In this podcast published a while ago, you can listen to how the founder of the world’s first publicly traded Bitcoin ATM company shares his philosophy on Bitcoin ATMs. Bitcoin Well is a company founded by Adam O’Brien 10 years ago with a current network of over 250 machines across Canada.
Non-Custodial Mission
Being non-custodial is a big part of what Bitcoin Well is all about, and Adam explains it as the reason Bitcoin is so good. It is because you can fully own and control your funds without the risk of a third party locking them. In a custodial environment, like exchanges, you pretty much have an IOU for Bitcoin, while the exchange really owns the funds and there is a decent chance that you will never see those funds again. As he further explains it can happen for different reasons. It is mostly due to the incompetence or malfeasance of their staff and executives who are responsible for handling and investing your funds. Or in a theoretical scenario where the government declares Bitcoin as illegal. In that case, all custodians would have to turn over your (their) funds, while non-custodial funds will stay owned by the users. Apart from that, even if they are saying that their security is cutting edge, every exchange is a massive honey pot for hackers.
Even though it’s much better from the user’s perspective, it’s much harder to grow as a non-custodial company from the owner’s perspective. That’s due to the fact that you don’t have customer funds at your disposal to invest and innovate your product.
Bitcoin ATM Regulation
Having in mind that Bitcoin Well is non-custodial, the Canada Securities Commission sees them as way less risky for consumers and they are actually regulated differently than if they were custodial. That’s because the consumer is not even close to susceptible to their business practices. They are, of course, obliged by all FinTec laws and have the necessary KYC, but are deemed more trustworthy. The users are required to go through different levels of authentication. Whether it’s with a phone number or confirming their identity with a valid ID it really depends on the amount of Bitcoin they want to acquire. Although the non-custodial and custodial regulation is different, Adam feels that over time we will see these two merging into an overall Bitcoin ownership regulation.
Going Public
As mentioned before, Bitcoin Well is the first company of its kind that went public, and per Adam it was not so much about the money as it was about the legitimacy. He describes the process as excruciating, having to go through five rounds of due diligence with auditors, lawyers, and accountants, but he also sees it as a big benefit for the whole industry. Namely, after going public everything opened up, banking, armored car services, auditors, etc. And not only for Bitcoin Well but for all other companies.
Coin Support
In regards to support of various coins, Adam says that Bitcoin Well as a company feels a certain responsibility towards its customers not to sell them “garbage” as he put it. In his opinion, pretty much every coin apart from Bitcoin is a “scam coin”. Still, they do offer Litecoin and Ether on their ATMs even if he feels they also creep into that category. He backs that up by sharing a bit of their data where 95% of transactions are Bitcoin while the rest 5% goes to these two.
ATM Fees
Having in mind that Bitcoin Well recently started building its own online ecosystem with the goal of providing an overall non-custodial service to its customers, Adam explains that online purchasing and physical purchasing are two completely different products and should be treated as such. Bitcoin ATMs are much more convenient and faster, on one hand, while on the other there are costs of maintaining the cash and hardware. When we take all into account the ATM fees should be higher, but the customers know what they are paying for. Especially having in mind that most of the users are unbanked or use it for remittance. Bitcoin Well charges from 9% to 15% on their machines, as opposed to online where it is 1%-2%.
Summary
Hearing Adam and his interesting thoughts we can conclude that non-custodial is the only way to go with Bitcoin, othervise you’re going contrary to it’s purpose. Even though it’s much harder to grow that way, it can be easier to get the regulation. Especially since Bitcoin Well went public, which opened a lot of doors for the crypto industry. Also, Bitcoin is the only “real” coin out there and Bitcoin ATMs will always be more expensive than exchanges, but you get what are you paying for.