What You Need to Know Before Buying Bitcoin at an ATM

Guides on buying bitcoin (BTC) often start with the advice that you first need to create a cryptocurrency exchange account and download or purchase a crypto wallet to store it in. But there’s another convenient way of purchasing bitcoin that doesn’t involve using a computer, let alone a cryptocurrency exchange.

Using a bitcoin automated teller machine (ATM), people have the opportunity to purchase BTC by inserting cash or their debit cards and completing a few basic steps. But while bitcoin ATMs become a growing part of the industry, the thought of using one still strikes many as being oxymoronic.

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How can something like bitcoin, which is a purely digital currency, be dispensed by an ATM that normally spits out physical currency?

It’s a perfectly good question. Here’s what you need to know.

What are bitcoin ATMs?

Bitcoin ATMs let people buy bitcoin – and sometimes other cryptocurrencies – using cash or debit cards. However, the term ATM is somewhat misleading.

Bitcoin ATMs aren’t like bank ATMs that allow customers to manage the funds in their accounts. Bitcoin ATMs are simply tools through which you can make bitcoin purchases – and sometimes sales – and do not require users to create any sort of account to do so.

Unlike cryptocurrency exchanges, bitcoin ATMs give users the option to custody their own purchased bitcoin by wiring the coins directly to a crypto wallet of their choice. However, if you use centralized exchanges like Binance or Coinbase (COIN), you can also opt to have your coins sent to your “deposit address” provided by your exchange and let the platform custody the assets for you.

Read more: What Is Crypto Custody

Wallet creation is often a key part of the process of buying bitcoin using ATMs, and this is the part that’s usually targeted by scammers (as we’ll explore below)

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How to buy bitcoin from a bitcoin ATM

When you spot a bitcoin ATM, you’ll often find it has a QR code plastered on it prompting you to download a particular crypto wallet that’s supported by the ATM machine.

A popular option is the Coinbase crypto wallet, but you can choose from a long list of other wallets, too.

You’ll first need to download the wallet, if you haven’t already, and follow any setup instructions when prompted.

Your newly created wallet will generate a unique bitcoin address to which the ATM will send your purchased coins after the transaction is confirmed and completed.

Beware of scams involving bitcoin ATMs

There are two scams that involve using bitcoin ATMs

Scammers often advertise goods for sale on sites like eBay, Craigslist or Gumtree (UK). These items are typically priced at a significant discount to the usual market rate, luring potential buyers to get in touch

The scammers tell victims they must make purchases via crypto if they want to secure those prices – usually by depositing funds into a bitcoin ATM and sending the crypto to the scammers’ wallet address. Once the transaction is completed, the scammers vanish

This is popular with scammers because of the irreversible and largely unregulated nature of blockchain-based payments. Once a transaction is finalized, it’s next to impossible to reverse it

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