Bitcoin has stretched its wide arms across the globe – unlike other crypto ventures. With the ongoing popularity of Bitcoin as a digital currency, Bitcoin ATMs are getting installed to assist the underbanked and unbanked in accessing this digital currency. But Are Bitcoin ATMs Safe?
However, it is very different than your conventional ATMs and has a couple of noticeable differences. BTM or Bitcoin ATM is primarily built for the purpose of selling and buying of this cryptocurrency to its users.
Unlike a conventional ATM, this one will be connecting its users to the exchange rather than a bank. They are physically small and is quite portable for crypto exchange meetings. They also make the experience pleasant since it excels the process of buying. But are Bitcoin ATMs safe?
Are Bitcoin ATMs safe?
Well, the anonymity associated with crypto exchanges gives it a bad rep since there is news of hackers flooding such exchanges. It is highly unlikely that it might be crypto jacked unless the crime rate is high in the concerned neighborhood.
However, the primary reason for its existence is to create secure transaction space for its users but the location of its placement, if uncanny can lead to unprecedented undulations.
But the year of 2018 saw its first loophole in BTM where Trend Micro accidentally bumped into an advert which was allegedly selling malware that can potentially exploit the BTM machine.
By the description offered in the advert, the malware would exploit the internal system by cutting it off from its security protocols and disconnecting it from the networks. This would be furthered by a raid which will amount to $25,000.
The possibility of its existence wouldn’t just threaten the BTM users but their owners as well. But General Bytes, the creator of Bitcoin ATMs, has dismissed any claims regarding the existence of such malware.
Karel Kyovsky, the CEO and owner of General Bytes stated that they have researched and investigated the claim of such malware.
The investigation also stated that the blogs associated with such adverts never reverted back. This made them realize that this advert is nothing but a scam for something that doesn’t exist.
Moreover, the creators have pointed out that the Bitcoin ATM would NOT dispense cash without anything in their return.
In cases of money laundering, the ATMs can still be complacent with shady individuals where they might just carry out their work without getting the question.
There can be chances of shady activities but the machine software keeps a log of all the transactions and records of their customers which can be retrieved during cases of the investigation.
How do Bitcoin ATMs Work??
Bicoin ATMs are not as complicated as they sound. The processes pertaining to transactions are pretty simple and it surprisingly isn’t time-consuming at all. This makes a case for anyone who has a hard time keeping up with a queue. But for the newbies who are new to BTMs, they might just be intrigued enough to take a look at how they work.
When you approach the concerned machine, it first greets you with the exchange rates that are being offered by the cryptocurrencies.
- Step one would require your phone number verification where you will naturally have to key all digits followed by a one-time code that you will receive within a few seconds.
- Step two is for ID scans. Some BTMs have the technical support to scan ID or Driver’s license by just holding them in front of the scanners. There are a few which might ask its users to take a self-portrait but this amount of rigorous identification processes are rare. But it’s never too late for a little prep, right? Ironically enough, BTM doesn’t quite provide the anonymity that it is known for since they have to comply with regulations under KYC (know your customer) and AML (Anti-money Laundering). Once you are through with these steps, it should take you another five minutes to get your details approved before buying your Bitcoins.
- Step three is where you are going to enter your respective wallet address, there are again two methods to do so, you can either choose to type in the address or display your unique QR code via your smart devices for getting it scanned. But you’d need to be a bit fast about since once it’s timed out, it starts from the very beginning.
- The last step would be to slip in your cash once the BTM asks for your fiat. Once the transaction gets processed, you are through with this ordeal and voila you just bought some virtual currency for yourself.
Here’s a video from BTC Sessions YouTube channel showing live how to use a bitcoin ATM.
Scams are on the rise
There have been recorded incidents throughout the world pertaining to bitcoin scams. In Canada, a police report has unveiled that more than 40 people have lost around 300,000 Canadian dollars to scammers who compelled their victims to make deposits through BTM on the grounds of tax default arrest. Australia saw scammers make more than one million Australian dollars since the first quarter of July after fooling their victims with tax.
There have been 28,000 reported cases of scam attempts during this particular period. There have been cases of phishing too where 6000 Australian taxpayers have given out their financial or personal info to scammers without being aware of such phishing scams.
Anderson who is the tax office assistant commissioner stated that ATO officials would never be rude to their taxpayers and neither will they threaten them with arrest since they are always urging their taxpayers to contact them for, they offer a range of ways to help.
The Final Verdict: Pros and Cons
Bitcoins are widely known to the world and are quite an easy task to acquire bitcoins. With BTMs at your disposal, buying and selling of Bitcoins have never been easier. These machines are supposedly built to make these exchanges convenient and better.
Traditionally, one can just use their bank ATMs to buy or sell bitcoins but with over 500 BTMs around the world, why endure the hassles of conventional transaction method. But there is indeed a catch to all of it, so here’s a possible list of pros and cons.
Speed: BTMs are fast and convenient to invest in bitcoin – sell and buy bitcoins. However, it depends on the machine used but with a machine like Lamassu, it can finish the ordeal within 15 seconds where the users can scan the QR code of their bitcoin address followed by banknotes submission and clicking on the “send” button. The Bitcoins are sent immediately afterward. The process may include a few steps to ensure proper verification for the first time. But for smaller amounts, phone verifications are required, unlike bigger amounts that require ID scan. As far as the verification is concerned, they are much faster compared to being registered.
Anonymity and Security: They are run by operational business entities with the support of email and phone calls. Moreover, it just takes a person and the machine in the entire process. It is thus a much safer and reliable alternative for many. The same can be applied to anonymity for machines that don’t require any kind of verification. However, for machines that require rigorous verification processes, the anonymity won’t be of any concern. It is less likely to make an anonymous purchase since the machine keeps track of all the transaction records and data. Additionally, most of these machines are under the regulations of AML and KYC.
User-Friendly and is available: They are available even during business working hours and be located if you have its physical location. They are user-friendly too for people who like to avoid the ordeal of registration during a wire or online exchanges. These people can try and locate the physical address of BTMs which might be placed in uncanny locations. But buying Bitcoins is pretty straightforward unless you are not acquainted with ATMs. It is the same process but in reverse. The Bitcoin manufacturers are slowly trying to make these machines more user-friendly where even the kids can use it without any issue.
Fees: BTMs charges a sizeable amount of commission which is around 6.5% as of now. But some may hike up to 30% which incurs a heavy commission fee. This is a stat calculated on 373 machine outputs which have provided transactional operations and the other 152 has sold bitcoins. But it is anticipated that with the growing popularity and competition, the fees will eventually decrease.
Service reliability: There have been reports of the machines being non-functional. In spite of custom fixes offered, the machine often lags and bugs out. The spread of such BTMs is quite on the low for which some users visit uncanny and remote places. But in instances like this, the service needs to be up for an effortless transaction. Additionally, the machine also needs to support both transactional methods i.e. buying and selling.
All in all, BTMs are the future especially when Bitcoins will be replacing fiat currency. They will soon reach the horizon of popularity as a decentralized, peer to peer and secure transaction platform.
Author: Vijaya Bharti
With a background in finance and a passion for writing, she has made her passion her profession. Her endless desire to learn new things developed her interest in Blockchain Technology and the Crypto world. She enjoys writing and learning in the process as she believes there is no end to gaining knowledge. She likes to unwind by watching online series or reading when she is not working.
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