A Bit Purchase - How Does a Bitcoin ATM Work?

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A newer type of ATM is called the "Bitcoin ATM." A Bitcoin ATM is essentially a kiosk that enables a user to buy digital currencies and/or Bitcoin from a machine that generates the required coins using a USB stick. Some models of these atms provide a bi-directional function allowing both the purchase of digital currencies and the sale of digital currencies for money. This feature has allowed many people to obtain digital money from such machines even if they do not live in the United States.

One of the advantages of using a digital currency such as bitcoins is that the owner does not have to physically retain the currency. The money is electronically deposited into a designated bank account usually with a small fee. The fees for such services are extremely low in comparison to what it would cost to carry around a large amount of cash on hand.

Many businesses have been set up with the sole purpose of helping their customers convert currencies from local banks to bitcoins. A simple internet search will return hundreds of such businesses. Many such companies offer free trials of various versions of the bitcoin ATMs. In some cases, the software necessary to operate one of these machines is bundled with a merchant account service. You will know more about these systems here.

There are two types of bitcoin ATMs available. Conventional models use a slot machine-style system where the customer deposits cash and then uses the kiosk's keys to spin the reels. To prevent fraud, these models are designed to only accept certain currencies. Currently, the most popular versions of these machines accept two popular cryptocurrencies - Dash and Litecoin. In addition to the two top currencies, more companies may add additional currencies in the future.

The second type of ATM is called the multi-sig wallet. Multi-sig wallets are like private ATMs, but instead of containing one single secure copy of the private key, multiple private keys are kept in the device. When you enter a password, the server encryption program encrypts the data so that nobody but you can make any changes. In this way, you are protected from the ability to steal the private key, which allows you to use any currency that you wish instead of just Dash or Litecoin. Learn something about this topic here: https://money.cnn.com/2013/04/04/investing/bitcoin-atms/index.html.