There are hundreds of cryptocurrency ATMs in the state, but how does the technology work, and do people actually use the machines?
ATMs, which are mostly located at gas stations and grocery stores, allow a user to buy bitcoins, or sometimes other cryptocurrencies, with cash or debit cards.
CoinFlips co-founder and president Daniel Polotsky says a transaction starts with the user entering their personal information – the necessary information depends on the amount they are buying – and then scanning a code. QR linked to his digital wallet, the deposit of the payment and confirmation of the purchase. CoinFlip then sends the cryptocurrency to the user’s digital wallet from their digital wallet.
“Technically, what happens is that it goes from one bitcoin wallet to another,” Polotsky said. “As 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 spread across the country, generated $ 50 million in transaction fee revenue 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 right away while I’m still able to get 24/7 customer support. Call us anytime and we can guide you through the transaction.
A grocery store owner, Ali Alnahlawi from Gene’s Super Stop in Trumbull, loved the machines. He said he had a Byte Federal machine and that 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 do not have to worry about anything else,” 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 send you a check every month.
Nader Ali, owner of Village Mart in Stratford, had a different experience with the company. He said he was paid about $ 800 for it two years ago but has not been paid since. He said it takes up space in his store so he will take it down. He said he was not sure how many people use it.
Odai Dayoub, son of the owner of Snaxx Plus in Stratford, said someone used the ATM in his store. The store has had it since last summer, he said, and the only trade it has 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 primarily used by those who need to send money out of the country.
“The correct answer is most likely that there is an immigrant population in the United States that uses them to transfer money at a certain price 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 “versatile customer base”, including those who want quick access to the “latest NFT coins”, those who do not trust the “traditional banking system” and those who cannot afford overdraft facilities.
“I’m sure bitcoin ATMs have high fees, but for those without a bank or internationally locked in, it’s a way to keep trading,” said Dawn Savo, CFO of Stratford, in an e-mail. mail to Hearst Connecticut Media.
Noble said it was possible they were used for money laundering, but unlikely due to fees charged by ATMs and the volatility associated with cryptocurrencies. In addition, many ATMs have a daily deposit limit, and using cryptocurrency for “uncanny purposes” only becomes useful “in the very large number” 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 going through an international financial service like Western Union.
Once a user has the currency in their wallet, it can be “as easy as sending an email” to send it abroad, 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 are sending money to and the transfer can be completed in minutes, however with a fee usually referred to as a “gas fee”, they have stated.
Noble said some crypto-ATMs that charge fees above 10% are likely to price their users.
“I would say you have less than 10%, it’s a pretty legitimate business,” Noble said. “If you go over 20%, you’re just exploiting a population that needs access to it and does not have the opportunity to get it elsewhere.”
Not all companies that have ATMs in the city state their fees online, but CoinFlip says its fees range from 6.9% to 12.9%, and LibertyX machines charge 8% on transactions.
The state does not require that crypto-ATMs be allowed under certain conditions – if it is not affiliated with a financial institution, or if the machine is restricted to depositing or withdrawing funds, according to the department’s website state banks.
mike.mavredakis@hearstmediact.com