What is a Bitcoin ATM?  | Blockchain Glossary| OKX Academy

A beginner-friendly explainer about Bitcoin ATMs, including how they work, how to find them, and their advantages and disadvantages

A Bitcoin ATM is a general term for a machine that enables users to buy or sell Bitcoin and other cryptocurrencies. Although the name suggests that they’re similar to traditional ATMs that dispense cash and facilitate various other financial services, Bitcoin ATMs’ functionality is usually limited to exchanging fiat currency for cryptocurrencies.  

In this beginner’s explainer, we cover what a Bitcoin ATM is, what they’re used for, how they work and how to find them. We also explain a few of the advantages and disadvantages of Bitcoin ATMs.  

Table of contents:

What is a Bitcoin ATM?

Bitcoin ATMs are sometimes referred to as Bitcoin Teller Machines or Digital Currency Machines — BTMs and DCMs, respectively. Despite their name, Bitcoin ATMs do not perform the same functions as regular cash machines. Instead of enabling users to check their bank balance, withdraw cash from their account, pay bills or deposit cash to their bank account, they allow users to buy and sell cryptocurrencies. 

Although different in function, a Bitcoin ATM is visually very similar to a traditional ATM or cash machine. They’re usually a standalone unit with a touchscreen to enter and display various details about transactions, such as a receiving address or QR code. They also feature a slot to deposit or withdraw physical cash. Additionally, a Bitcoin ATM may have a numerical keypad and a credit card slot to facilitate payments via credit or debit cards. 

How do Bitcoin ATMs work?

There are two main categories of Bitcoin ATMs: unidirectional and bidirectional. Unidirectional Bitcoin ATMs facilitate exchanges in one direction only. More often than not, unidirectional Bitcoin ATMs enable users to purchase BTC and other crypto assets but not sell them. As such, the Bitcoin ATM operator only needs to concern themself with removing cash from the machine rather than ensuring it always has enough funds to facilitate the selling of digital currencies. Depending on the machine, buys might require physical cash deposits or may be performed using a credit or debit card.

Bidirectional Bitcoin ATMs enable users to both buy and sell digital currencies. When a user sells crypto, they may be able to receive their funds in cash or directly to their bank account. There will almost certainly be some delay between using the machine and receiving the funds in the latter case, as bank-to-bank transfers take longer than crypto transactions!

Behind the scenes, Bitcoin ATMs are connected to regular crypto exchanges. These facilitate the actual buying and selling of digital currencies. However, because there is an additional operator involved, the spread between the price you can buy and sell at is usually quite wide. Typically, you will pay a premium of around 6%–10% when buying, and you will sell at a similar discount.  

Buying crypto from a Bitcoin ATM  

Step 1: Choose the option to buy crypto and enter your phone number or identification details

First, select the option to purchase BTC or other cryptocurrencies. Next, enter any identification details requested. 

Almost all Bitcoin ATMs these days require some form of identification — particularly if you are buying more significant amounts of crypto. This is to ensure compliance with Know Your Customer laws and other anti-money laundering regulations. 

You might also need to create an account with the Bitcoin ATM operator. This will likely require a valid email address and phone number. Before you show up, it’s worth checking whether you need to create an account and, if so, whether you can do so at the machine itself. 

Step 2: Scan the receiving wallet’s QR code

Most Bitcoin ATMs have a camera or QR code scanner on them. When prompted, show the scanner the QR code for the wallet in which you want to receive your crypto. Make sure to show the QR code for the correct cryptocurrency because all transactions are irreversible.

Step 3: Fund your purchase

If you’re buying BTC or other crypto assets using physical cash, enter the amount required and deposit it using the note slot on the machine. Before doing so, check if the machine can give change. If not, make sure to deposit the exact amount in fiat currency.

Alternatively, enter payment details from the credit or debit card with which you want to pay. 

Step 4: Check the details and submit your transaction

Before submitting your transaction, the Bitcoin ATM will probably display the buy order details once more. This will include the receiving address used, the purchased crypto asset and the amount. Carefully check that the address matches your actual wallet address. 

When you’re sure you have entered all the details correctly, tap Confirm, Submit or similar. Your crypto will arrive in your digital wallet when the blockchain confirms the transaction, which may take a few seconds or up to an hour or more depending on the network used and current congestion. 

Selling crypto from a Bitcoin ATM  

Using a bidirectional Bitcoin ATM, you can also sell crypto assets using the machines. Some only support selling cryptocurrency on the device itself; others enable you to perform a sell transaction beforehand using the operator’s application or website. In this case, you’ll receive a PIN code referencing the sale. The machine will dispense your cash or initiate a transfer to your bank account per the order details when you enter this verification code.    

