In this video, that took place on the latest TABConf 2019 in February, you will hear Brandon Mintz, Founder and CEO of ATM Operator “Bitcoin Depot”, talking about Bitcoin ATMs.
Bitcoin Depot is the 2nd largest operator in the world with 200 machines all across the US with plans to expand to 350/400 by the end of the year. They use machines manufactured by Genesis Coin and offer Bitcoin, Bitcoin Cash, Litecoin and Ether. Per Brandon, the difference between their product and others is that they offer a much quicker verification time. Also, he emphasizes the quality and availability of their live support as another big difference and advantage that Bitcoin Depot has to offer.
As an example on how important fast validation is, he mentioned how he missed out on a big price run-up while waiting a couple of weeks for Coinbase to verify his account, while on the other hand, he managed to acquire Bitcoin in just a couple of hours with cash into coins which was pretty unknown at the time. This really got him into the idea of Bitcoin ATMs.
Starting a Bitcoin ATM Business
Mintz talks about finding the correct software and hardware providers as a first obstacle on your way to a successful Bitcoin ATM business. He mentions that some providers didn’t have proper features required for doing KYC / AML compliant business. So, you have to read up an educate yourself on that topic before you make the initial move in order to avoid mistakes that can cost you thousands of dollars further down the road.
After that, you will need to find a bank which is willing to work with you, and banks in the U.S. are extremely strict on high-risk customers after something that was called Operation Choke Point that took place in 2013. They consider as a high-risk customer any sort of ATM or Kiosk where money is exchanged, and according to federal guidelines, Bitcoin ATM’s fall into that category.
The fact is that 99% of Crypto ATM’s work with cash, and when you work with cash it is very expensive because you have to somehow collect that cash from the physical ATM machine and bring it to a bank. So, you have to work with various armored providers which can be a problem. It turns out that people managing millions of dollars of cash on a daily basis get paid entry-level salaries, and it can sometimes be pretty shocking the mistakes that can be made by them when operating this type of business.
Another thing is setting up a technician network to secure the maintenance of your machines. This is a pretty long process and especially tricky if you wanted to go outside your local network since there are quite a few dozen of companies providing this service.
When it comes to startup capital, although it is very difficult to measure the volumes you will receive, according to Mintz the number is $25,000 per location to run a Bitcoin ATM properly which is definitely not cheap.
At the end there are Location and Marketing. Since only 2% of the population of the U.S. owns any sort of crypto and a lot of people still don’t even know that Bitcoin ATMs even exist, you need to target your Locations and Marketing activities to that tiny fraction of population and the best places for that are very dense metropolitan cities around the U.S.
Volume variance at Bitcoin ATM’s
The business is pretty stable regardless of the price of cryptocurencies. The industry also grows quickly (doubling every year). Volumes of Bitcoin Depot compared to major online exchanges like Bittrex, Binance, Gemini, Coinbase were much more stable. The volumes at exchanges at the end of 2017 ran up a lot (30x compared to today’s volumes). Bitcoin ATM’s target more every day users of the currency, rather than speculators, which makes volumes pretty stable. People use ATM’s more for utility purpose, e.g. quicker money transfer without foreign currency exchange fees, ability to pay international merchants.
The Importance Of Crypto ATM’s
Crypto ATM’s provide access to cryptocurrency to the under banked. 2-3 billion people in the world does not have access to bank accounts, which makes for third of the population. In U.S. a fifth of the population (60 million people) is under banked and can only deal with cash.
People can use Crypto ATMs to transfer money because it is much faster, they can send crypto and user will receive it on the other end in a matter of minutes, while using money transfer services it can take days. Also, the fees are lower.
Bitcoin ATM physical presence and instant verification provide users with a greater sense of trust, especially because with Crypto ATMs you do not need to leave your credit card or social security number on some sketchy website and you will be much more comfortable using something that you can see live, than choosing an online option.
The Future of Crypto ATMs
Brandon’s predictions for Crypto ATMs are exponential growth and mainstream acceptance. As, Crypto ATM’s have been doubling every year, he predicts that in a couple of years there will be an Crypto ATM at pretty much every gas station and convenience store. Because of that the adoption of cryptocurrency is going to become more mainstream.
Consequently , the underbanked population will use the machines more and more, since it is their only way into the crypto market.
So, to summarize, cryptocurrencies are going to become more heavily adopted and Crypto ATMs are going to play a big part in that.
There is also a QA session at the end of the video presentation.