Misadventures on the Blockchain: A Lesson in Bitcoin ATMs

Crypto expectations flipped upside down

The day finally arrived! An hour of freedom provided the chance to make my first-ever pilgrimage to an Automated Tokenization Machine.

I felt like a kid heading to a candy store; almost skipping as I walked into the coffee shop.

CoinFlip makes it easy to find your nearest machine — the site’s map feature displays each machine’s presence, nationwide.

Although millions of residents live in my sprawling US city, we share only 4 CoinFlip boxes.

According to the site’s map, three of the four local ATMs inhabit places that may as well be called ‘Shady Shawn’s Smokey Shanty.’

So, the coffee shop 12 miles across town seemed the best choice.

Mission: Use fiat to buy $20 in $KMD from a mechanical box.

I was oblivious to the CoinFlip company’s services until the Komodo Platform’s weekly newsletter called them out. $KMD is one of six cryptocurrencies on tap within CoinFlip machines.

Rather than dealing with the Coinbase to Binance shuffle — paying fees each time — I salivated at the chance to walk into a coffee shop, flatten my phone’s QR code on the plexiglass, put fiat into a machine, then walk away with a fatter bag.

After all, the CoinFlip site promises speedy convenience coupled with low fees.

With a phone in hand and a crisp Andrew Jackson in my pocket, I was heading towards what was to become my new favorite source for crypto.

Until it wasn’t. I’m sure you’ve guessed by now… it didn’t go well…

Good: Easy to Find

I’m not here to bash CoinFlip. I love the idea and appreciate the mainstream adoption efforts the project brings to blockchain and crypto.

Physical ATMs can only boost interest in cryptocurrencies from no-coiners.

The more of these machines in circulation, the more people we can get to hop aboard this roller coaster most of us here ride every day.

Offline gateways to buying crypto are welcome additions to the industry.

Here’s a fun idea:

Put these in bars so patrons can use short-term price predictions as fuel for bets and drinking games. Participants feed cash into the ATM after deciding whose phone serves as the pot. Set a timeframe and the crypto goes to the winner(s).

Now, having never been to the establishment housing the machine, I had to hunt it down. Its big, bright screen made it super-simple to find.

Ironically, the adjacent fiat ATM’s screen brandished a hand-written ‘out of service’ sign.

So far, so good. But things went downhill within moments of getting started…

Bad: A Spectacle for Prying Eyes

Technically, you can’t label it as an invasion of privacy, but it certainly felt like it at the time.

The first piece of information the ATM wants is a phone number.

As you type, your number is on display via enormous, 4-inch numbers occupying a third of the overall screen.

I felt like I was typing my phone number into a Jumbotron for everyone in the shop to see.

Ever get creeped out or uncomfortable when you feel someone uninvitedly looking over your shoulder as you type on your laptop? That feeling washed over me as I sensed onlookers.

Next, the system wants your name. So, that guy sipping his triple-frapped mochaccino, should he care, can now give me a call and use my name as an icebreaker.

Those little plastic fins covering the PIN entry pad on Point of Sale terminals are there for a reason. Even something as benign as a phone number feels inappropriate to display for strangers.

Ugly: No Crypto Here!

The whole purpose of this experiment was to buy crypto without using a traditional exchange.

The expectation was to pay under 7% for the privilege of using cash. Not exactly cheap, but speed and convenience often come at a premium.

Nobody’s a fan of paying fees of any sort, but 7% of $20 is only $1.40. No big deal for the sake of discovery!

Some investors may disagree, but I saw the fee as negligible and acceptable.

Surprise Pricing

Now’s when the real fun began.

I glanced at Blockfolio right before walking into the coffee shop, and the going rate was $0.77 per $KMD.

After inputting my name and number while enduring glares from the questionable character sitting at a table less than two feet away from the machine, the ATM claimed a price of $0.82 per coin.

That figure’s in line with CoinFlip’s website. All good.

Upon proceeding, the machine informs me of a ‘roundup’ to $0.99 per coin. That’s fine if I’m only inserting a dollar. But if there’s any rounding happening with $20 and $0.82, I’ll take 24 coins, thank you very much.

While 7% is more than tolerable for such a small transaction, we’re approaching a 30% premium.

Now, I’ve hunted for crypto acquisition methods ranging from credit cards to PayPal. I’ve seen fees run as high as 25%, but the CoinFlip machine carries the highest upcharge I’ve ever come across.

