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First Bitcoin ATM gets 348 transactions in first 8 days. Now comes the hard part

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An ATM machine that trades cash for Bitcoin attracted plenty of hoopla when it went live in a Vancouver coffee shop last week, but how many people actually used it? Now we have some numbers:

According to the ATM maker, Robocoin, the machines did over $100,000 worth of business and racked up 348 transactions in its first eight days. CEO Jordan Kelley added that 70 percent of the ATM users created Bitcoin wallets — suggesting they were first-time users.

“We had a fantastic mix of new and old Bitcoin users,” said Kelley, adding that the ATM visitors included Bitcoin miners and an 80-year-old woman.

Kelley claimed that the Robocoin machines, which cost about $15,000 each, will soon appear in other cities by the end of December, including Berlin, Toronto, Hong Kong, London and New York.

It’s too soon to say if Kelley’s prediction will come true, but the hype over the Vancouver ATM does show far Bitcoin has moved into the mainstream in the last year alone. It’s not only trading at new highs, but is getting serious respect from venture capitalists and the tech establishment.

But the rise of Bitcoin does not mean the rise of Bitcoin ATM’s. I’m still a skeptic about the business model here, which works like this: companies like Robocoin sell the machines to operators who install them and take three to five percent of every transaction.

Did you catch that last part? An exchange at the Bitcoin ATM will result in a fee higher than a regular ATM. Why do that when you can do the same transaction online for a one percent fee?

Recall that Bitcoin’s appeal, compared to conventional banking, lies in its convenience, cost saving and (relative) privacy. A Bitcoin ATM provides none of these things, especially as the Robocoin machine requires a biometric handprint for compliance with money laundering rules (though the handprint, presumably, won’t be shared with the government). Meanwhile, can a Bitcoin operator expect to recoup their investment, especially when operators must rely on the ATM maker’s software?

Kelley argued that people will flock to ATM machines because it’s a quicker method to sign up for Bitcoin than using a service like Coinbase, which requires several days to link an online bank account. He added that at current rates, the Vancouver Bitcoin owners will recoup their investment in less than a year.

We’ll see. I’ll be in Vancouver in late December and let you know firsthand whether North America’s first Bitcoin ATM is still humming.

This story was updated at 10:30PM ET to replace “next to nothing” with “one percent” to describe online exchange rates for Bitcoin.

Bitcoin Canada

18 Responses to “First Bitcoin ATM gets 348 transactions in first 8 days. Now comes the hard part”

  1. Really? People still think BitCoins are currency? It will never be currency when it is inflating and acting as an investment causing hoarding.

    Would you buy a chocolate bar with Bitcoins knowing you could wake up in the morning to discover you paid over $20 CAD for it? I doubt you will. The grocer is not going to stand by waiting for an hour in, a trading rush, waiting for one confirmation for a $1 chocolate bar sale.

    Perhaps the Internet access is down. What is the store clerk going to do? Write you a hand-written receipt? Business stops. The economy stops.

    When the scammers behind the system decide that 21 millions Bitcoins aren’t enough and start to produce more to jack up their profits, who is going to stop them? You? Canadians without guns? The banking giants for a huge fee?

    Bitcoins are going to be the most expensive currency we have ever seen. You think banking fees are high now? You haven’t seen nuttin’ yet! There is no free lunch.

    • Bitcoins are a few years old and most people dont know what they are. You immediately assume that the technology wont adapt to facilitate transaction speeds and or methods. Its a very myopic and unintelligent view on bitcoin.

      As far as it taking a currency to support bitcoin thats how all fiat starts. The USD was originally backed by silver/gold. Not anymore. Eventually bitcoin wont need currency for support but become its own currency. In fact it might be that many currencies are backed by bitcoin.

  2. Minds would like to know where all the Bitcoins cam from to trade with cash? How did so many Bitcoins get in the hands of the machine producers t stock the machines? The supply to the machines should run dry quickly o do they have some magical supply that never ends?

