How Safe Are Bitcoin ATMS?
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.
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.