This video is the first of a series where you will hear Jason Appleton from Crypto Crow talk about his hands-on experience in starting a Bitcoin ATM business. The purpose of these videos is to educate you on the ups and downs and everything from machines, legal, compliance, marketing, and more.
At first, Jason contemplated on starting an exchange business but quickly dropped it after he found out that there are a lot of gray areas and he was not comfortable with that. So he decided to go with Bitcoin ATMs, as he thinks that you can get into the business with a relatively affordable investment and grow as you are comfortable.
As there is a lot of legal stuff involved related to compliance, he got in contact with a lawyer, so he can have someone to consult with and get through the whole process without any legal issues. On the other hand, he is emphasizing that he is not a legal nor a financial advisor therefore anything he says is purely his point of view related to the area he is operating in. Anyone who is thinking of starting a Bitcoin ATM business should conduct thorough research on the laws and compliance in the designated area.
The first thing he did is a google search of the Bitcoin ATM manufacturers and compiled a shortlist which he presented in the video.
His first option was ChainBytes, primarily because they are based in Pennsylvania. Also, their prices are fairly low when compared to other companies. When he contacted the sales rep, he found out a couple of things.
Firstly, they charge a 1% monthly fee for software and license updates.
Secondly, they offer a $1,000 compliance package, where a partner company can provide you with a written AML KYC compliance policy, as well as register you with appropriate authorities on a federal level. This looks like a good offer, having in mind that individual lawyers can charge up to $25,000 to do the same thing. And, if you are going into the Bitcoin ATM business, it is highly recommended to abide by all compliance rules and be ready when FinCEN comes knocking on your door.
Finally, he found out that some additional expenses are not included in the $6,500 price that is listed on the site. Apparently, the shipment for each machine costs $1,500 which makes up to $32,000 in total for 4 machines.
As they were not willing to make any adjustments to the price, even after he explained how his presentation could potentially bring more customers, he decided not to go with ChainBytes.
After some digging Jason found out that he can acquire the same machines that he was offered by ChainBytes twice as cheap on Alibaba. The price there is $2,550 – $2,700 depending on how much you order. You can also get them with customized logos and packaging. The shipping to the U.S. is also significantly cheaper and is just $290 per machine.
He again went back to ChainBytes with this information, trying to get a better deal to work with a U.S.-based company, but no luck.
After that, he decided to try with Alibaba, and figure out how to get the AML KYC policy later on. But he then found out why the machines are that much cheaper. Apparently, they come without software which you need to install afterward.
After some more research, he found that BitAccess offers to install software for $500. This came into consideration because even with the price of the machine, shipping, and software installation the price is at $3,500 which is still considerably cheaper.
Then he started doing some due diligence and came across some bad reviews. After consulting his lawyer he decided to go away from this option also.
General Bytes and Genesis Coin
Jason considered both General Bytes and Genesis Coin but quickly gave up. Apart from the somewhat high prices, he emphasizes that the lack of customer service was the biggest letdown.
He claims that he tried to reach them by phone, but never got an answer. He tried within and outside the office working hours and was always directed to leave a message. This kind of practice definitely does not instill confidence, so he decided to look further.
The Portugal based manufacturer, who was responsible for installing the first Bitcoin ATM ever, got the most of Jason’s attention. First of all their site is very well structured, and informative. Furthermore, they do not take any transaction fees whatsoever. Actually, you are the owner of the software itself, and they will update it but will not access your back end.
Another great feature is that their machines are configured to top up your wallet automatically whenever someone makes a purchase and that way they eliminate the volatility risk. Let’s say someone comes and buys $1,000 worth of Bitcoin at your ATM. The machine will automatically go back to your exchange account and replenish the spent Bitcoin. That way you top up your wallet at the current prices instead of doing it later when the price can be much higher.
They also dive into international and U.S compliance and explain them both very well on their site. All of the above are the reasons why Jason chose to set up a meeting with them on which he is going to update us in his next video.
The main topic he would like to go through in that meeting is the price. Apparently, the Lamassu prices are on the higher end. The base price for their two-way machine is around $10,000. With additional costs, it can come up to $12,000 which is much higher than the other manufacturers. Also, he needs to define will he go with a one-way machine or a two-way option. Having in mind that the current ratio of people buying Bitcoin against people selling is 70 to 30, he is leaning towards a one-way with a plan to eventually swap to two-way when that ratio evens.
This was the initial step in starting your Bitcoin ATM business. Conducting deep research aiming to find the best manufacturer candidates and setting up meetings. Jason is going to go deeper into that rabbit hole and share his experience with us along the way.