Bitcoin marketplace LocalBitcoins.com has produced a bitcoin ATM and is preparing to mass-manufacture the machine, which was launched on 17th February.
The Helsinki-based company said the machine can perform two-way conversions between bitcoin and fiat currency. Each unit is priced at €1,990 (approx $2,732) and the firm has built five so far.
LocalBitcoins founder Jeremias Kangas said:
“We have a pretty good chance of entering [the ATM market]. Of course there are existing companies but our model is much more cost-effective.”
The LocalBitcoins machine will also obtain its conversion rates differently from existing two-way machines. A Robocoin ATM, for example, takes its rates from a large exchange like Bitstamp through an internet connection.
The ATM can operate offline, and transactions must be completed through the LocalBitcoins website.
Customers buying bitcoin through the ATM, for example, would deposit cash in the machine and receive a redeemable code. The customer would then enter this code on LocalBitcoins.com to complete the transaction.
Customers selling bitcoin would transfer coins into a LocalBitcoins wallet and specify the amount of fiat currency they wish to withdraw. This would then generate a redeemable code which can be inputted into the ATM – the machine would then produce the cash.
LocalBitcoins will charge a 1% transaction fee for using the ATM. This fee would be on top of the premium on conversions set by the ATM’s operator. Kangas said he expected the machines to be a hit among active LocalBitcoin traders:
“[LocalBitcoins.com] is already a world-leading website for finding [bitcoin to cash] exchangers, so an ATM makes sense. We can distribute ATMs to our traders. Many will be interested. We have traders in at least 150 countries.”
Kangas said the first batch of machines are designed to be used with an attendant monitoring them. Currently, they do not have any customer identification features, he added.
A blogpost on the LocalBitcoins website announcing the machines called the units “experimental” and offered a full refund if customers found any technical problems.
LocalBitcoins is planning to develop two types of machines, one priced at €1,500 to €2,000 and a more advanced model at €2,500 to €3,000, according to Kangas.
The machines can accept more than 100 currencies. They also contain a bank-note recycler, which reduces the need for the operator to monitor and top-up the amount of cash in the machine.
Although the company has not sold any units yet, it confirmed that it has received various inquiries. Kangas said he expected the first machine to be acquired and installed within a month.
Earlier this month Florida police arrested a LocalBitcoins user in a sting operation where an undercover agent attempted to convert $30,000 into bitcoin. Police said the user flouted Florida’s anti-money laundering laws. Kangas said his firm had not formulated a response to these scenarios yet. He said:
“We are thinking about what to do with the situation, how to deal with this kind of activity in the future.”
The ATM space is evolving quickly as operators begin to move upstream with their own exchanges, as in the case of Vancouver’s Bitcoiniacs, while marketplace owners like LocalBitcoins begin manufacturing operations.