollars, euros and pesos.

The move makes symbolic sense for Bitcoin believers, but does it have a practical purpose? I don’t think so. There’s no obvious advantage to buying the stuff at an ATM rather than online or person-to-person. In fact, it seems downright inconvenient: why trundle down to a regular ATM to get bills to stuff into the Bitcoin ATM, when you could do the same transaction on your couch — and pay fewer fees? The Bitcoin ATM seems no more than an electronic middleman, albeit a novel one.

There is also no privacy advantage. The Vancouver contraption requires users to register a palm print as an anti-money laundering measure — meaning users give up more personal information than they might online.

If Bitcoin ATM’s have a practical purpose, it’s overseas where, as I’ve argued in the past, Bitcoin may have a vital role in countries with unstable currencies. Indeed, a reported plan to stall Bitcoin ATM’s in Cyprus, an economic basket-case that could get booted out of the euro zone, makes some sense.

It’s a different matter in the United States and especially, Canada, which has a sound currency and the world’s safest banking system.

The upshot is that, two years from now, the Bitcoin machine in the Vancouver cafe is more likely to seem akin to an old Frogger machine than the vanguard of an economic revolution.

6 Responses to “First Bitcoin ATM goes live next week: but does it have a purpose?”

  1. This one is a shocker for most people; Canada is often considered the darling of Western currencies because (so goes the conventional wisdom) the Canadian economy is strong and natural-resource based.

    But if you look at the health of the central bank, Canada wins the award for LEAST capitalized central bank in the west, posting razor thin equity of just 0.53% of total assets.

    Given that currency is nothing more than a liability of a central bank, the bank’s poor financial condition weighs heavily on the currency’s resilience.

  2. There’s no way you can do the same transaction just as easy from home.

    If you’re someone who uses an online exchange, you must be a large dealer, because the fees to deposit cash into them are insane. Like 50$.

    For those who deal in small amount of coins (100-500$), they dont want to spend 50$ in fees for such a small amount. A machine such as this is a godsend for those who want coins quickly and easily, and don’t want to find a stranger on the internet to sell to them.

    (If I’m wrong, and there is a cheaper way of getting money onto exchanges, please let me know! Otherwise, I’ll be at the ATM)

    • Thanks for the comments. Bryan: I’m not sure about Canada right now but, in the US, Coinbase permits you to trade bitcoin for cash instantly so long as you disclose your identity. Because of this, I can’t see how it could be cheaper or easier to walk around to ATM’s to do the same exchange

      If there is not Coinbase-like service in Canada, then the Vancouver ATM does make sense

  3. A bitcoin ATM could give the unbanked access to online shopping. Though it’s true that buying face to face could do the same, that requires coordination with other people.