Today, Scanlan is the chief technology officer of Coinmover, a Lynn company that makes “Bitcoin ATMs,” essentially vending machines that sell digital currency. Today, there are just over 100 of his company’s devices in retail stores in Massachusetts, New Hampshire, Connecticut, and Washington state, each selling an average of about $40,000 in crypto per month. This is just below the price of one bitcoin, which has been bouncing between $44,000 and $52,000 in recent days. But Scanlan is just getting started. He plans to have 1,250 machines in 18 states before the year is out.
There is a nationwide boom in easier ways to buy cryptocurrency, with Bitcoin ATMs leading the way. According to industry tracking website Coin ATM Radar, there were about 6,000 such devices in the US at this time last year, but more than 26,000 today, with hundreds more installed each week.
This includes only “pure” Bitcoin ATMs, those that only sell cryptocurrencies. In addition, thousands of traditional cash-selling ATMs have been modified to support cryptocurrency purchases as well. Then there is Coinstar, which makes coin-counting machines found in many US supermarkets. About 7,500 of these devices are now selling bitcoin, and that number is expected to reach 10,000 by the end of the year. Researchers at a different site, How Many Bitcoin ATMs, have added these hybrid machines to the mix, and they estimate that there are more than 42,000 Bitcoin vending machines in the United States today.
Sophisticated cryptocurrency users often buy online, through websites or smartphone apps. But the emergence of Bitcoin ATMs provides ease of boarding for first-time buyers.
Financial technology giant NCR has entered the game. Last month, NCR acquired Boston-based LibertyX, one of the first Bitcoin ATMs. These days, LibertyX primarily makes software to add crypto-selling capabilities to standard ATMs and retail POS machines – the modern equivalent of cash registers.
NCR is one of the world’s leading manufacturers of Automated Teller Machines and Points of Sale. The acquisition of LibertyX means not only thousands of crypto-capable ATMs. It could also mean that thousands of retail stores could sell cryptocurrency just like candy bars.
It is already happening. LibertyX has deals with retailers CVS, Rite Aid and 7-Eleven to enable bitcoin purchases at select stores. The customer uses the LibertyX smartphone app to punch up the amount they want to buy, up to $500 per day. A bar code appears on the phone screen. The employee scans the barcode and the customer hands over the cash. It is instantly credited to the customer’s bitcoin account, minus the $4.95 transaction fee.
LibertyX claims this service is now available in more than 20,000 retail stores. But this is news for many retailers. Four CVS stores contacted by Globe said they knew nothing about selling bitcoin.
“This appears to be a cashier awareness issue,” LibertyX co-founder Chris Yim said, adding, “We have a lot of volume in Massachusetts.”
To purchase bitcoin at a retail store, the buyer must install the LibertyX app days in advance, and provide detailed personal information, including source of income and workplace. This information is required by federal banking regulators, and is intended to prevent criminals from using bitcoin to launder illicit money. It takes several days to confirm the information and clear the user to purchase bitcoin from a retail store.
But at one Coinmover ATM, anyone can instantly buy up to $2,500 in bitcoin per day, simply by providing their name, email address, and phone number. Those wishing to purchase larger quantities must provide more detailed information and wait several days for approval.
The Coinmover machine sells not only bitcoin, but also other cryptocurrencies, such as Ether, Litecoin, and Dogecoin. The user installs a crypto wallet app on his smartphone, which displays a QR code. Then they press the phone screen against a scanner built into the ATM, and enter the required amount of money. The ATM reads the wallet code from the phone, and transfers the correct amount of digital currency to that wallet.
The process only takes about a minute, but it costs a lot. Transaction fees for buying Bitcoin ATMs range from $2.95 to $5.95. The buyer also pays a profit of 10 to 15 percent above the market price of the coin. For example, a recent $20 bitcoin purchase, after fees and trademarks, left the buyer only $12.36 worth of currency.
So who will use these machines? Anyone with a traditional bank account can use smartphone apps to purchase cryptocurrencies at very low fees. For example, it only costs 45 cents to buy $20 of bitcoin with a debit card and a program called Cash App. Other personal finance apps from companies like PayPal and Robinhood also support low-cost cryptocurrency trading.
Francisco J. Alvarez-Evangelista, banking analyst at Aite-Novarica Group, said Bitcoin ATMs may make sense for people in developing countries with limited access to banks. But the US “is kind of a difficult market to deal with,” he said, “because there are so many easier ways to get and sell bitcoin.”
However, the hardware may appeal to US crypto investors who are obsessed with privacy, and people who are looking for a quick and easy way to send money abroad. Once someone buys bitcoin at an ATM, they can instantly transfer money to a relative’s bitcoin address, anywhere in the world. Even with all the fees, Scanlan said, “We’re cheaper than Western Union in certain places.”
Besides, cryptocurrency purchased through a bank cannot be spent until the transaction is completely cleared, which may take several days. “With these devices, you can get your cryptocurrency right away,” Scanlan said. “That’s why people want to pay more.”
According to a survey conducted by the University of Chicago, 13 percent of American adults have bought or sold cryptocurrency within the past year. That’s approximately 33 million people. How many people will sign up, when thousands of retail stores and ATMs become bitcoin trading hubs? We’re about to find out.
Hiawatha Bray can be reached at email@example.com. Follow him on Twitter Tweet embed.
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