Cash may be king when it comes to purchasing Bitcoin (BTC), as recent data states that there has been a spike in crypto ATM installations during 2021, showing a 71.3% increase from Jan. 1, 2021, until the time of reporting. Specifically speaking, there are currently over 24,000 crypto ATMs located across the globe. Data further suggests that crypto ATMs are being installed at a rate of about 52.3 machines per day.
While growth is clearly underway for the cryptocurrency sector, the reason behind the surge in crypto ATMs may be due to a demand for using cash to buy Bitcoin. Alona Lubovnaya, director of product operations for Bitcoin Depot — a Bitcoin ATM operator — told Cointelegraph that more people from all walks of life are becoming interested in crypto, particularly the underbanked community. “We’ve entered a new era where traditional bank accounts can be replaced with digital wallets, and because of this, more people are choosing to buy crypto with cash.”
Cash is easy and familiar for the mainstream
While there are many reasons as to why certain individuals would want to buy cryptocurrency from an ATM versus an exchange, most of the common use cases seem to be focused on easy and quick access to crypto.
For instance, one piece of research claims that over 50 million Americans are likely to buy cryptocurrency in the next year. Findings also indicate that a lack of understanding is the biggest barrier for new investors. Specifically, 20% of those surveyed said that they still don’t understand how to buy cryptocurrency.
Derek Muhney, director of marketing and strategy at Coinsource — a provider of Bitcoin ATMs — told Cointelegraph that many people looking to get started with crypto value the haptic element of a physical machine, such as an ATM. According to Muhney, Bitcoin ATMs are the best way to buy Bitcoin for an increasing target group of unbanked and underbanked. While this may be obvious, Muhney further pointed out that this has become the case with baby boomers and millennials, noting that these users make up the lion’s share of Bitcoin ATM transaction volumes to date.
Echoing Muhney, Ben Weiss, CEO of CoinFlip — a Chicago-based Bitcoin ATM operator — told Cointelegraph that Bitcoin ATMs function primarily to make crypto digestible and attainable to new users who may not understand the intricacies of cryptocurrency or blockchain technology. To demonstrate this point, CoinFlip conducted a Twitter poll to find out how many people on Crypto Twitter have used a Bitcoin ATM. CoinFlip’s survey revealed that 72.2% of individuals never used a Bitcoin ATM, while only 27.8% noted they have.
Weiss explained that he wasn’t surprised by these results, noting that Crypto Twitter is composed of people who are passionate about cryptocurrency and have a relatively deep understanding of the technology. As such, Weiss commented that mainstream users are the primary customers of Bitcoin ATMs:
“Using a crypto ATM is the simplest way of purchasing crypto. You don’t have to wait weeks or months for verification and will normally receive your crypto before you get back to your car. People understand ATMs, and crypto ATMs are not too different of a concept.”
Alex Mashinsky, CEO and co-founder of Celsius — a centralized cryptocurrency lending platform — further elaborated on this, noting that there are many groups of customers in the crypto space. For example, Mashinsky explained that hodlers will never sell their crypto, while speculators aim to time the market. Yet, Mashinsky noted that “tourist” users will be the ones to likely leverage a Bitcoin ATM. Mashinsky added:
“For temp workers and the 25% of those who do not have a bank account, a Bitcoin ATM is cheaper than Western Union or a bank wire. This segment will continue to grow and take market share from traditional finance companies that overcharge their clients.”