  3. ReallyRackedUp

    Jeff John Roberts, you overlook something very important. The exchanges now require ID verification to comply with anti-money laundering regulations. Fulfilling this requirement involves sending an identity thief’s wet dream payload (copy of driver’s license, passport, bank statement, utility bill) to some entity in, say, Slovenia…and entity that “itself” hides behind a net obscurity. Now, when ID thieves can use my biometric handprint to steal my identity this ATM will lose a lot of it’s appeal, but until then I sure wish there was one closer. Then again I like Vancouver, so thanks for the article.

  4. To my understanding, they issue you a certificate once you put in real money as to how many bitcoins that money obtained. Since this currency is constantly fluctuating, if I wanted to redeem some bitcoins for real cash and the value had dropped, would it dispense the real trading price of the bit coin?

  5. Using an ATM machine to get ready cash out immediately is the only method that was accustomed with ATM users till date. Now with the invention of bit coins, managing cash transactions and making purchases will get quite unaccustomed to. But it for sure that with the advent of bit coins a new method of cash transactions will be adopted.

  6. I would love to know how you are buying\selling exchanging online for next to nothing? I pay at least 2-3% and as high as 6% and I consider myself well informed. Please point me to your way as I would love to save that money if I can!! Thanks.

    Guy in glasses

    • Thanks for the comments, everyone. Guy in glasses, I bought my Bitcoin on Coinbase which offers both a wallet service and an exchange, The exchange fee was 1% I think — I’ve updated the story to say this, as it’s true this is not “next to nothing” as I initially stated. (I’m not partial to Coinbase in particular — there are other services out there).

      As for the future of the machines, I’ll add that you can use Bitcoin for two reasons: to speculate, or to buy things. I don’t see how a for-cash ATM facilitates either purpose.

    • Jonas Lihnell

      Let me introduce to you the idea of local bitcoin transactions. When trading with individuals instead of companies you seldom need to pay any fees for the trade itself. That said, the strength of the bitcoin protocol only applies to the bitcoin protocol itself, not the various technologies that connects it to things other than the bitcoin protocol. If a vendor decides to take a markup, or a company that helps facilitate trade between bitcoin and fiat money decides to take a markup then those are not properties of bitcoin but rather choices that these individual companies or entities does. Bitcoin in itself does not have those levels of waste, it’s rather efficient.

      If we’re looking at finding a complete system in which you can go from fiat money to buying a product and getting it delievered where you’re looking for a low or inexistent cost then you might want to look at the companies that lowers their prices for their bitcoin paying customers, in particular I’d like to highlight the bitcoinstore which sells consumer hardware at almost no markup at all ni an effort to strengthen the ecosystem. You could make quite some savings by buying your next computer, tv or other household electronic from them.

      Disclaimer, I have no stake in bitcoinhardware and have never used it myself (yet).

  7. Paws1t1veEV

    Bitcoin’s too slow to buy coffee at a coffee house (10 min ~confirmation). These ATMS will allow users to “store wealth” clandestinely and securely and also to convert that wealth to easy to use fiat for the days goods.

    • Jonas Lihnell

      There’s no need to wait for the first confirmation if the recieving part has personally verified the transaction itself (as that makes it very likely that it would end up in the coming block). Furthermore, we will soon ™ have upgraded the bitcoin protocol with a payment enhancement that allows for receipts and direct transactions that doesnt need to wait for the transaction request to bounce over the internet before being looked at in the shop, instead the transaction will be broadcast both via the internet and via NFC, bluetooth or other direct means to the payment terminal.

      • There will be and already are companies that will take the risk of fraudulent transactions on behalf of the merchant for a fee. They will be the Visas and Mastercards of bitcoin. Merchants and consumers can freely exchange bitcoin with someone else taking the risk at a premium.

        A 20 minute verification is better than a 3 day verification.

  8. I’m one of the people who used it. I agree, the fee was very high, but it was quick, I didn’t have to make an account beyond the palmprint, and it takes actual paper cash.

    Now I have to go back and see if I can actually buy a copy of coffee.

  9. When it comes to purchasing Bitcoin online, it’s a hassle for anyone that’s not already ultra techy. I understand your point about the fees, however, people are quite familiar with paying a little extra for convenience. Personally, I’d like to see the major alts also supported such as Peercoin (PPC) and Litecoin (LTC).