In this interview held in September 2017, Kenn Bosak speaks with CEO of RockitCoin Michael Dalesandro about Bitcoin ATM’s.
Michael started in the trading business in the pitch Chicago Board Options Exchange back in 1990, after which he created a first social network travel company built on the back of Facebook. After it built up to over 10 million members he sold it to Expedia. After that, he needed to figure out what’s next, and after researching the blockchain and got interested, he decided on Bitcoin ATM’s, as it was the closest to the money that he could go as he was learning the business. Now he owns the third largest Bitcoin ATM company in the USA.
- What is one of the biggest hurdles of being a Bitcoin teller machine?
The way I define it is that there are three main hoops: compliance, operations, and customer service. That is because bitcoin machines are 24 hours.
- What are some of the tech support side issues that some customers run into?
I think the biggest issue we see is people want to want their coins as soon as they make the transaction, and there’s usually two reasons it doesn’t happen:
One, we batch transactions every 10 minutes that way we can do them all a little cheaper for the customer and for us.
Two people don’t send enough Satoshi/bytes depending on what the network needs, so sometimes their wallet is automatically set at a really low rate. They don’t realize that because they just scan their wallet and their wallets trying to confirm the transaction because they’re sending it at like 90 percent lower than the average Satoshi/byte. It just takes longer to process and at that point there’s nothing we can do as RockitCoin and it’s already done on the consumer side and their wallet.
So, patience is key here guys.
- Since you sell Litecoin, what keeps other coins from being added?
So we use other providers for back-end and front-end so we need to get them on board with the process, integration and test it. It has been a developer roadmap and you have to get it integrated. We did Bitcoin which was the first on the roadmap. We hope to bring all coins at one point but right now it’s 2.
Note: as of October 2018, the company also supports Ethereum and Bitcoin Cash.
- What is the limit on the ATM machine and is there a limit that would require verification of identity?
Yes, and that’s the whole thing for us. Every ATM operator is allowed to set their rate to go from 0 to X amount of dollars for no ID. We’re currently set at $400, but I think we’re about to redo ours. We just met with an independent auditor trying to figure out what’s best practice based upon the money service business industry so I think we’re gonna raise ours to $750. So, you can get up to 750 without an ID, and then if you want to go up to 2,900 then you need to provide an ID, and then over that, we need to start getting data for our social security number.
- How does paying taxes as a Bitcoin operator work? Do you preload Bitcoin? Or you is it bought from exchange using cash reserve that buys bitcoin at a time live.
We pre-buy. We own the Bitcoin and then sell to the consumer. So, we don’t use the exchange as a middle person at all, in fact, we come from the trading background and we just hired our first cryptocurrency trader. So, now I have a trader that’s building logarithms to trade the Bitcoin, cryptocurrencies against all the other currencies.
- How do you establish the rates?
Of course, we look at the market and see where’s the market at, and as you start operating a business you realized, well there’s a lot of costs that people don’t realize in this business. You have a whole Compliance team, you have an Operations team, you have Cash Logisitcs team, you have to have the physical machine. It’s a really low margin business at the very end of it, so getting the scale is important.
- Is there anything that you’re looking at next for your machines, anything that you consider is the next level?
Right now our main iteration is that we want to cover the US. Let’s get full coverage, let’s get up 120 machines by March. That’s our internal goal, and then let’s figure out where we’re going from there. I want to take RockitCoin and not only be a Bitcoin ATM provider, but I want to also be able to buy and sell it through the internet, and then start competing to Coinbase on a small, small level.
- Does your machine displays warning if someone asks send me bitcoin for a car from Craiglist? Is there any kind of failsafe or security precaution?
So, what we do at RockitCoin is when people make a first transaction that’s large we flag it, and we want to call them up. I would say 85% of the time it’s a good transaction and the person knows what they’re doing, but we’ve caught probably fifteen scams in the last three months.
- There’s a software that sells Bitcoin, and in your opinion, what separates that software from the ATM machine?
Well, the reason people go to the human element or the point-of-sale system is the critical mass. The Machine cost a lot of money and iPad doesn’t, or whatever they’re using for their third party to integrate. To get a store owner to use it’s a little more challenging, so I think that’s why people use it. We’ve debated, do we go to our own software platform, so we can go to all these stores and hand them an iPad, and make it easy, but you still have that same banking issue. Cash flow has to go back to the system. They have to make deposits all the time.