In this podcast published in March 2020, you will hear Gordon and Faris from CoinCompass answering questions on how bitcoin ATMs actually work.
The concept of this podcast is for people to send their questions related to Bitcoin ATMs for Gordon and Faris to answer. It’s not going to be too much technical or too much economic detail but simply the basics of Bitcoin – those questions you thought were too silly to ask but actually are not.
In this post we have a brief overview of what Lightning Network is and how it can and is integrated with existing cryptocurrency ATM’s. We check what are potential advantages and disadvantages of using LN payments for both users and operators.
Lightning Network Overview
There is a lot of information on what Lightning Network is. In short, it is a second layer protocol on top of cryptocurrenices like Bitcoin, Litecoin etc. Effectively, two users have a mutual (multi-signature) transaction on the base layer and then exchange signed new transactions, which are not broadcast to the base layer network and hence are not included into blockchain. Only last transaction in a sequence of exchanged signed transactions (commitment transaction) is broadcast to the blockchain, when one party decides to close the financial relationships with counterparty. Such funding transaction and exchange of signed transaction is called a payment channel.
During the recent years there was natural growth in two industries — bitcoin ATM installations reached almost 6000 as of end 2019 and cannabis industry legalization was happening steadily over time in various US states. In this article we check how the two industries fit together and factors that can be beneficial for both sides from synergy.
With introduction of cryptocurrencies in our lives, they became instrument for funds transfer not only among users with legitimate purposes, but also for fraudulent activity. Usually, the victims are the less knowledgeable people, who are instructed by scammers what to do, and who send large amounts by using bitcoin ATM’s. The advantage of using cryptocurrencies by scammers is because payments are non-refundable, once the payment is done and confirmed at least in 1 block, there is hardly anything can be done to revert the payment. Advantage of using cryptocurrency ATM’s is that they are the easiest bridge between old traditional fiat world (accept cash banknotes) and transform to cryptocurrency.
If you are asked or forced to use bitcoin ATM in order to deposit cash and scan a given to you QR code — please STOP. This is a scam, and you will lose all money.
Fair to say that similar schemes are used by scammers with different money transfer vehicles, e.g. users are asked to buy gift cards or various vouchers types. Cryptocurrencies and bitcoin ATM as conversion mechanism is much easier for scammers to use. First of all, bitcoin ATM is less understood by masses, and hence might look more “official” for victim and more people can fall for scam, which increases the probability of scam success. The figures from Edmonton Police Service confirm this, as fraud using Bitcoin were larger than 80% of CRA scams in 2018:
Recently a news about 0-conf attack on bitcoin ATM operator circulated on the web. The attack was conducted by 4 unknown individuals in several cities in Canada back in September 2018. In total, they were reportedly able to withdraw / steal from operator $195K CAD (or $146K USD as of today’s rate).
Anyone with information about the identity of any of these suspects is asked to call the Calgary police service non-emergency line at 403-266-1234, regardless of what jurisdiction they live in.
In this post we try to look in details what this attack is about and why it could happen. We try to have a deeper understanding of the problem and choice, which operators face.
This article is for all newcomers to cryptocurrency field. At Coin ATM Radar we receive many requests to register account in order to start using bitcoins and bitcoin ATMs in particular. In order to buy and start using bitcoins, you don’t need to register with any service provider. We will cover the main options how to start using cryptocurrencies, and especially Bitcoin — the most popular cryptocoin as of today.
The first thing you need to do is choosing where to store your bitcoins, when you buy or receive them. There are two main options:
Store with third-party service provider
Store on your own in local wallet
You can store them with any of online wallets or exchanges (e.g. Coinbase, Kraken etc), in this case you trust these services, while they fully control access to your bitcoins, so generally you trust them that they will send bitcoins to you or to someone you will want to pay in the future, if you ask them to do so. This is no different from traditional banking, when you don’t control your money, rather banks do and promise you that they will execute your order to pay in the future.
However, the great thing about Bitcoin is that it allows you to fully control your funds without any intermediary and this is done with wallets installed locally on your device, be it mobile phone or computer.
With quick expansion of bitcoin machines locations, they become more and more available to general public. One of the bitcoin ATM use-cases is investing in bitcoin.
In this part we discuss advantages of bitcoin ATMs and also reasons why bitcoin has value and worth investment.
Advantages of bitcoin machines
The clear advantage of using a bitcoin ATM vs. online exchanges is verification time (exchanges usually take longer, when you register for the first time). Another advantage of bitcoin machines is ability to purchase BTC much more easily and quickly as you deal with cash exchanged to bitcoins (immediately), comparing to sending a wire transfer to exchange first and then waiting for it to get received and credited to your exchange account before you can trade.
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.
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.