Okay, so now we’re talking about a dollar per coin, with fees swallowing six of my 20 dollars.

Not exactly the cost-cutting decentralized service blockchain tech promises!

Unwilling to back out since I’d gone so far, I agreed and put my fiat into the ATM’s glowing slot…

The Dreaded Dry Wallet

Like a slap to the face after all I’d been through to reach this critical junction, the ATM immediately ended any chance at success…

“We’re sorry, but this machine does not contain enough $KMD to complete your transaction.”

Are you (Coin)Flippin’ kidding me? Are 20 measly coins too much to ask? Was there a massive run on $KMD moments before I arrived? Ugh… so glad I made the drive.

I’m confident we have the technology to create a contract smart enough to auto-fill ATM addresses as balances deplete.

Beautiful: How to Streamline the Experience

Again, I’m not here to complain; I’m here to offer a solution.

I’ll address two main points of contention here.

Yes, a pair of tweaks to the service can leave customers walking away with an ‘I’ve got a secret’ air about them as opposed to wallowing in frustration.

Aside from the need to closely monitor ATM balances, here’s what I’d like from any machine serving cryptocurrencies:

1) Let’s Iron Out the Personal Details in Advance

If an ATM is banking on walk-up traffic, those customers still need an app to interact with the machine.

Unless you’ve planned ahead or already have a crypto app with QR codes on your phone, you’ll have to download software before making a trade.

We’re not in spur-of-the-moment, impulse-buy territory here. I wasn’t out getting coffee and happened to see crypto available. Instead, I went out to get crypto and an optional coffee.

The QR code should know who you are before a transaction takes place. Integrating with a digital ID service provider such as Civic or Ontology can accelerate ATM operation times.

Civic’s digital IDs can follow you all over the blockchain

Before I even walk into a location housing a bitcoin ATM, I’d prefer to choose my coin and the amount of cash I plan to trade.

Mobile wallets require a mechanism that triggers simple interaction with a CoinFlip machine.

By identifying patrons and making arrangements ahead of time, the entire checkout process can distill down to only a few steps:

  • Hold phone’s QR code to machine
  • Insert cash
  • Walk away with a heavier bag of coins or tokens

I always feel like a target at fiat ATMs, and a bitcoin ATM is no exception. I want to spend as little time as possible interacting with money-exchanging hardware.

Ever get stuck behind the person at the ATM that has to cash a check and withdraw from three separate accounts? Please, CoinFlip, don’t make me be that person by spending so long in front of your machinery.

I want to use my phone to perform anything and everything that facilitates a faster checkout process.

2) Be Upfront About Pricing

Had I known to expect such high fees, I may have skipped the trip altogether. However, a thirst for product knowledge, as well as a little curiosity, probably would’ve been enough to prompt a mission.

Not everyone likes surprises, especially when it comes to money. Bait and switch tactics fail to attract repeat customers.

Look, we know there’s a premium for buying and selling. If I walk into a local coin shop intent on buying ounces of silver, I’m fully aware that I’ll pay more than the current spot price.

The difference is I know the exact percentage I can expect to pay. Businesses selling their services at reasonable market rates needn’t worry about hiding their true pricing structures.

Final thoughts…

I was genuinely hoping I’d discovered a new partner in my quest for coins.

The crypto market’s prolonged bearish sentiment has seen most projects’ prices fall off a cliff. Most of the industry’s shitcoins won’t emerge from the bottom of the pit in which they crash-landed.

However, among the turds are the proverbial diamonds in the rough. And those projects are currently at dirt-cheap prices. In my speculative, not-financial-advice opinion, now’s a great time to scoop up some undervalued tokens.

What better way to dollar-cost-average and incrementally fill bags than when you’re near a bitcoin ATM and have a few extra dollars in your pocket?

On the surface, this misadventure may seem like yet another of blockchain’s broken promises. However, I maintain hope.

Bitcoin ATMs like the one I used can help build a growing community of crypto advocates. But that’s only after solving the privacy issues and being more transparent with fees.

Similar to blockchain itself, we can chalk this one up to a need to iron out the kinks. After all, emerging technologies take years to develop.

We can’t expect a smooth outcome on the first go, can we?

