About 106 million people around the world were using cryptocurrencies in 2021.
From its humble beginnings in 2009, Bitcoin has now spread to every corner of the world. Some countries, such as El Salvador, have made Bitcoin the official currency. Similarly, many of the world’s leading Banks now trade in Bitcoin.
As cryptocurrency takes root in many countries, people are calling for convenience and accessibility. This has led to Bitcoin ATM locations appearing in many parts of the world.
Here is an overview of the growth of Bitcoin ATM locations.
How Bitcoin ATMs Work
Bitcoin ATMs resemble traditional ATMs in the sense that customers can complete a financial transaction on the ATM. The main difference is that the traditional ATM allows you to deposit or withdraw cash. On the other hand, a bitcoin ATM allows you to sell or buy cryptocurrency.
When the first Bitcoin ATMs went into operation, they only allowed users to buy Bitcoin. As competition increased, selling Bitcoin became part of the package.
Generally, most bitcoin ATMs allow customers to buy or sell bitcoin using cash. A few allow bank transfers and online payment methods such as PayPal.
The Bitcoin ATM has a bill acceptor, QR scanner, and monitor. It also uses advanced software to manage transactions.
Bitcoin ATMs don’t attach to a bank account as traditional ATMs do. Instead, they are connected to a crypto exchange through the internet.
Geographical Distribution
The first ever bitcoin ATM machine went into operation in Vancouver, Canada, in 2013. Today, there are more than 35,000 Bitcoin ATMs around the world.
Bitcoin ATMs are present on all continents, but the density varies greatly. As of June 2022, North America was home to the largest number of ATM locations in the world.
North America was already leading in terms of ATM locations in 2016. But it extensively increased its lead when the pandemic struck in 2020. Today, North America accounts for most of the bitcoin ATM installations in the world.
Europe has held the second position regarding ATM locations for many years. It initially had a rapid expansion, but this came to a standstill in 2021. This was because European authorities came up with heavy legislation.
In particular, the European Union introduced the AMLD5 to control ATMs for Bitcoin. Currently, Europe accounts for a small percentage of ATM locations worldwide.
The number of ATM locations outside Europe and North America is negligible, and many countries have no ATM locations.
Bitcoin Machine Manufacturers Distribution
While there are many Bitcoin ATM manufacturers, only a few control the market. Genesis Coin alone manufactures almost half of all the Bitcoin machines used worldwide. Other leading manufacturers are General Bytes and Lamassu.
In some countries, such as the UK, less than five manufacturers produce all the ATMs operating in that country.
The Emergence of Large Operators
Amateur operators were behind the initial growth of Bitcoin ATMs. Many of these operators were not doing it as a business but as a proof-of-concept project. However, it wasn’t long before these operators became popular.
The initial operators faced many problems. Their biggest problem was the few and complex supply lines.
Similarly, many companies were reluctant to partner with a cryptocurrency agency in the early 2010s. A hostile regulatory environment made the situation worse.
Things started looking up for Bitcoin ATM operators when the regulatory environment became receptive to cryptocurrencies. Simultaneously, the price of Bitcoin around the world exploded. The result was that millions of people worldwide began buying and selling Bitcoin.
It wasn’t long before amateur operators began receiving more orders for their machines.
Key Locations
Bitcoin ATMs are found on all continents, but less than five countries are home to most machines.
The vast majority of Bitcoin ATMs in the world are in the United States. Small private companies own most of these machines. However, a few large corporations, such as Walmart, have installed Bitcoin ATMs in their stores.
You will find many of the ATMs in gas stations and convenience stores. Some of them are also located in large malls.
The biggest challenge facing Bitcoin ATMs is fraud. Law enforcement agencies now worry that criminals are conducting business through Bitcoin ATMs.
The cases of Bitcoin ATM fraud have increased even though all ATM operators have to register with the government. However, customers can make sizable withdrawals without providing any identity.
Factors Influencing the Growth of Bitcoin ATM Locations
Bitcoin ATMs’ growth rate is better than that of traditional ATMs due to a combination of factors. Here are some of those factors.
Printing Money
The COVID-19 pandemic caused an economic disaster and increased the cost of living. Many governments responded by providing stimulus packages to their citizens.
In the United States, the federal government disbursed about $1.9 trillion to Americans. The immediate effect was a rise in inflation.
At the same time, the stimulus package provided enough capital to invest in Bitcoin. Many people decided to move their money away from fiat currency into crypto. The increasing demand for cryptocurrency has seen a surge in the number of Bitcoin ATM locations.
Regulation Flexibility
There is very little government regulation on the cryptocurrency industry at the federal and state level. In addition, the few existing regulations are ambiguous, unclear, and don’t provide strict penalties.
The result is that Bitcoin ATM operators are free to make their regulations. The operators don’t have to implement structures to protect consumers or collect data. In addition, the operators are free to set their fees, according to bytefederal.com.
A few operators do due diligence and demand proof of identity from their customers. They also install anti-money laundering systems to prevent fraud. However, these operators are a minority, and the majority just want to increase their trade volume.
