Whether or not you’re a believer in the value of bitcoin and other digital currencies, the constant flow of news about cryptocurrencies makes them hard to avoid. One of the least known aspects of bitcoin is the rise of bitcoin ATMs. Are these a convenience or an attempt at fleecing the “unbanked,” mostly low-income people who do not have bank savings, checking or credit card accounts?
According to Coin ATM Radar, there are nearly 2,000 bitcoin ATMs in the United States and another 511 in Canada. Globally there are 3,400 bitcoin ATMs, of which more than half support additional cryptocoins as well. A further 3,800 or so support different cryptocurrencies such as litecoin, ethereum and monero.
The bitcoin machines are being installed at a rate of about seven per day, with two companies, Genesis Coin (34%) and General Bytes (28%), accounting for most of the installations.
A weekend report in the Detroit Free Press found 80 bitcoin ATMs in the Detroit area, more selling bitcoin than buying it back, although new installations may be favoring two-way transactions. Detroit’s machines “are showing up in the oddest spots … many in the neighborhoods where most people aren’t flush with cash.”
While the bitcoin ATM industry claims the machines are placed in low-income neighborhoods as a benefit to the unbanked, the dean of the University of Michigan’s Gerald R. Ford School of Public Policy commented:
That strikes me as not a safe or sound way of providing financial services to low-income people. … Bitcoin has very volatile price levels, asset levels–and the last thing low-income people need is more volatility, more uncertainty, in their lives.”
Some of the target population may even be looking at the machines as a kind of lottery, an opportunity to score a big gain when the price of bitcoin moves higher. But as bitcoin prices over the past six months demonstrate, rising bitcoin prices are anything but a sure thing.
Coin ATM Radar reports that the average transaction fee at a bitcoin ATM is 8.99%, with an average buy fee of nearly 9.5% and a sell fee of 8.1%. That’s an average, so fees could be much higher in some locations.