What is a Bitcoin ATM, and how do you use one?

A Bitcoin ATM machine, very much like a traditional ATM, is a physical kiosk. A Bitcoin ATM allows you to purchase Bitcoins and other cryptocurrencies using fiat money or a debit card easily and conveniently. 

There are two types of Bitcoin ATMs, unidirectional (one-way) – one that allows you to only buy Bitcoins and other supported cryptocurrencies, and bi-directional (two-way) – one that allows you to buy and also sell Bitcoins and other cryptocurrencies in exchange for fiat money. Not all Bitcoin ATMs are bi-directional, so you should make sure to check before you use one in case you want to sell Bitcoins.

Although they look like traditional ATMs, a Bitcoin ATM is not connected to any bank. They do not allow you to directly withdraw cash from your bank account or deposit fiat money into your bank account. 

Bitcoin ATMs are connected to the internet and directly create transactions on the blockchain. When you buy Bitcoins (or another cryptocurrency) using fiat money, a transaction is recorded on the blockchain, and the Bitcoins are added to your crypto wallet. When you choose to sell Bitcoins via the ATM, the Bitcoins are removed from your wallet, and the machine dispenses fiat currency.

To use a Bitcoin ATM, you need to first verify your identity. This is usually done using your phone number. The machine sends a verification code to your phone number, which you need to enter into the ATM to verify your identity.

You are then required to scan a QR code that corresponds to your crypto wallet address. If you do not own a crypto wallet, you can create one online, or create and use a paper wallet (a physical document used to store the QR codes, public keys, and private keys associated with your crypto trades). Once you have the QR code associated with your crypto wallet address, you can scan it at the ATM.

After scanning the QR code, you need to feed fiat currency into the machine, or you can also use a debit card. The machine will then ask you to verify and confirm your purchase. Once you confirm, the transaction is completed, and Bitcoins will be added to your wallet.

Selling Bitcoins in exchange for fiat currency works similarly to purchasing Bitcoins. 

You need to first select the ‘sell’ option (only available at bi-directional Bitcoin ATMs) and verify your identity by using a code sent to your phone number or scanning a valid ID. 

You will then be asked to scan a QR code linked to the wallet to which the Bitcoins you sell will be moved. Once done, you need to select the number of Bitcoins you want to sell, and confirm the sale.

When the sale is executed, the Bitcoins are removed from your wallet, and the ATM dispenses fiat currency.

Yes, they generally do. Bitcoin ATMs could charge a considerably high transaction fee to users, which is one of the drawbacks of using an ATM to buy or sell cryptocurrency.  

The average transaction fee can sometimes go up to 15 per cent, but the actual fees and charges you pay will depend on the ATM provider. Make sure you research different ATMs around your neighbourhood and find out the fees they charge for both buying and selling before you use one. 

If you wish to buy and sell cryptocurrencies, you could also sign up on one of the cryptocurrency exchanges that list the crypto tokens you wish to purchase. However, remember to compare crypto exchanges before signing up on one by analysing their fees, features and benefits. You should also check if an exchange is registered with AUSTRAC to ensure it complies with local laws and regulations.