There are hundreds of cryptocurrency ATMs in the state, but how does the technology work and do people actually use the machines?
ATMs, usually located at gas stations and convenience stores, allow a user to purchase bitcoins, or sometimes other cryptocurrencies, with cash or debit card.
CoinFlip co-founder and president Daniel Polotsky says a transaction starts when the user enters their personal information – the information needed depends on the amount they buy – then scans a QR code linked to their digital wallet, inserting the payment. and confirmation of purchase. CoinFlip then sends the cryptocurrency from their digital wallet to the user’s digital wallet.
“Technically, it goes from one bitcoin wallet to another,” Polotsky said. “As if he was actually sent. We know where to send it based on the QR code associated with their wallet address.
He said the company, which has machines nationwide, generated $50 million in transaction fees in 2020 and nearly $100 million in 2021.
“So people use the machines,” Polotsky said. “And I think it’s a great way to get crypto instantly and still get 24/7 customer support. Call us at any time and we can guide you through the transaction.
A supermarket owner, Ali Alnahlawi of Gene’s Super Stop in Trumbull, loved the machines. He said he had a Byte Federal machine and they usually pay between $300 and $600 a month in rent. He said about six to eight people a month use the machine and at one point a customer put $20,000 into the machine at once.
“They pay you for the location and the place and you don’t have to worry about anything,” Alnahlawi said. “They come in, they empty the machine. All you have to do is provide the place and an internet connection and they will mail you a check every month.
Nader Ali, owner of Village Mart in Stratford, had a different experience with the company. He said he got about $800 for it two years ago, but hasn’t been paid since. He said it’s taking up space in his store, so he’s going to tear it down. He said he wasn’t sure how many people are using it.
Odai Dayoub, son of the owner of Snaxx Plus in Stratford, said someone was using the ATM in his shop. The store has had it since last summer, he said, and the only transaction it’s had was over the winter.
David Noble, director of the Peter J. Werth Institute for Entrepreneurship and Innovation at the University of Connecticut, said crypto ATMs are mainly used by those who need to send money abroad.
“The real answer is most likely that there is an immigrant population in the United States that uses it to transfer money at a certain cost to repatriate money to other places,” Noble said.
Polotsky said there are people who use the machines to send money home. He said they have a “diverse customer base”, including those who want quick access to the “latest NFT coins”, those who don’t trust the “traditional banking system” and those who can’t afford overdrafts.
“I’m sure bitcoin ATMs have high fees, but for those who don’t have a bank account or are locked out internationally, it’s a way to continue transactions,” Dawn Savo, Stratford’s CFO, said in an email to Hearst Connecticut Media.
Noble said it was possible that they were used for money laundering, but unlikely due to the fees charged by ATMs and the volatility associated with cryptocurrencies. In addition, many ATMs have a daily deposit limit and using crypto for “nefarious purposes” only becomes useful “in the very large numbers” that ATMs would not allow a user to use.
He said that if ATMs charge low enough transaction fees, they can sometimes be cheaper and faster to send money abroad than through an international financial service like Western Union.
Once a user has the currency in their wallet, sending it abroad can be “as easy as sending an email,” according to Coinbase, a company that combines cryptocurrency training and a digital wallet. All a user needs is the wallet address of the person they’re sending money to, and the transfer can be completed in minutes, albeit with a fee commonly referred to as a “gas fee,” they said.
Noble said some crypto ATMs that charge more than 10% are likely to praise their users.
“I’d say you have less than 10%, that’s a pretty legit thing,” Noble said. “If you go over 20%, you’re just taking advantage of a population that needs access to it and doesn’t have the ability to get it elsewhere.”
Not all companies that have ATMs in the city disclose their fees online, but CoinFlip says fees range from 6.9% to 12.9% and LibertyX machines charge 8% on transactions.
The state does not require crypto ATMs to be allowed under certain conditions — if it isn’t affiliated with any financial institution or if the machine is restricted to depositing or withdrawing money, according to the ministry’s state-owned banks website.
mike.mavredakis@hearstmediact.com