There are now 8948 crypto and Bitcoin ATMs worldwide, with Canada hosting the second highest number of any country after the U.S. Canadians can now buy crypto from 819 locations across the country. The number of these machines has exploded worldwide since Netcoins’ president, Mitchell Demeter, helped install the first ever Bitcoin ATM in Vancouver in 2013. There are now crypto ATMs in 71 countries with 544 new ones installed in July alone.
What are Bitcoin ATMs?
Bitcoin ATMs differ from regular ATMs in that they do not allow you to withdraw cash unless you have that amount in your digital wallet, held as cryptocurrency. You can withdraw cash by selling your accumulated cryptocurrencies for a fee. You can also purchase Bitcoin and other digital assets directly through the ATM.
A Bitcoin ATM connects you directly to an exchange. This exchange and its buying/selling fees will vary based on the facilitator, in the same way they do on other exchanges. You can find your nearest bitcoin ATM, its manufacturer, fees and available coins on coinatmradar.com. The price of a coin may be listed on the ATM at a substantially higher rate than the current listed price, which is worth considering before using an ATM out of sheer convenience.
Are Bitcoin ATMs vulnerable?
The primary use of Bitcoin ATMs is to allow the unbanked and other investors easy access to acquire cryptocurrencies. As such, they are placed in locations you might not associate with security – tucked away in convenience stores, shopping malls and even supermarkets. This is a reflection on how cryptocurrencies are designed for everyone, not just the wealthy. Ease of access does not mean lax security, however.
Bitcoin ATMs are safe to use. However, some have found the registration process to be intrusive, with a phone number, scanned driver’s license, password and a selfie required. For some, these drawbacks are worth it if they do not have a bank account or are determined to leave the existing banking system behind.
As with any piece of technology or financial platform, there are those who seek to exploit people through these ATMs. The US government recently took down a $25 million operation, seizing 17 Herocoin machines set up by an unlicensed operator. The man running Herocoin, Kais Mohammad, now faces up to 30 years in prison.
As we mentioned in our last post, Bitcoin ATMs are sometimes used by scammers as part of a larger scheme. They will cold call people and talk them into exchanging their fiat currency for Bitcoin, then send it to the scammers’ own wallet as an irreversible transaction. As an update to that story, two Ontario residents have now been scammed out of almost $80,000 using similar methods.
The takeaway here is to always take time to research and understand a new technology, especially in the world of finance. If you’re new to Bitcoin and looking to buy crypto in Canada, start by educating yourself and using a trusted Canadian exchange (like Netcoins). Never purchase from a Bitcoin ATM or make any transfers before you know what you’re getting into and do not comply with anyone you don’t know demanding payments in crypto.