banking
"There’s a definite opportunity for
manufacturers to meet the growing
demand for cryptocurrency by
installing more kiosks"
Though the term ATM is used, these
are specialist machines and there is no
connection to a bank account, users are
instead connected to a Bitcoin exchange.
Bitcoin ATMs are expensive to operate
and the fees charged reflect this. How do
they work? Though manufacturer models
vary, the majority of the machines are
sell (cash withdrawal) only. The general
principles when withdrawing cash at the
ATM are as follows:
1. Select cash withdrawal
2. Enter amount
3. On Bitcoin wallet press the scan
button
4. Scan code from phone to the Bitcoin
ATM
5. Swipe phone screen to send Bitcoin
6. Receive printed receipt with
redemption code from ATM
7. After a short delay you’ll be able to
enter the redemption code
26 KIOSK solutions
8. Enter redeem code via PIN pad
9. Cash will be dispensed with a receipt
Similarities to traditional ATMs
The process is obviously more complex
than a straightforward ATM cash
transaction, but Bitcoin purchases
and sales via the machines do involve
inward and outward cash payments.
It’s about the exchange of value to or
from physical currency. The machines,
therefore, requires the necessary
technology to ensure only genuine
cash is accepted and dispensed, and
that the count is accurate. The ability
to consistently detect doubles, even
with severely degraded notes, can’t be
understated and is where significant
recent advances in technology have
taken place.
Recent reports have highlighted the
potential for money laundering and
fraud at Bitcoin ATMs. Here a different
approach needs to be taken; one where
full traceability of every note passing
through the machine is enabled. Optical
character recognition can export the
serial number of each banknote to
a control computer through a direct
communication application. Digital
images of the banknotes can also be
captured for enhanced security and risk
reduction.
This technology gives customers the
confidence to know that only genuine
notes have been dispensed, and
provides the evidence to challenge the
operator if they’re at all suspicious of
counterfeit notes being issued. Serial
number recognition is being mandated
by more and more central banks, with
the Chinese among the first to adopt
it. Understandably, the rise in new
payment technologies and the advent
of cryptocurrencies could ultimately
reduce the general population’s need
or demand for cash and negatively
impact future transaction volumes for
traditional ATM operators. On the other
hand, there’s a definite opportunity for
manufacturers to meet the growing
demand for cryptocurrency by installing
more self-service kiosks in the market. n