Step 1: Select the option to sell crypto

First, choose the sell crypto option. Depending on the operator’s policy, you may also be required to log in to your account. Log in or create an account if needed and tap Sell crypto or similar. 

Step 2: Submit identification details

As with buying crypto from a Bitcoin ATM, selling usually requires some identification to comply with KYC and AML regulations — particularly when dealing with amounts over a few thousand dollars. 

Enter the details requested. 

Step 3: Choose a crypto asset to sell and enter the amount

Because most Bitcoin ATMs support multiple digital currencies, you need to select which one you are selling. Next, enter the amount being sold. 

Step 4: (Optional) Enter bank account details

If you are using a Bitcoin ATM with a bank transfer function, enter the receiving account details.

Step 5: Create a send transaction in your digital wallet

The machine will generate a QR code that corresponds to a receiving address. Initiate a transaction in the digital wallet from which you are sending crypto and scan the QR code. Then, enter the sending amount. 

Step 6: Check the details carefully and send

Cryptocurrency transactions are irreversible, and chargebacks are not possible. Therefore, it’s essential to check all the transaction details before hitting Send in your digital wallet. Compare the address on your device and the Bitcoin ATM, and ensure the amount being transacted is correct.

Finally, send your transaction from your device and wait for it to arrive at the Bitcoin ATM. You should receive a receipt either physically or via email when it has arrived. 

If the machine supports physical cash, wait for the transaction to confirm on the blockchain, and you should receive your fiat currency. If you are receiving funds via bank transfer, you will have to wait until the banks involved complete the payment and your bank account is credited. 

Advantages and disadvantages of Bitcoin ATMs

Advantages

• Users can buy and sell cryptocurrency without using an exchange or bank account.
• Cash withdrawals are instant.
• Can require sharing fewer sensitive details, which is often better for privacy.
• A convenient way to turn crypto into cash.

Disadvantages

• The spread between the price at which the machine buys and sells crypto is usually very wide — you’ll pay more than you would at an exchange like OKX when buying and receive less than you would when selling.
• Only limited crypto assets are supported — Bitcoin ATMs are highly unlikely to support niche, microcap altcoins.
• Machines can run out of cash to dispense.
• Not as anonymous as they once were — examples of money laundering via Bitcoin ATMs have invited closer regulatory scrutiny in recent years.

How to find a Bitcoin ATM

Bitcoin ATMs have become more popular over the years and are an increasingly common sight in major cities worldwide. Yet, they’re still relatively rare in more remote or rural locations. 

If you want to find a Bitcoin ATM near you, a search engine is the best place to start. If you have location services on your device turned on, simply searching “Bitcoin ATM near me” will likely show you the closest. Alternatively, if you’re visiting a particular city and a Bitcoin ATM would be helpful during your stay, you could search for “Bitcoin ATM in [city name].” 

One website that will almost certainly be among the top search results is Coin ATM Radar. The site lists more than 36,000 machines across 76 countries, provided by more than 600 Bitcoin ATM operators. 

Coin ATM Radar features a map showing the exact location of the devices, and you can also search using your current location or by the cryptocurrency you want to buy or sell. For example, you could quickly find a Bitcoin ATM that facilitates ETH buying and selling in Los Angeles, Chicago or any other city in the United States. 

Bitcoin ATM operators

We’ve listed 10 of the most established Bitcoin ATM providers and the number of units they operate as of April 2022 below: 

• Bitcoin Depot (7,008)
• CoinCloud (5,198)
• CoinFlip (3,437)
• Bitcoin of America (1,826)
• BitStop (1,747)
• RockitCoin (1,671)
• CoinSource (1,485)
• ByteFederal (1,327)
• LocalCoin (945)
• National Bitcoin ATM (937)

Are Bitcoin ATMs legal?

In many countries, Bitcoin ATMs exist in a regulatory grey area. They are not illegal, but their operation is not regulated. In such jurisdictions, operators are under no obligation to register with regulatory authorities. While transactions involving such Bitcoin ATMs are usually more private because they are less likely to require identification, users are also more likely to fall victim to various scams.

Elsewhere, Bitcoin ATM operators must register with regulatory bodies in the jurisdiction they serve. In March 2022, for example, all Bitcoin ATMs in the United Kingdom were deemed illegal, as they had not obtained permission from the Financial Conduct Authority. The media reported that the U.K. had banned all Bitcoin ATMs when, in fact, it had ordered those not licensed to cease operations, and none of the operators serving the nation had previously registered with regulators. Similarly, in the United States, all Bitcoin ATM operators are required to register with the Financial Crimes Enforcement Network.  

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