In this interview you will hear Daniel Polotsky, the CEO of Coinflip Bitcoin ATM’s, talking about his introduction to the crypto and Bitcoin space, as well as regulations and finance.
At first, he tells an interesting story about how he got the idea to get into the crypto ATMs. Considering that in the beginning, crypto ATMs were not at all user-friendly, he had to turn to a website called LocalBitcoins and organize meetings with people so they could trade Bitcoin in person, for cash. On one of those meetings, he started talking with the person he met and after realizing that, as they put it: “if you meet too many people in a Starbucks you’re probably eventually gonna get killed“, they decided that there is no better way to trade in crypto than ATMs, and so they went for it.
When talking about the regulations, he said that they wanted to be super cautious and not end up going to jail like Charlie Shrem. So, immediately he e-mailed the Illinois regulator and found out that it is fine to operate the ATMs as long as they are selling their own direct stock of Bitcoin. He also mentioned the banking problem, saying that in the beginning it was fine, but later on, banks changed their mind and it was a bit of a struggle.
As for the investments, Daniel said that they funded their own start by saving up money doing their regular jobs. In his experience you probably need twenty or thirty thousand dollars of cash per ATM to keep a steady flow in the beginning, but that scales a little bit better as there are more machines.
When asked about the software that their machines use, he said that they are pretty close with the development process now, which wasn’t the case before. Nowadays they are very integral in terms of updating the system because they can provide feedback on things like regulations and customer needs.
Now that Coinflip has just under 300 machines all over the USA, the annual sales could rise up to nine figures according to Daniel, emphasizing that he can’t reveal the details of their financial structure.
Interestingly, he speaks about the advantages of Bitcoin ATMs for unbanked people. First of all, they can’t use Coinbase, or any other exchange for that matter, since none of them operate with cash, therefore Bitcoin ATMs are the only way to trade crypto in their case. Secondly, as David put it, if you keep most of your money in cash, it could be even safer to hold it in crypto, as long as you are properly educated.
Coinflip is not selling their machines, David says, they are the owners of all of their machines and they pay the rent to store owners. Their presence is also boosting up the store’s marketing, with extra people entering the store, and having in mind the small footprint of the machine, they develop a mutualistic relationship.
His vision for Coinflip in the future is to scale out of the US since it is becoming a more saturated market and probably enter into the OTC trading, have their own wallet, use the Bitcoin ATM for remittance…
In the end, he talked about the regulations some more, saying that even though nowadays the regulations are getting tighter, he is glad because at the same time they are getting more clear, and now you know what to do. He also mentioned that he is strongly against the IRS proposal to make spending crypto a taxable event since it will discourage spending the cryptocurrency.
And to finish up, his advice to anyone who is thinking of getting into the ATM business is to obey the rules, do what you need to do, grind and hope it will work, since it is much harder to get into the business these days than when he started.
So to summarize, Bitcoin ATMs are the best way to trade cash for crypto, and a great convenience for the unbanked people. And if you are getting ideas of starting your own business, you will need twenty to thirty thousand dollars per machine to get going, and of course, the most important thing is to obey the rules and regulations since they are definitely more clear nowadays.