An ATM machine that trades cash for Bitcoin attracted plenty of hoopla when it went live in a Vancouver coffee shop last week, but how many people actually used it? Now we have some numbers:
According to the ATM maker, Robocoin, the machines did over $100,000 worth of business and racked up 348 transactions in its first eight days. CEO Jordan Kelley added that 70 percent of the ATM users created Bitcoin wallets — suggesting they were first-time users.
“We had a fantastic mix of new and old Bitcoin users,” said Kelley, adding that the ATM visitors included Bitcoin miners and an 80-year-old woman.
Kelley claimed that the Robocoin machines, which cost about $15,000 each, will soon appear in other cities by the end of December, including Berlin, Toronto, Hong Kong, London and New York.
It’s too soon to say if Kelley’s prediction will come true, but the hype over the Vancouver ATM does show far Bitcoin has moved into the mainstream in the last year alone. It’s not only trading at new highs, but is getting serious respect from venture capitalists and the tech establishment.
But the rise of Bitcoin does not mean the rise of Bitcoin ATM’s. I’m still a skeptic about the business model here, which works like this: companies like Robocoin sell the machines to operators who install them and take three to five percent of every transaction.
Did you catch that last part? An exchange at the Bitcoin ATM will result in a fee higher than a regular ATM. Why do that when you can do the same transaction online for a one percent fee?
Recall that Bitcoin’s appeal, compared to conventional banking, lies in its convenience, cost saving and (relative) privacy. A Bitcoin ATM provides none of these things, especially as the Robocoin machine requires a biometric handprint for compliance with money laundering rules (though the handprint, presumably, won’t be shared with the government). Meanwhile, can a Bitcoin operator expect to recoup their investment, especially when operators must rely on the ATM maker’s software?
Kelley argued that people will flock to ATM machines because it’s a quicker method to sign up for Bitcoin than using a service like Coinbase, which requires several days to link an online bank account. He added that at current rates, the Vancouver Bitcoin owners will recoup their investment in less than a year.
We’ll see. I’ll be in Vancouver in late December and let you know firsthand whether North America’s first Bitcoin ATM is still humming.
This story was updated at 10:30PM ET to replace “next to nothing” with “one percent” to describe online exchange rates for Bitcoin.