How Safe Are Bitcoin ATMS?

Page 3 of 2

How Safe Are Bitcoin ATMS?

Bitcoin, unlike other cryptocurrencies, has spread across many countries. As its evangelists work day and night to popularize digital currencies, Bitcoin ATM machines are popping up to help the unbanked and underbanked have access to the leading cryptocurrency.

Although it takes on the name ATM, Bitcoin ATM (BTM) differs from conventional teller machines in a couple of ways. Primarily, it’s built to facilitate buying (and times) selling of Bitcoin to cryptocurrency users. While a conventional ATM connects you to your bank account, BTM connects you directly to an exchange.

Physically, BTMs are smaller than traditional ATMs and tend to be stashed in slightly hidden spots. Their portable nature is sometimes an inconvenience to clients as their operators are forced to carry them to a display during crypto investment meetings every now and then. However, they make crypto buying faster and uncomplicated, which is the best part.

How Safe Are Bitcoin ATMs?

The anonymous nature of crypto transactions, the shady activities they are associated with and the rampant hacking leaves one questioning the safety of Bitcoin ATMs.

Can you get cryptojacked while buying or selling crypto? Can the unit get hacked? These are a few of the questions which are often asked.

Well, to answer that, the primary purpose of putting up ATM machines is to allow the unbanked and other cryptocurrency followers to acquire cryptocurrencies and accept the transactions securely. Therefore, you are likely to find them in funky neighborhoods and stores frequented by ordinary folks. So, if the crime rate is high in those areas, then the ATM users should have a reason to worry.

It’s up to you to find out how safe the ATM place is before transacting. On the other hand, operators will always try their best to keep them in the safest areas. The next concern is about the unit itself- is there a chance of it getting hacked?

Since the inception of the first crypto ATM a few years ago, no one knew they could be hacked until in the last quarter of 2018 when Trend Micro (security experts) bumped into a hacker’s advert that purports to sell a malware for hacking Bitcoin ATMs.

According to the ad, the malware exploits the ATM’s weaknesses by disconnecting it from the network (and any alarm systems it’s linked to). After that, it corrupts the system triggering it to dispense forth much of the money inside the machine. The ad went ahead and clarified that you don’t need to be techy or be near the ATM to exploit it. The malware was going for a whopping $25,000.

Even if such a technology existed, it would only threaten ATM owners and not users. However, General Bytes (creators of Bitcoin ATMs) denied the existence of any technology that exploits the vulnerabilities in their units.

“We researched the malware claim and found the offering to be a scam but because none of the blogs bothered to contact us, they are effectively helping the scammer with free advertising, luring would-be thieves into purchasing a non-existent hack,” said General Bytes owner and CEO Karel Kyovsky in a statement.

Kyovsky further outlined a couple of technical inconsistencies that make the existence of such a hacking tool impossible. On another note, GB manufacturers pointed out that there is just no mechanism or tool to make a bitcoin ATM dispense cash without receiving anything in return.

Regarding money laundering, ATMs are still a good place for shady individuals to carry out their duties as no one asks where one got his or her money. Nevertheless, the ATM’s software keeps data of all customers and their transactions. These records can be retrieved in case of an investigation.

So for both regular and new crypto users, there are currently no reasons to be worried about BTMs unless when stationed in areas with high crime rates.

How Bitcoin ATMs Work

Firstly, Bitcoin ATMs are not complicated. The buying or selling process is simpler and takes a considerably shorter time to get your money than when using exchanges. If you are still new to the concept of BTM, here’s how they work.

When you take a look at it, the first thing that greets you on the screen is the exchange rates for the offered cryptocurrencies.

Step one: Phone number verification

Next, you’ll be prompted to provide your phone number. Once you key the digits in, you will receive a one-time code within seconds.

Step Two: ID scan

or new users, some BTMs might require you to hold out your ID/Driver’s license for scanning.  Don’t be surprised if it asks for a selfie as well. Not many BTMs would take you through these two steps but it’s always good to be ready for a surprise.

“But I thought Bitcoin thrives on privacy?” Yes, it does, however, this is an ATM machine and like others, it has to comply with KYC (know your customer) and AML (Anti-money Laundering) practices put in place.

Now you are done with registration. It should take about five minutes to approve your details before you can buy some Bitcoin.

Step three: Enter wallet address

The machine will request you to enter your wallet address. There are two ways this can go; you can either type in the address if you know it or display the QR code via a phone for scanning. Do this quickly to avoid the ATM from timing out.

Step 4: Slip in the cash

After the address confirmation, the ATM will request you to slip in your fiat in exchange for some Satoshis (smaller amounts of Bitcoin). Give it a few seconds and Voilà! You’ve got yourself some virtual currency in your wallet.

Bottom line

Bitcoin machines offer a lot of convenience albeit at a price. Security-wise, there is very little to worry about. As long as the machine is located in a safe place, it doesn’t suffer from bugs or links to scam exchanges and the operators can be reached easily in case of a problem. Nevertheless, all the verification steps put in place helps to keep you safe from unscrupulous individuals.

So, are BTMs the future? Definitely, when Bitcoin replaces fiat currency.  And that, will take a while.

About the Author

Ana Farr is the Community Manager at ecommerce-platforms.com and Unblock.net.

Featured

  • Cloud Adoption Gives Way to Hybrid Deployments

    Cloud adoption is growing at an astonishing rate, with Gartner forecasting that worldwide public cloud end-user spending will approach $600 billion by the end of this year—an increase of more than 21% over 2022. McKinsey believes that number could eclipse $1 trillion by the end of the decade, further underscoring the industry’s exponential growth. Read Now

  • AI on the Edge

    Discussions about the merits (or misgivings) around AI (artificial intelligence) are everywhere. In fact, you’d be hard-pressed to find an article or product literature without mention of it in our industry. If you’re not using AI by now in some capacity, congratulations may be in order since most people are using it in some form daily even without realizing it. Read Now

  • Securing the Future

    In an increasingly turbulent world, chief security officers (CSOs) are facing a multitude of challenges that threaten the stability of businesses worldwide. Read Now

    • Guard Services
  • Security Entrances Move to Center Stage

    Most organizations want to show a friendly face to the public. In today’s world, however, the need to keep people safe and secure has become a prime directive when designing and building facilities of all kinds. Fortunately, there is no need to construct a fortress-like entry that provides that high level of security. Today’s secured entry solutions make it possible to create a welcoming, attractive look and feel at the entry without compromising security. It is for this reason that security entrances have moved to the mainstream. Read Now

Featured Cybersecurity

Webinars

New Products

  • HD2055 Modular Barricade

    Delta Scientific’s electric HD2055 modular shallow foundation barricade is tested to ASTM M50/P1 with negative penetration from the vehicle upon impact. With a shallow foundation of only 24 inches, the HD2055 can be installed without worrying about buried power lines and other below grade obstructions. The modular make-up of the barrier also allows you to cover wider roadways by adding additional modules to the system. The HD2055 boasts an Emergency Fast Operation of 1.5 seconds giving the guard ample time to deploy under a high threat situation. 3

  • EasyGate SPT and SPD

    EasyGate SPT SPD

    Security solutions do not have to be ordinary, let alone unattractive. Having renewed their best-selling speed gates, Cominfo has once again demonstrated their Art of Security philosophy in practice — and confirmed their position as an industry-leading manufacturers of premium speed gates and turnstiles. 3

  • AC Nio

    AC Nio

    Aiphone, a leading international manufacturer of intercom, access control, and emergency communication products, has introduced the AC Nio, its access control management software, an important addition to its new line of access control solutions. 3