In this video recorded at Bitcoin Wednesday on 2 August 2017, CEO of Lamassu, Zack Harvey talks about Bitcoin ATM’s, UX consideration they took and problems they had and provides some insight into the user habits.
At the beginning of the video, Zach explains how Bitcoin is truly educational and teaches us the importance of scarcity – the 21 million. It also teaches us about custody, or how important it is for you to hold your own money, politics or how important the consensus is and many more things like security and the importance of decentralization. Bitcoin basically points out the flaws of the current financial system.
Zach emphasizes the meaning of a good UX as a focal point of every Bitcoin ATM. The reason being that Bitcoin is very hard to explain, and he claims that Lamassu machines do just that. They take this very complex technology and boil it down to a few simple actions. The idea is to provide the user’s access to Bitcoin and crypto without a need for an expert. The main concept is to provide people with an opportunity to experience cryptocurrency without a need of understanding it all in detail. This is well reflected in the fact that about 75% of the transactions are under $100, so it means that people want to firstly have a taste of Bitcoin and then try to further understand it.
Further on, he showed us a nice graph, provided by one of the operators who has 14 machines. This graph will show us what people are doing with Bitcoin ATM’s and help us analyze and understand their spending habits.
As you can see, about 30% of the transactions are actually under 10$. These are the people that are putting in small amounts of money, just to test it and see what’s happening. As we said, around 75% are under a 100$, a tiny fraction is over $1,000 and the rest is somewhere between $100 and $500.
He also showed another graph, that is similar, but it is actually a graph that displays specific bills. So, we can see that the majority is a $20 bill, which makes a lot of sense because all of the ATM’s in the U.S. dispense only $20 bills. Of course, you can see a bunch of spare change, somewhere between 10 and 30%, where people put in $5 or 10$ in the machine.
As a side note, he mentions the transaction fees which got up to $2 or $3 and that was a big problem for their operators. Because with $2 fee, they are not making a profit on a $20 bill, and the machine can accept it or reject it but cannot store a certain amount of bills. In other words, whatever bill you put in that is the actual amount.
So, if the operators refuse to accept less than $50, it would reduce the number of users by 30%, and that is if the transaction fee stays at $2 or $3. If the transaction fees get up to $10, then it would wipe up about 90% of their users.
There was also an interesting part, where Harvey showed a Bitcoin ATM map of Toronto where we can see that there are about 50 machines right now, so the area is relatively rich in Bitcoin. Yet, he got an e-mail from a convenience store owner in a Toronto area who says that he is getting questions from customers about why he is not having a Bitcoin ATM in the store. So, this is a kind of a vision into the future of how mainstream things are going and shows that people want to have a Bitcoin ATM at their walking distance.
As an example of how important UX is, and how it can confuse people, he used a comparison between an old interface on their machines and a new one. On the old one there are two panels, one on the left says, “I want Bitcoin” and one on the right says, “I want cash”. That caused confusion where random people started coming up to the machine and pressing the “I want cash” button thinking that they will get cash without having to do anything. So eventually they changed the right side to say, “Sell Bitcoin”.
Another example would be the adding of the Bitcoin Cash to the machine. Just imagine what would it look like if it says “I want Bitcoin cash” on the screen. The point here is to emphasize that there are a lot of things to consider when it comes to UX. The most important thing is to make it as simple and obvious as possible because sometimes people can make simple mistakes when they are stressed about giving away their hard-earned cash and getting something, they never saw before.
In other words, the anxiety of doing something that they do not understand which involves money can make people confused so you need to make everything ridiculously clear for them. Otherwise they will be less likely to use it.
- How do you see bitcoin ATM’s evolving with Lightning Network?
Lamassu team will wait and see. Zach mentions he is not sure whether LN will work as expected or not. If it does and it makes sense with correct fees, this is something Lamassu will experiment with.
- For people cashing out EUR / Dollars, what is the recommended number of confirmations?
At the moment operators of Lamassu machines have only two choices: zero (recommended for smaller transactions) or one confirmation. Lamassu operators never had problems with 1 confirmation, as well as no problems with 0 confirmations yet. The problem with waiting for confirmation at a bitcoin ATM is the process flow. With 1 confirmation you need to send bitcoins to machine, and then need to wait around 10-20 minutes waiting for confirmation. Once there is a confirmation you get a code to your phone and then you can cash out. But this is totally different UX than sending bitcoin right to the machine and it dispenses in a moment later. That is why some people prefer to do 0-confirmation although there is a risk of double spend.