Misadventures on the Blockchain: A Lesson in Bitcoin ATMs

Crypto expectations flipped upside down

The day finally arrived! An hour of freedom provided the chance to make my first-ever pilgrimage to an Automated Tokenization Machine.

I felt like a kid heading to a candy store; almost skipping as I walked into the coffee shop.

CoinFlip makes it easy to find your nearest machine — the site’s map feature displays each machine’s presence, nationwide.

Although millions of residents live in my sprawling US city, we share only 4 CoinFlip boxes.

According to the site’s map, three of the four local ATMs inhabit places that may as well be called ‘Shady Shawn’s Smokey Shanty.’

So, the coffee shop 12 miles across town seemed the best choice.

Mission: Use fiat to buy $20 in $KMD from a mechanical box.

I was oblivious to the CoinFlip company’s services until the Komodo Platform’s weekly newsletter called them out. $KMD is one of six cryptocurrencies on tap within CoinFlip machines.

Rather than dealing with the Coinbase to Binance shuffle — paying fees each time — I salivated at the chance to walk into a coffee shop, flatten my phone’s QR code on the plexiglass, put fiat into a machine, then walk away with a fatter bag.

After all, the CoinFlip site promises speedy convenience coupled with low fees.

With a phone in hand and a crisp Andrew Jackson in my pocket, I was heading towards what was to become my new favorite source for crypto.

Until it wasn’t. I’m sure you’ve guessed by now… it didn’t go well…

Good: Easy to Find

I’m not here to bash CoinFlip. I love the idea and appreciate the mainstream adoption efforts the project brings to blockchain and crypto.

Physical ATMs can only boost interest in cryptocurrencies from no-coiners.

The more of these machines in circulation, the more people we can get to hop aboard this roller coaster most of us here ride every day.

Offline gateways to buying crypto are welcome additions to the industry.

Here’s a fun idea:

Put these in bars so patrons can use short-term price predictions as fuel for bets and drinking games. Participants feed cash into the ATM after deciding whose phone serves as the pot. Set a timeframe and the crypto goes to the winner(s).

Now, having never been to the establishment housing the machine, I had to hunt it down. Its big, bright screen made it super-simple to find.

Ironically, the adjacent fiat ATM’s screen brandished a hand-written ‘out of service’ sign.

So far, so good. But things went downhill within moments of getting started…

Bad: A Spectacle for Prying Eyes

Technically, you can’t label it as an invasion of privacy, but it certainly felt like it at the time.

The first piece of information the ATM wants is a phone number.

As you type, your number is on display via enormous, 4-inch numbers occupying a third of the overall screen.

I felt like I was typing my phone number into a Jumbotron for everyone in the shop to see.

Ever get creeped out or uncomfortable when you feel someone uninvitedly looking over your shoulder as you type on your laptop? That feeling washed over me as I sensed onlookers.

Next, the system wants your name. So, that guy sipping his triple-frapped mochaccino, should he care, can now give me a call and use my name as an icebreaker.

Those little plastic fins covering the PIN entry pad on Point of Sale terminals are there for a reason. Even something as benign as a phone number feels inappropriate to display for strangers.

Ugly: No Crypto Here!

The whole purpose of this experiment was to buy crypto without using a traditional exchange.

The expectation was to pay under 7% for the privilege of using cash. Not exactly cheap, but speed and convenience often come at a premium.

Nobody’s a fan of paying fees of any sort, but 7% of $20 is only $1.40. No big deal for the sake of discovery!

Some investors may disagree, but I saw the fee as negligible and acceptable.

Surprise Pricing

Now’s when the real fun began.

I glanced at Blockfolio right before walking into the coffee shop, and the going rate was $0.77 per $KMD.

After inputting my name and number while enduring glares from the questionable character sitting at a table less than two feet away from the machine, the ATM claimed a price of $0.82 per coin.

That figure’s in line with CoinFlip’s website. All good.

Upon proceeding, the machine informs me of a ‘roundup’ to $0.99 per coin. That’s fine if I’m only inserting a dollar. But if there’s any rounding happening with $20 and $0.82, I’ll take 24 coins, thank you very much.

While 7% is more than tolerable for such a small transaction, we’re approaching a 30% premium.

Now, I’ve hunted for crypto acquisition methods ranging from credit cards to PayPal. I’ve seen fees run as high as 25%, but the CoinFlip machine carries the highest upcharge I’ve ever come across.

