One of the most confusing parts of buying bitcoins from ATM is understanding how the coins get transferred to your control. This is especially confusing for new users and first-time buyers.
This post will aim to help make this process more clear for you before you make your way to a bitcoin ATM.
In most cases, ATMs ask you to scan a QR code of a Bitcoin address. This is where the bitcoins will be delivered to after you deposit cash. So, all you really need to do is figure out how to access the receive screen of your wallet that shows a Bitcoin address and corresponding QR code. We’ll show you how to do this using 2 iOS wallets and 2 Android wallet as examples. Even if the wallet you use isn’t featured in this post, know that the process will be very similar.
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%.