What do you need to know before using Bitcoin ATM? how do scammers work?

Buying crypto doesn't have to involve learning how to use complicated exchanges. In some places in Poland, you'll find ATMs specifically designed to facilitate crypto transactions. Before using one, however, figure out how scammers who try to extort money from you operate.

Thumbnail of a bitcoin vending machine in Warsaw on the left

The entrance to the M1 mall, which leads to Bitcoin ATM

These thumbnail photos of an example Bitcoin ATM in Marki will help you locate it. The last one is the entrance to the M1 mall.

What you need to know before buying Bitcoin at Bitcoin ATM

Buying crypto doesn't have to involve learning how to use complicated exchanges. In some places in Poland, you'll find ATMs specifically designed to facilitate crypto transactions.

Guides on buying bitcoin (BTC) often start with the advice that you must first download or buy a cryptocurrency wallet to store these cryptos. But there is another convenient way to buy bitcoin - without using a computer or exchanges.

Using an ATM (Bitcoin ATM), people have the opportunity to purchase BTC, putting cash or debit cards into the machine. All it takes is a few simple steps. But while Bitcoin ATMs are slowly becoming an inseparable part of the industry, the thought of using them still seems strange to many.

How can something like Bitcoin, which is a purely digital currency, be issued by an ATM, which usually issues physical currency?

This is a very good question. Here's what you need to know.

What are bitcoin ATMs?

Bitcoin ATMs allow people to buy bitcoins - and sometimes other cryptocurrencies - with cash or debit cards. However, the term ATM is somewhat misleading.

Bitcoin ATMs are not exactly like bank ATMs, which allow customers to manage funds in their accounts. Bitcoin ATMs are simply tools with which to make btc deposits and withdrawals, and do not require users to create any account.

Unlike cryptocurrency exchanges, bitcoin ATMs give users the freedom to instantly withdraw crypto "into your hand," as well as store their own purchased bitcoin by connecting coins directly to the cryptocurrency wallet of their choice. However, if you use centralized exchanges such as Binance or Coinbase (COIN), you can also choose to send the coins to your "deposit address" provided by your exchange and let the platform store the assets for you.

What is a cryptocurrency?

Creating a wallet is often a key part of the process of buying bitcoin using ATMs, and it is a step that requires extreme caution. This is where scammers succeed. We will discuss this topic in a moment.

The first bitcoin ATM appeared in 2013 at a coffee shop in the Canadian city of Vancouver. At the time, it was common practice among crypto fans to spend bitcoin in coffee shops. After all, all insiders remember spending 10,000 btc on two pizzas.

*Bitcoin ATM operators (data from Coin ATM Radar)*

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Since then, bitcoin ATMs have popped up all over the world. To date, 36,610 bitcoin ATMs have been established in 77 different countries. Genesis Coin is the largest bitcoin ATM manufacturer with 15,140 machines, followed by General Bytes with 7965 and BitAccess with 5549.

The leading bitcoin ATM operators are Bitcoin Depot (19.1% market share), CoinCloud (14.1%) and CoinFlip (9.7%).

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Increase in popularity of Bitcoin ATMs over time

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How to buy bitcoin from a bitcoin ATM machine

When you spot a Bitcoin ATM, you'll often notice that it has a QR code stuck on it, asking you to download a specific cryptocurrency wallet that the ATM supports.

A popular option is the Coinbase crypto wallet, but you can also choose from a long list of other wallets.

First you need to download the wallet (if you haven't already done so) and follow the setup instructions when prompted. The created wallet will generate a unique bitcoin address to which the ATM will send the purchased coins once the transaction is confirmed and completed. ATMs

Bitcoin is meant to be an intuitive experience for anyone who has used an ATM before. All you need to do is follow the on-screen instructions.

Machines will vary slightly from country to country and location to location, and some may require a Know Your Customer (KYC) activity to be performed before a purchase is allowed. Minimum and maximum purchase amounts may also vary.

After setting up your wallet and locating your wallet address for incoming transactions, you'll want to enter the amount you want to buy and enter the address of your crypto wallet. This is usually done automatically by scanning the QR code on your phone's screen, rather than typing it in manually (which can lead to errors and cause you to lose your funds forever). The transaction usually takes about 10 minutes, although sometimes it can take up to an hour.

Advantages and disadvantages of bitcoin ATMs

For users who are not familiar with the technology, bitcoin ATMs are an excellent "first step" leading to specialization in cryptocurrencies. Fortunately, this does not come at the expense of security, as most ATMs do not store users' KYC information, bank details or private keys.

However, there are some obvious drawbacks. Bitcoin ATMs charge exorbitant fees - in some cases 7%-20% - and there are stricter limits on purchases compared to cryptocurrency exchanges. In addition, if something goes wrong, there is little or no customer service.

The answer to this problem is the business model of a bitomat company in Poland called Shitcoins.club. At least once a month they organize promotions to buy or sell various crypto, even at 0%, 1%, or +3% commission. The customer support department is complemented by their social media, where hundreds of users chat with each other on a daily basis.

Beware of scams using bitcoin ATMs

There are two scams that are associated with the use of bitcoin ATMs.

Scammers often advertise goods for sale on sites such as eBay, Craigslist and Gumtree (UK). These items are usually priced at a significant discount to the usual market rate, encouraging potential buyers to contact them.

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Bitomat scammers don't necessarily look that way, but it's still worth watching out for them.

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Scammers tell victims that if they want to secure these prices, they must make purchases via cryptocurrencies - usually by depositing funds at a bitcoin ATM and sending crypto to the scammers' wallet address. Once the transaction is complete, the scammers disappear.

This is popular with fraudsters due to the irreversible and largely unregulated nature of blockchain. Once a transaction is finalized, it is almost impossible to undo it.

Another type of ATM bitcoin scam is more intricate.

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Bitumen scam "on an employee"

Scammers often target job seekers and offer them a trial job. The process involves the scammers sending money to a person's bank account, then telling them to withdraw the money and convert it into bitcoins at a bitcoin ATM, and then transfer the cryptocurrency to the scammers' address.

However, a few days later, the money sent to the victim's account is withdrawn because it came from a stolen account. This leaves the victim's account with a negative balance.

In general, if you want to buy a reasonable amount of bitcoin in a relatively private way and are not particularly concerned about paying high fees, a bitcoin ATM may be a good choice for you - provided, of course, that there are machines in your area. You can check this on the map Bitcoin ATMs in Warsaw, or on the list Bitcoin ATMs in Poland. Otherwise, a good option is to use an exchange or buy bitcoin via the apps you most likely already have on your smartphone.