According to the data obtained by CoinATMRadar and LongHash, the number of crypto ATMs worldwide has increased from 501 to 4,000 in less than 3 years by nearly 700 percent.
In the early days of crypto, Bitcoin ATMs gained significant popularity in fast-growing markets like South Korea.
The demand for crypto ATMs has started to increase among travelers and foreign residents that are unable to utilize local cryptocurrency-to-fiat ATMs due to know-your-customer (KYC) regulations.
What’s Behind the Increase in Popularity of Crypto ATMs?
Cryptocurrency ATMs are a practical alternative to exchanges in regions that either have a poor cryptocurrency exchange infrastructure or exchanges that do not allow foreigners to trade.
In South Korea, for instance, foreigners are not allowed to trade on local cryptocurrency exchanges due to strict KYC regulations.
Eric Gravengaard, the CEO of a cryptocurrency ATM supplier Athena Bitcoin, told LongHash:
“Crypto ATMs satisfy two demands. First, they allow users of crypto (BTC, LTC, BCH, ETH, etc.) to receive their crypto instantly. Blockchains are both instantaneous and permanent. The only analog in the U.S. financial system is physical currency, so ATMs are the only real way to instantly gain spendable Bitcoin.
Second, [cryptocurrency] ATMs are easy and convenient for people without convenient and trusted bank accounts. All you need is cash and ID and you can purchase Bitcoin.”
While the cryptocurrency ATM sector has seen exponential growth since 2016, there are several limitations to the machines.
Most crypto ATMs are operated independently by ATM suppliers or operators, and the ATMs are unable to carry out any additional task apart from converting cryptocurrencies to fiat and vice versa.
Due to the lack of features on the ATMs, when the usage of the machines is low, the ATMs are unable to generate any revenue. As such, to cover maintenance and electricity costs, ATM operators are often forced to charge high percentage-based fees and conversion rates.
As the popularity of crypto ATMs increases in the long-term, conversion rates and transaction fees will eventually decline. But, high fees remain as the core issue of ATMs to date.
In some regions like Japan, the Philippines, and South Korea, cryptocurrency exchanges have integrated software into existing ATMs to convert crypto to fiat and vice versa to maintain low fees and maintenance costs.
Growth Won’t Slow Down
Despite some near-term issues with crypto ATMs that are currently being addressed, the growth rate of the cryptocurrency ATM sector is expected to increase in the months to come.
The convenience of using ATMs outweighs its disadvantages and as the demand for ATMs increase, it will be possible for ATM operators to bring down costs and eventually the fees users have to cover.
Throughout 2019, cryptocurrency ATM companies like Athena Bitcoin in the U.S., BitOcean in Japan, and CoinPlug in South Korea are planning to expand their operations.
As one of the largest cryptocurrency ATM operators in the world, Athena Bitcoin operates 100 cryptocurrency ATMs as of February and the company intends to bring it up to 200 ATMs in the next 2 years.