First Bitcoin ATM goes live next week: but does it have a purpose?

Virtual currency Bitcoin will tick off another milestone in its remarkable year of swings and scandals next week when the first permanent ATM will open for business in a Vancouver coffee shop.

According to Wired, the ATM will go live on Tuesday, allowing anyone to walk up and stuff the machine with up to C$3,000 (about $2,900 in U.S. dollars) and receive Bitcoin in return; users can likewise trade in Bitcoins and pull cash from the machine.

The ATM, built by Nevada-based Robocoins, made an appearance at a Las Vegas convention earlier this year, and a competing version turned up at a Bitcoin event in London. The Vancouver machine, however, appears to be the first permanent ATM, and its owners reportedly plan to install four more of them throughout Canada in the near future.

If the Vancouver installation is successful (and the machine isn’t torn out and carted away by regulators), it could help further cement the legitimacy of Bitcoin: the permanent presence of the ATMs, which the owners bought for $18,500 a pop, will reinforce that Bitcoin is a valid currency just like dollars, euros and pesos.

The move makes symbolic sense for Bitcoin believers, but does it have a practical purpose? I don’t think so. There’s no obvious advantage to buying the stuff at an ATM rather than online or person-to-person. In fact, it seems downright inconvenient: why trundle down to a regular ATM to get bills to stuff into the Bitcoin ATM, when you could do the same transaction on your couch — and pay fewer fees? The Bitcoin ATM seems no more than an electronic middleman, albeit a novel one.

There is also no privacy advantage. The Vancouver contraption requires users to register a palm print as an anti-money laundering measure — meaning users give up more personal information than they might online.

If Bitcoin ATM’s have a practical purpose, it’s overseas where, as I’ve argued in the past, Bitcoin may have a vital role in countries with unstable currencies. Indeed, a reported plan to stall Bitcoin ATM’s in Cyprus, an economic basket-case that could get booted out of the euro zone, makes some sense.

It’s a different matter in the United States and especially, Canada, which has a sound currency and the world’s safest banking system.

The upshot is that, two years from now, the Bitcoin machine in the Vancouver cafe is more likely to seem akin to an old Frogger machine than the vanguard of an economic revolution.