During April 2017 bitcoin continued to increase in price, and reached ATH ~$1400 by the end of the month.
Such price increase definitely led to hype in bitcoin demand. As bitcoin ATMs are one of the easiest ways to purchase bitcoins, usage of bitcoin machines also reportedly increased. To some extent it led to growth of number of bitcoin ATMs installed. The following statistics illustrate changed bitcoin machines number during April 2017:
Period Start: 1113, Period End: 1156
Open: 63, Closed: 20, Net Growth: +43 (+3.9%)
Bitcoin ATM industry is relatively new, however, it develops very dynamically. There are many new players entering the market, at the same time there is definitely a trend of some major participants increasing their machine networks size. In this article we evaluate how high is the concentration in bitcoin ATM industry w.r.t. manufacturers and operators. For assessment we look at top 3 countries with highest number of bitcoin ATMs installed: United States of America, Canada and United Kingdom.
For the purpose of this article three types of indexes are used:
Concentration ratio 3 (CR3) – market share controlled by top 3 manufacturers or operators;
Concentration ratio 5 (CR5) – market share controlled by top 5 manufacturers or operators;
Herfindahl index – is a concentration index, which is calculated as a sum of squared market shares, and gives more weight to the situation with dominance of a single or small group of companies.
With a trend of growing number of bitcoin machine installations worldwide many business owners start to consider hosting a bitcoin ATM at their premises. This post is supposed to help take a decision about how to house a bitcoin machine.
Generally there are several ways of doing it:
Organizing all on your own and later on also self operating machine(-s);
Finding someone who will be ready to finance and install machine at your location;
Some options in between the above two scenarios.
Operating bitcoin machine on your own
When not to pursue…
The first option is rather a tedious task. Running a bitcoin ATM is a separate business by itself. In order to run a machine one should do all preliminary research work, e.g. finding out what is the legal status of such a business in the area and which licenses are required, then generally obtaining all permissions to do it within legal framework, which is usually time requiring and costly process. Apart from initial investments in legal advice services and obtaining permission, and then investment in machine hardware itself, business owner also will need to organize and maintain running of a bitcoin ATM on ongoing basis. This means to provide liquidity for bitcoin machine operations, and also organize the exchange process and provide all connected services, e.g. customer support.
The United Kingdom is the third largest country with respect to the number of installed bitcoin ATMs, following after the U.S. and Canada, which are significantly larger both geographically and population-wise.
The United Kingdom is a home for 60 bitcoin ATMs at the time of writing.
The vast majority of the U.K.’s bitcoin machines — 45 bitcoin ATMs in total — are located in London, a global epicenter for multi-culturalism. These ATMs are represented by various ATM producers, with leading General Bytes (64%), but also Lamassu (22%) and BitAccess (11%). The main operators in London are Satoshi Point (42%), BCB ATM (16%), Bitins (13%) and Landmark Coins (11%), which combined represent more than 80% of all bitcoin machines in London.
In this post we look at how operators can organize supply of bitcoin ATMs with liquidity. For simplicity purpose only buy bitcoin transactions (sell bitcoins to customers) are considered.
When running a bitcoin machine every operator needs to provide it with liquidity. Usually this is done via using own capital (fiat and BTC) in order to fund hot wallet (from where bitcoins are sent to customers) or additionally holding some liquidity on bitcoin exchange (fiat currency liquidity), which is converted to BTC when transaction happens to lock exchange rate and laterto replenish hot wallet for future transactions. You can read more details about it in Running bitcoin ATM from own hot wallet or Operating bitcoin ATM via exchange.
Another year has finished. Now it has been a little more than 3 years since first permanent bitcoin ATM installation in Vancouver. What has year 2016 year brought to bitcoin ATM industry, what has changed, what are the latest trends…
Bitcoin ATMs are installed around the world, however, most of them have high geographic concentration. The following chart illustrates bitcoin ATM installations split by continents for the last 3 years (year end is taken as a data point for each year):
As it is seen North America was always dominating the market with 51% share in the end of 2014, and it grew constantly over years and reached 73% in the end of 2016.
Due to expansion of Canadian and mostly US market, Europe has lost 9% share over the same period and is at 20% of world installations currently. All the rest continents have very insignificant number of bitcoin ATM locations with a total of ~6%. In 2014 their share was ~20%.
There is a steady increasing number of bitcoin ATMs on the map. However, many people complain that fees to use these machines are still high, although these complaints might not be that prominent as they were at the start of first bitcoin ATMs launch times. Users finally realize that running a bitcoin ATM is not that easy and there are many costs associated with it.
Bitcoin ATM fees were already analysed in our blog back in 2014. This article is supposed to look at what are the latest figures across the industry as of the end 2016.
There are two ways of collecting fee size on the site:
First is based on the manually defined values. This is normally used for bitcoin ATMs, which don’t support passing online information over API. Most prominent example is Lamassu with currently 185 installed and operational bitcoin ATMs across the world.
Another way to collect data is via online feeds. There are several bitcoin ATM providers, which support online reporting of information similar to the one used at actual machines. These are: Genesis Coin, General Bytes, and Bitaccess. In case of Genesis Coin and General Bytes machines, online price is taken and converted to fee size based on Bitcoin Average rate. This allows to make all fee size comparable. In case of Bitaccess fees are reported directly.
Since April 2015 we collect daily information about fee size. There were some algorithm adjustments to calculation and storing procedure over time, but generally fees are comparable historically.
Current worldwide average bitcoin ATM fee is 8.4% for buying bitcoins from machines, and 5.4% for selling bitcoins for cash.
This is the last (tenth) review from our bitcoin ATM use series. Hope our reviewers enjoyed HW.1 hardware wallets from Ledger and readers enjoyed reading experience of real people using bitcoin ATMs at different locations.
For the full list of bitcoin ATM usage reviews please check this post.
The following review is provided to us by the user with a nickname NoNSeNsii from Las Vegas. Bitcoin machine that was reviewed is located at Rocket Fizz.
The bitcoin ATM was wonderfully convenient and easy to use. I started out walking up to it and noticing how strange and minimalistic it seemed. As I touched the screen to activate the process it gave basic questions and requests. It asked for my phone number. Then requested that I verify the front and back of my ID. Then it asked that I take a picture in front of the webcam in order to verify and authenticate. After verifying everything, it asked me to wait a moment as it verified. I then waited about 10 minutes. And I received a text message to go back to the ATM.