Okay, so now we’re talking about a dollar per coin, with fees swallowing six of my 20 dollars.

Not exactly the cost-cutting decentralized service blockchain tech promises!

Unwilling to back out since I’d gone so far, I agreed and put my fiat into the ATM’s glowing slot…

The Dreaded Dry Wallet

Like a slap to the face after all I’d been through to reach this critical junction, the ATM immediately ended any chance at success…

“We’re sorry, but this machine does not contain enough $KMD to complete your transaction.”

Are you (Coin)Flippin’ kidding me? Are 20 measly coins too much to ask? Was there a massive run on $KMD moments before I arrived? Ugh… so glad I made the drive.

I’m confident we have the technology to create a contract smart enough to auto-fill ATM addresses as balances deplete.

Beautiful: How to Streamline the Experience

Again, I’m not here to complain; I’m here to offer a solution.

I’ll address two main points of contention here.

Yes, a pair of tweaks to the service can leave customers walking away with an ‘I’ve got a secret’ air about them as opposed to wallowing in frustration.

Aside from the need to closely monitor ATM balances, here’s what I’d like from any machine serving cryptocurrencies:

1) Let’s Iron Out the Personal Details in Advance

If an ATM is banking on walk-up traffic, those customers still need an app to interact with the machine.

Unless you’ve planned ahead or already have a crypto app with QR codes on your phone, you’ll have to download software before making a trade.

We’re not in spur-of-the-moment, impulse-buy territory here. I wasn’t out getting coffee and happened to see crypto available. Instead, I went out to get crypto and an optional coffee.

The QR code should know who you are before a transaction takes place. Integrating with a digital ID service provider such as Civic or Ontology can accelerate ATM operation times.

Civic’s digital IDs can follow you all over the blockchain

Before I even walk into a location housing a bitcoin ATM, I’d prefer to choose my coin and the amount of cash I plan to trade.

Mobile wallets require a mechanism that triggers simple interaction with a CoinFlip machine.

By identifying patrons and making arrangements ahead of time, the entire checkout process can distill down to only a few steps:

  • Hold phone’s QR code to machine
  • Insert cash
  • Walk away with a heavier bag of coins or tokens

I always feel like a target at fiat ATMs, and a bitcoin ATM is no exception. I want to spend as little time as possible interacting with money-exchanging hardware.

Ever get stuck behind the person at the ATM that has to cash a check and withdraw from three separate accounts? Please, CoinFlip, don’t make me be that person by spending so long in front of your machinery.

I want to use my phone to perform anything and everything that facilitates a faster checkout process.

2) Be Upfront About Pricing

Had I known to expect such high fees, I may have skipped the trip altogether. However, a thirst for product knowledge, as well as a little curiosity, probably would’ve been enough to prompt a mission.

Not everyone likes surprises, especially when it comes to money. Bait and switch tactics fail to attract repeat customers.

Look, we know there’s a premium for buying and selling. If I walk into a local coin shop intent on buying ounces of silver, I’m fully aware that I’ll pay more than the current spot price.

The difference is I know the exact percentage I can expect to pay. Businesses selling their services at reasonable market rates needn’t worry about hiding their true pricing structures.

Final thoughts…

I was genuinely hoping I’d discovered a new partner in my quest for coins.

The crypto market’s prolonged bearish sentiment has seen most projects’ prices fall off a cliff. Most of the industry’s shitcoins won’t emerge from the bottom of the pit in which they crash-landed.

However, among the turds are the proverbial diamonds in the rough. And those projects are currently at dirt-cheap prices. In my speculative, not-financial-advice opinion, now’s a great time to scoop up some undervalued tokens.

What better way to dollar-cost-average and incrementally fill bags than when you’re near a bitcoin ATM and have a few extra dollars in your pocket?

On the surface, this misadventure may seem like yet another of blockchain’s broken promises. However, I maintain hope.

Bitcoin ATMs like the one I used can help build a growing community of crypto advocates. But that’s only after solving the privacy issues and being more transparent with fees.

Similar to blockchain itself, we can chalk this one up to a need to iron out the kinks. After all, emerging technologies take years to develop.

We can’t expect a smooth outcome on the first go, can we?

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Misadventures on the Blockchain: A Lesson in Bitcoin ATMs was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.