Krypto Karma, LLC business model will set up and operate Bitcoin cryptocurrency automatic teller machines (ATM's). Below is a basic explanation of how this business operates.
What Is a Bitcoin ATM?
A bitcoin ATM is an Internet-connected
kiosk that allows customers to purchase bitcoins and/or other cryptocurrencies with deposited cash. A bitcoin ATM is not the same as an
automated teller machine (ATM) that allows bank customers to physically withdraw, deposit, or transfer funds in one's bank account. Rather, bitcoin ATMs produce
blockchain-based transactions that send cryptocurrencies to the user's
digital wallet, often via the use of a
QR code.
Key Takeaways
- A bitcoin ATM is a standalone device or kiosk that allows members of the public to buy or sell bitcoin or other cryptocurrencies for a terminal.
- Bitcoin ATMs are connected to the Internet and often utilize QR codes to send and receive tokens to users' digital wallets.
- There are currently more than 20,000 bitcoin ATMs in operation in the US. The market is still very young with impressive earning potential.
Understanding Bitcoin ATMs
Buyers will typically scan a quick response (QR) code corresponding to their own
bitcoin wallet address, to which purchased coins are transferred. If the buyer does not yet have a wallet, a new one can be generated. After the purchase, a record of the bitcoin will appear in the customer's wallet, though this may take several minutes to process.
Most bitcoin ATMs will set a lower and upper limit on the cash that can be deposited. All bitcoin ATM operators in the United States must register with the
Financial Crimes Enforcement Network (FinCEN) and comply with
anti-money laundering provisions of the
Bank Secrecy Act (BSA). Depending on the transaction size, the bitcoin ATM may ask you for a mobile phone number to receive a text verification code. Or it may require you to scan government-issued identification, such as a driver's license, before completing a transaction.
Bitcoin ATM Fees
Customers are charged a
service fee for using a bitcoin ATM (10-17% / National Average is 14%). This fee is typically charged as a percentage of the transaction rather than a fixed dollar value. The fee is where the company profits from each transaction. The typical profit share with location owners is 1-3%, whereas, the operator makes the remain transaction fee % for profit.
Bitcoin ATM Locations
Bitcoin ATMs are becoming increasingly popular in the U.S. Coin ATM Radar, which maintains an online directory of Bitcoin ATMs, estimates an installed base of more than 20,000 plus kiosks in the U.S. as of October 2021. ATMs are more likely to be owned and operated by companies focused on the cryptocurrency industry. In some cases, a bitcoin ATM may be operated by a company that offers its own trading platform or wallet. These companies may require a customer to have an account in order to conduct a transaction, much like how banks do.
Profit Time Frame
The current trends show most locations are reporting initial profit is between 4-8 weeks with steady increases over time. Reports have shown monthly transactions between $15,000 - $90,000 per month initially, and profits at 10% of transaction fee equals between $1,500 - $9,000 per month initially with steady increases over time.
Locations
Convenient Stores
Gas Stations
Head Shops
Coffee Shops
Malls
Shopping Districts
Resorts
College Campus
How do Bitcoin ATMs make money?
Whether they are included in the spread between the fiat and cryptocurrency rate prices or applied as a percentage of the transaction, the fees involved with making a market, processing payments, and shifting currencies between hot wallets and financial institutions pass onto the consumer and can include a profit
Are Bitcoin ATMs safe?
Bitcoin ATMs are one of the safest ways to buy, send or sell Bitcoin. First, instant transactions protect you from Bitcoin's volatility. Secondly, passwords and 2-factor authentication protect your account from others.
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