On To-Do List: Deposit Cash in Bitcoin A
The Fresh York Times
August 25, 2014
Welcome to the A.T.M. of the future, where customers insert cash and leave with nothing.
A cashless society is still a long way off, but automated machines that turn traditional money into virtual currency are cropping up across the globe. The trend has come to Fresh York — Plane 128, a retailer that sells British jewelry and accessories in the West Village, is home to the very first such machine in Manhattan and is becoming a destination for Bitcoin enthusiasts.
Yet this fresh Bitcoin A.T.M. is only a means for users to deposit cash and convert it to Bitcoins for their accounts; it does not suggest cash withdrawals.
Still, virtual currency supporters see the growth of these machines as a milestone that will help Bitcoin A.T.M.s become as widespread as traditional bank A.T.M.s. For that to happen, however, customers will have to get used to exchanging real money for digital code, which may be a bit unsettling for those familiar to cash, or even credit cards.
As Bitcoin gains acceptance, such A.T.M.s are providing a swift path to switch cash to Bitcoin. They also are a way to access Bitcoin for those who do not want to deal with online exchanges or who lack a traditional bank account.
“The aim of Bitcoin is to make money digital,” said Gil Luria, an analyst with Wedbush Securities. “This is truly a improvised way of bridging inbetween physical currency and digital currency.” The A.T.M.s appeal in particular to those who want to maintain the anonymity associated with Bitcoin, he said.
The companies that make the Bitcoin A.T.M.s say they aim to make virtual currency as effortless to obtain as buying food from a vending machine or ordering a car rail from Uber on a smartphone. Even so, some in the virtual currency industry acknowledge that the machines are a marketing gimmick.
“Having these machines in stores, especially quality stores that sell quality items, is truly going to raise the profile of Bitcoin,” said Matt Russell, the chief marketing officer for PYC, a company that operates Bitcoin A.T.M.s in Fresh York. “We’d be fools to not think that marketing is a part of this.”
If the A.T.M.s are to help shove Bitcoin further into the mainstream, then more consumers may be observing machines, like the one that went live at Vapid one hundred twenty eight last week, which is operated by PYC.
The machine may be a draw for Bitcoin enthusiasts, many of whom very likely never would have set foot in the store otherwise.
“I heard about it from friends,” Adam Krellenstein, a developer at a Bitcoin company, said on Friday, standing awkwardly among the chunky necklaces and expensive rings.
Plane 128’s regular clientele seemed confused by the fresh attention. Some peered cautiously at the machine, asking what it did and how it worked. One, after noticing a photographer nearby, asked if she had walked into some sort of special event.
Elizabeth DuBois, the possessor of Vapid 128, said the A.T.M. had enlargened traffic, estimating that fifteen to twenty people had visited her boutique each day to use the A.T.M.
Merchants around the country say that the Bitcoin A.T.M.s are helping draw would-be customers, too. Some of those are in coffee shops, where the tech crowd and early Bitcoin adopters are coming in for beverages.
Petite shops like Plane one hundred twenty eight certainly benefit from the publicity that comes with accepting Bitcoin, but there are also significant financial advantages, including lower processing fees.
There are about two hundred working Bitcoin A.T.M.s around the world, according to the website Coin ATM Radar, which keeps track of the machines in operation.
As that number grows, one company expecting a surge in business is Lamassu, which manufactured the machine in Manhattan. The company, based in Fresh Hampshire, embarked selling Bitcoin A.T.M.s last August and has since shipped two hundred fifty machines to forty five countries, albeit many are not yet set up to convert local currency into Bitcoins, said Zach Harvey, who runs Lamassu with his brother. About eighty of the machines, which cost about $6,500 each, are in operation worldwide, he said.
The machine’s operator is responsible for loading the machine with Bitcoins, similar to the way a bank ensures that its A.T.M.s have enough to cover cash withdrawals. The operator also determines the transaction fee. For example, PYC has set the fee at its Manhattan A.T.M. at about five percent of the transaction value.
At Vapid 128, the only things users need to exchange cash for Bitcoins with a Lamassu machine are an existing Bitcoin wallet and a smartphone. After hitting a commence button on the machine’s touch screen, users access their Bitcoin wallet’s QR code, a type of bar code, from their phone. They then scan the code against a puny screen on the machine and insert cash. To initiate the currency exchange, they select “Send Bitcoins.” It takes only a few seconds for Bitcoins to show up, via the Internet, in the user’s digital wallet.
Other manufacturers of Bitcoin A.T.M.s, including Genesis Coin and the Canadian company BitAccess, aim to also permit users to turn Bitcoins into cash.
Even as the rise of these A.T.M.s suggests that Bitcoin is gaining ground, the virtual currency world is also facing the prospect of fresh rules that could stunt growth.
Government agencies proceed to make efforts to regulate digital money, stirring concern that virtual currency could eventually be regulated into oblivion. In July, for example, Fresh York State proposed rules for virtual currency companies that some in the Bitcoin world believe could make it too expensive to operate in the state. Bitcoin A.T.M.s are particularly vulnerable to regulations intended to prevent money laundering.
“I’m always worried about harsher regulation,” said Mr. Harvey of Lamassu. “If the barrier for entry is too high, then these machines might have to budge out of Fresh York City.”
Despite these looming rules, Bitcoin supporters are largely optimistic that it is not only a viable form of currency, but also increasingly accessible.
Mr. Russell of PYC was on mitt Friday to reaction questions about Manhattan’s very first A.T.M. About three months ago, he purchased the A.T.M. for $Five,000 in Bitcoin and kept it in his East Village apartment. He and Ms. DuBois, Vapid 128’s possessor, determined to bring the machine to her store in part to introduce the idea of Bitcoin to consumers who might not be familiar with the virtual currency.
“It makes them understand that it’s not a foreign thing,” Mr. Russell said. “It’s just like getting cash from a bank, but Bitcoin.”