This is one of those blog posts where the title pretty much sums it up. Bitcoin ATMs have been around for a long time, I remember seeing a suitcase version functioning at Defcon in 2013, and I’m pretty sure commercial versions were already operating prior to that. A recent y-combinator startup is joining the fray, and I have to wonder why. The concept is very simple, send Bitcoin to an address provided by the machine and it spits out cash, insert cash and it sends Bitcoin to your phone or printed onto a hard wallet.
There is a major structural difference between these and Bank ATMs, in that the former is in no way linked to any account accept BTC under your control, and the latter ties directly into the banking infrastructure which centrally debits and credits your account from a database. In other words the ATM is a machine that connects to an opaque network and lets you take out fiat. The Bitcoin ATM lets you trade out your digital currency which you are already carrying around for cash. If I inserted gold into the ATM and it gave me cash would we call it a teller machine? Why don’t we see gold trading machines where you insert metal and get out dollars? Probably because it is a terrible idea, you already are carrying something of value, why swap it out for something of alternate value in physical form when there are myriad other ways to spend it?
Now I’m sure some of you will say I am missing the point, you want to be able to put cash in and get Bitcoins. I get it. Of course there isn’t any structural reason why you couldn’t transfer direct into BTC from your bank account, or attach a credit card to a Bitcoin backed account, or a million other smarter peer-to-peer mechanisms to accomplish the same thing. All of which can be done without the need to install expensive physical infrastructure all over the place.
The ATM idea seems to have some kind of growing mind-share, and I think the reason that bothers me is that it is old school thinking. Its forcing a transformative new technology into an existing box (literally). Trying to make it work and behave in a way that completely ignores its radical potential. You should be able to hand anyone a dollar and get a Bitcoin. You should be able to receive it as change. You should be able to link it to a bank account or debit card, and in the not too distant future you will be able to. Where does that leave the ATM machine? We can now do perfect digital delivery of value, but instead of focusing on that capability lets come up with a convoluted way to allow people to insert paper and get digital currency.
Finally, from a technology perspective the ATM is mind numbingly boring and rapidly commoditized. A machine can probably be built in thirty days or less by someone with experience, which means that we are going to see tons of people competing in that space beyond the 3+ companies already there very shortly. This isn’t meant as an attack on any particular product, but if you find yourself thinking about how cool it would be to have a Bitcoin ATM you need to take a step back. Bitcoin is much bigger and more interesting than that. Let’s put our collective resources to developing the next wave of technology, not retrofitting a completely irrelevant and antiquated system.