Bitcoin ATM Maker Hopes Machine Will Bring Bitcoin to the Masses

Zach Harvey says it’s too hard to get Bitcoins, so next month his new company will start shipping its first machines intended to let ordinary consumers exchange cash for the controversial digital currency.

The company, Lamassu Inc., is billing the tabletop device as “the world’s first Bitcoin ATM” and says it will ship 15 of them in September from its factory in Portugal. The company, which is incorporated in the British Virgin Islands, only began taking so-called pre-orders a week ago, and already has enough to fund the September shipments, Harvey tells Digital Transactions News. “We’re definitely very happy with the situation,” he says.

Harvey is ready for more orders to flow in. At current capacity, he says Lamassu can manufacture as many as 50 of the devices, dubbed the Bitcoin Machine, per month. The machines list for $5,000 apiece, though orders of 10 or more bring the price down to $4,000.

Harvey, who until recently ran a guitar store in New Hampshire and became fascinated with the potential of Bitcoin as a digital currency, says he sees the Bitcoin Machine going into the same sort of retail locations that deploy conventional ATMs. That, he hopes, will ultimately make it easier for more people to get their hands on the newfangled currency that has made headlines over the past several months for wild price swings and attention from federal authorities concerned about its anonymity and usefulness for money laundering.

But for all their apparent popularity, Bitcoins are too hard for ordinary people to get, Harvey argues. Users must apply for an account with an online exchange, and then must often wait for days for the registration to be recognized.

“There are a lot of people trying to get Bitcoins right now and having trouble with it,” Harvey says. “I’ve had issues with it. There are people who don’t want to wait too long. There aren’t enough online exchanges.” And tentative beginners, he says, are put off by the process. “It’s not the sort of thing you can try out for few bucks,” he says.

The Bitcoin Machine can solve many of those problems by making the digital money easily accessible, Harvey says. To get Bitcoins, a user calls up his Bitcoin wallet app on his smart phone and scans the app’s quick-response (QR) code at the machine. He then inserts as much cash as he wants. The machine converts the cash to Bitcoins at the exchange rate set by the deployer and deposits the Bitcoins in the user’s mobile wallet.

An administrative interface allows deployers to link the machine to any Bitcoin exchange and to set exchange rates and fees.

The transaction takes 10 to 15 seconds, says Harvey. “You don’t have to understand everything about Bitcoin mining or cryptography,” he says. “It’s extremely seamless. We hope it will bring new people into Bitcoin.

While the machine’s size—it weighs about 110 pounds—may make it seem susceptible to easy theft, Harvey says it comes with brackets allowing deployers to bolt it down to counters or tables.

But the wider consumer demand Harvey foresees remains a big unknown, experts say. “While the Bitcoin ATM business model is intriguing, the ability for distributors and merchants to actually achieve a profit from these devices will require significant and sustainable demand from consumers,” Sam Ditzion, president and chief executive of Boston-based Tremont Capital Group Inc., a consulting firm to the ATM industry, says by e-mail. “These devices are more expensive than mainstream retail cash-dispensing ATMs, so I think that the only way these become viable is if they are deployed in certain international markets where the public has lost its faith in its banks and currency.”

And recent federal scrutiny of Bitcoin exchanges—including Mt. Gox, the largest of them—could scare off some potential distributors and deployers in the United States, where 5% to 10% of Lamassu’s orders have come from so far. “Deployers will need to overcome several significant security and regulatory hurdles depending on where they are operated,” says Ditzion.