One of the main obstacles holding back mass adoption of Bitcoin is that it's not all that easy for the average person to buy it.
That is quickly changing, however, with the spread of Bitcoin ATMs. The few hundred Bitcoin ATMs scattered around the world right now will bloom into tens of thousands over the next few years, and eventually hundreds of thousands. (There are about 2.2 million conventional ATMs in the world.)
That kind of accessibility will prove key to the wider adoption of Bitcoin. But the machines also need to be easy to use, a consideration the Bitcoin ATM pioneers already seem to understand.
"A lot of people have called our [Bitcoin] ATM the 'on-ramp to the masses,'" Jordan Kelly, the chief executive officer of Las Vegas-based Robocoin, told Bloomberg TV earlier this year. "What we've created is the easiest way to buy and sell."
So far there are at least four companies making Bitcoin ATMs - New Hampshire-based Lamassu, Ottawa-based BitAccess, San Diego-based Genesis Coin Inc., and Robocoin.
And sales are booming. Lamassu CEO Zach Harvey said at the CoinSummit this week in San Francisco that his company has already sold 220 Bitcoin ATMs.
"We try to make the machine as shiny and sexy as possible. I think the experience, that's when people start understanding it," Harvey said.
Harvey told The New Yorker that Lamassu is already turning a profit on its $5,000 Bitcoin ATMs and expects to ship 110 more over the next three months. His machines are already operating in places like Helsinki, Bratislava, and Albuquerque, N.M.
Bitcoin ATMs Will Multiply Rapidly Once Regulations Are Settled
At this point, the only thing holding back the even more rapid spread of Bitcoin ATMs is the lack of clarity on regulations. Many potential buyers are waiting to see what happens before they jump in.
In addition to regulations that might apply to digital currency in general, owners of Bitcoin ATMs will almost surely face addition rules that govern money-dispensing machines, such as a rule requiring that transactions of $10,000 or more be reported.
"That's where I see the biggest challenge for these ATM operators, especially the one-off operations," Carol Van Cleef, an attorney and electronic-payments specialist at the law firm Manatt, Phelps & Phillips, told The New Yorker. "Will they be able to support the compliance regime required to be put in place, not only to comply with the law but to protect themselves from being abused by criminal elements?"
But once regulators determine what will and what won't be required of Bitcoin ATM operators, the machines will start springing up at a much faster rate.
And some regulators, such as New York Superintendent of Financial Services Benjamin Lawsky, have indicated they want to see digital currencies thrive.
"I think the most important thing regulation can do is strike the appropriate balance between encouraging innovation and not strait-jacketing the technological development that we want to see continue," Lawsky told The New Yorker.
Bitcoin ATMs differ from conventional ATMs in that anyone can operate one; they do not need to be owned by any financial institution or third party. And the machines don't give access to accounts. They simply enable the exchange of fiat currency for Bitcoin, or vice versa.
The issue of volatile Bitcoin prices is solved by holding the machine's reserves in fiat currency, then converting to Bitcoin only at the moment of the transaction.
When you think about it, Bitcoin ATMs are a logical evolution in the life of Bitcoin. Instead of acquiring the digital currency on dodgy Bitcoin exchanges like the bankrupt Mt. Gox, people will be able to buy as much as they need wherever they are and whenever they need it.
"It takes the pressure away from all these single failure points," Harvey said. "And so, if something goes down, you will always have a place to buy bitcoin."
The IRS finally released its guidance on how Bitcoin should be treated for tax purposes, and not everyone is going to be happy. What's good news for some folks will be a record-keeping nightmare for others...
Bitcoin ATMs: Simplifying Bitcoin for the Masses
The New Yorker:
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