Working for Bitcoin is, on the whole, great. I get my entire pay without someone taking a cut, it can come to me on a Sunday at 2am or whenever I want. But turning that Bitcoin into fiat can sometimes be a hassle. Waiting a few days for Circle or Coinbase to sell my Bitcoin and put the good old rent-paying American Fiat into my bank account can be a stressful situation, where I am left hoping that Circle can beat my bank’s automatic withdraw for rent.
There are solutions, I could sell on Local Bitcoins, but I would have to depend on someone being willing to buy my Bitcoin right then, and there is always the potential of running afoul with the law, seeing as I have no plans to register as a money exchange any time soon. The other instant cash solution is a Bitcoin ATM, I tried my first one last week, in a rushed attempt to turn my magical internet money into something I could use to enjoy my Halloween.
My experience was a mixed bag. On one side, the purchase was extremely quick and easy, and the attendant at the Gas station that housed the ATM was friendly and happy to talk to me about the machine. On the other, the exchange rate the machine gave me was off significantly, and that cost me more than the already high 7% fee that was tacked onto the transaction.
I used the Genesis coin two-way ATM in the Shell gas station on Chain Bridge Rd in FairFax, VA on Saturday, October 31st, Halloween 2015. The price of Bitcoin had just risen dramatically, from around $250 to around $325 at the time I made the purchase. The machine, however, gave me an exchange rate of $280 USD = 1BTC. I’m not sure what the reasoning behind this was, was the machine simply behind on its exchange rate?
Unfortunately, I didn’t think of clicking the buy button to see if the exchange rate was similarly off going the other way, if it is, it seems there is a significant arbitrage opportunity there.
Despite knowing that I was being ripped off to the tune of 45 bucks per Bitcoin, I moved forward with the purchase. I needed some quick cash and since I was only getting $20, the exchange rate was less of an issue, plus I knew a story was going to come out of it and it would be unfulfilling if I didn’t sell any actual bitcoin in the end.
The machine did want to verify my identity. I had two options, either letting it scan a government issued ID, or enter my phone number to get a special code. I chose the later and a confirmation text arrived moments later. I picked the $20 option, a QR code appeared on the screen, I scanned it, sent the Bitcoin via Circle and moments later the cash popped out. I did not have to wait for a network confirmation.
With the hope of sparking up a conversation with the store clerk, I purchased a drink using my newly acquired Government notes and started peppering him with questions. He told me that people often mistake it for a traditional ATM, but that “five to seven” people come to use it everyday. That number surprised me and makes me wonder about the aforementioned arbitrage opportunity, perhaps that explains the machine’s high use? Other than having an ATM in the store, the clerk seemed to know very little about Bitcoin, at one point asking me if people can buy and sell it for money online.
Whatever the reason, it is encouraging to hear that a Bitcoin ATM in Fairfax Virginia, a good 20 minutes south of Washington DC, is getting so much use. For it to become a viable entry point for people wanting to get into Bitcoin, the exchange rate would have to match reality and the fee would have to come down. I’m not sure that is possible with physical Bitcoin ATMs, with the upkeep and retail space required to keep one running, but I do believe they have a purpose to serve in our ecosystem. Exorbitant rates or not, there is something to be said about being able to go to a physical location and instantly turn bitcoin into cash, even if it cost a bit to do so. I doubt it will ever become my primary method of selling bitcoin, but I do imagine that I will use it to help me through certain situations.
We have reached out to the ATM’s operators, VirtualATM.net, to ask them about the price disparity and how successful their machines have been and will update this space if and when we get a reply.
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