Sebuh Honarchian, a developer from Los Angeles, showed up at the South By Southwest Interactive trade show in Austin, Texas on Saturday because he heard there would be a Bitcoin ATM and he needed to pay rent. He found the machine in a corner of the trade floor, flashed it a QR code on his phone, and retrieved $3,000 — less than five BTC at current prices.
"I just cashed my Bitcoin out because I need to pay some bills, you know I got rent and other things," he tells The Verge. "You have to cash out your Bitcoin sometimes whenever you need to spend it. These machines make it really easy."
There are at least three companies making ATMs designed for Bitcoin, the virtual currency that approximates cash on the internet. Two of the models only dispense Bitcoin, but one is capable of dispensing US dollars as well. That model is made by Robocoin, a startup based in Las Vegas, and it’s about the size of a vending machine. There are now at least four of them in Austin, one in Vancouver, and one in Edmonton, all of which were installed in the last three weeks with more scheduled to pop up soon.
The Robocoin ATM is relatively convenient compared to what people had to do before, which was show up at a trading event or use a website like LocalBitcoins to find someone nearby who would meet up and trade. You can also buy Bitcoin online, but that can take weeks to process.
The ATM experience is far from seamless, however. To use it, you must submit your phone number, a PIN, a government ID, a palm vein scan, and let it take your photo. This is to comply with anti-money laundering laws that require money services businesses to keep certain records on their customers. Cashing out Bitcoin can take up to 15 minutes because the currency is designed so that every transaction must be verified by users in the network. The price of Bitcoin is also higher at the ATM than it is online, because of the convenience of using cash as well as the fees charged by the operators.
The ATM experience is far from seamless
A Robocoin ATM is a pretty hefty investment for operators. It costs $20,000 for the hardware, then an additional $25,000 to $75,000 in "float," or cash to stock it. Mike Piri bought three. He put one in the bar Handlebar, one in the coffee shop Dominican Joe’s, and one in the convention center for SXSW. In a little over two weeks, they’ve processed more than 400 transactions, he says, mostly from people buying Bitcoin.
As we spoke, people stopped to gawk at the machine, snapping pictures, tapping on the screen. One gentleman bought a little Bitcoin "just for fun." Another snorted as he walked by, reading the signs on the machine and saying, "‘Buy Bitcoin, sell Bitcoin.’ There should be a button that says ‘hack Bitcoin.’"
The virtual currency has been trading at between $600 and $700 apiece at the time of this writing, despite a flurry of bad publicity in the past few weeks. A reporter for Newsweek claims to have unmasked the creator of Bitcoin, revealing a humble Japanese man living in California. The proof is far from conclusive, but the story stirred up new debate about Bitcoin’s viability and took some of the sexiness out of its creation myth. The week before, the largest Bitcoin exchange announced it’s filing for bankruptcy after losing $400 million worth of coins, possibly due to theft from hackers. Last month, a prominent Bitcoin entrepreneur was arrested for money laundering.
"There should be a button that says ‘hack Bitcoin.’"
Piri, who runs a company called Bitcoin Agents with his brother Reza, believes the machines will make him money. He discovered he could make money off Bitcoin when he noticed a $100 discrepancy in price between two websites and arbitraged it. The ATMs will make Bitcoin more popular, he says, by making it easier to use and adding liquidity to the currency.
"Five years from now, I see a use for [Bitcoin ATMs] in third world countries. Here in the United States, they’ll be ubiquitous. I think there will be a few hundred. We just have to bring them mainstream," he says. "When you introduce people to Bitcoin, it’s a very hard idea because it’s not clear, even in regulators’ minds. Even in our minds, and we’re working with it."