Since virtually anybody with capital can buy and operate a bitcoin ATM, the number of machines will likely increase. And as the profits from Bitcoin grow, these operators will continue to buy more ATMs and expand to new locations.
Animal Spirits
Economists have always argued that psychological factors influence investment decisions. This investment strategy is referred to as “animal spirits.” It is where people don’t make decisions based on market analysis but rely on their instincts to invest in a specific asset.
The main driving force behind animal spirits is the media. In the early days of Bitcoin ATMs, the media provided favorable coverage. News items touted bitcoin ATMs as the most novel invention of the time.
Positive media coverage encouraged many investors to purchase Bitcoin ATMs. It also made Bitcoin investors aware of the existence of these machines. Consequently, more people have begun to buy and sell bitcoins via ATMs.
Another contributing factor was when significant companies such as Walmart introduced bitcoin machines in their stores. The ensuing media hype created a fear of missing out (FOMO) in many people. The result was unprecedented investment in Bitcoin machines.
Political Risk
Political instability harms investments. An unfriendly government can seize physical assets such as real estate and cash. To avoid this, people need a safe but convenient way to hold their assets.
Fears of fiat currency collapse due to political changes are also behind the growth of Bitcoin ATM locations. Investors may fear that their currency will fall if a certain candidate gets elected. But the same investors also need a convenient way to access their digital assets.
Bitcoin ATMs are preferred because they offer the safety of cryptocurrencies while providing the convenience of traditional banking systems.
Decentralization
Perhaps the most significant factor influencing bitcoin ATM location growth is decentralization.
Traditional ATMs are owned and operated by banking institutions. For the bank to install a new ATM, it must conduct an extensive survey. For instance, the bank must be satisfied that there are enough customers in that area to justify the ATM investment.
Even if there are enough customers in an area, the bank may be reluctant to open an ATM there. For example, the bank may be worried about security in the area. In some instances, the bank may not have enough money to open many ATMs.
The decentralized nature of Bitcoin means that any person can buy and install a Bitcoin ATM. There is no central authority to manage or prevent people from opening new ATMs. This means that there are so many players, each of whom wants to increase their trade volume.
At the same time, Bitcoin ATM operators don’t need to hire employees to process the transactions. Instead, the ATM will forward all the transactions to the blockchain. Decentralized computers all over the world will then process and verify the transaction.
This reduces the process and costs of opening a bitcoin ATM.
Institutional Adoption
Bitcoin faced a lot of skepticism in its early days. The general perception was that only criminals, such as drug dealers, were using Bitcoin. Therefore, its mainstream usage was low, and no major institution wanted to buy or sell Bitcoin.
In the mid-2010s, consumers began using Bitcoin for legitimate transactions. Furthermore, many e-commerce businesses began to accept payments in Bitcoin.
The rapid growth encouraged major banks and institutions to begin offering Bitcoin. Several banks, such as JP Morgan, were now selling and buying Bitcoin. PayPal also joined the fray in 2020.
The institutional adoption created a market panic. Bitcoin ATM operators were afraid that major banks would dominate the ATM market. The operators decided to quickly preempt this by setting up as many bitcoin ATMs as possible.
The race to dominate the ATMs market before major institutions moved in has encouraged the growth of Bitcoin ATM locations.
Many People Are Unbanked
Despite the long history of traditional banking systems, many people remain unbanked. This is especially true in the developing world.
Most banks in developing nations have located their ATMs in major cities and towns. Customers in far-flung areas are unable to access their funds quickly.
On the other hand, it’s cheap and easy to set up a bitcoin ATM in a rural area. The result is that bitcoin ATMs have become a key source of quick funds in many far-flung areas.
Additional Revenue Stream
A bitcoin ATM doesn’t take up a lot of space in a room. Consequently, small businesses that engage in other businesses, such as fashion retail, can take advantage of this.
The small businesses will need to set aside a small space in their stores. They will continue to receive income from the main business, but they can expect additional income from the ATM.
Brick-and-mortar stores can offer Bitcoin ATM services because they already have foot traffic. Therefore, they can expect to convert their foot traffic into Bitcoin buyers or sellers.
Online Fraud
Many current crypto exchanges only offer a platform for buyers and sellers to meet. Although some platforms require proof of identity from their users, many Bitcoin exchanges don’t.
Consequently, criminals are likely to join the crypto exchange platforms. This creates the ideal environment for theft and hacking.
For instance, you want to buy bitcoins from a seller on the crypto exchange platform. You agree on a price, and the seller asks you to send the money. However, they fail to send the Bitcoin once they have received your money.
A bitcoin ATM allows you to buy and sell Bitcoin from a trusted entity. The Bitcoin ATM operator is usually present and can assist you in buying and selling Bitcoin safely.
Understanding Why Bitcoin ATM Locations Are Increasing
Bitcoin has become an integral part of the modern financial system. As a result, there are now many services and technologies that support the buying and selling of Bitcoin. One of these services is Bitcoin ATMs.
Bitcoin ATM locations continue to increase and spread to all parts of the world.
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