One of our Spelunkin field reporters, Rob Mitchell, was good enough to give us a thorough review of the first Bitcoin ATMs in Los Angeles. Spelunkin is pleased to post the first part here, which covers the overall launch and then in Part Two, he will take us step-by-step through using the machine. Finally for Part Three, we will bring you an interview with the CEO of ZenBox, Cailen Sullivan, and Locali Co-Founder, Melissa Rosen
As a Los Angeles resident who got into Bitcoin in early 2013, I have been waiting with anticipation to see Bitcoin commerce develop in this city. While there are a lot of enthusiasts who are deeply involved in the cryptocurrency community in L.A., this enormous city is lagging in terms of mainstream businesses accepting Bitcoin. So I was beyond excited to find that Southern California’s first two Bitcoin ATMs were coming to two Locali delis in Los Angeles, one being just a mile away from me in Venice. I love that Bitcoin ATMs enable almost anyone to buy Bitcoin relatively quickly, with cash – albeit with the requirement of: proper ID, a wireless device that accepts text message, a palm, and a face. I think Bitcoin ATMs could ease a lot of interested people into their first purchase of Bitcoin. And I also can’t help but imagine, if ATMs proliferated around the world, migrant workers could easily send funds back home and pay much lower remittance fees than they do today.
I went to the Venice Locali for the first time before the ATM launch, just to snoop around, and get a look at this piece of Bitcoin equipment. Maybe I’d find it running already? No, but I found a plastic-wrapped ATM that looked like a Robocoin ATM. No one working there knew exactly when it would be up and running, so I enjoyed a sandwich at the deli, and returned home, ready to pounce when I received a hint of a launch date.
A few days after my visit, I saw an article that linked to a press release, stating the Bitcoin ATMs would be active on Saturday, June 21. Great! I had seen on Twitter that the new ATM was a Robocoin machine, but later I saw it referred to as a ZenBox (I’d never heard of them). The press release mentioned both, as well as Expresscoin (a local Bitcoin exchange located in the Bitropolis Bitcoin incubator office space). I was confused, but eager to better understand the relationships between these companies.
I arrived at the Venice Locali on opening day and found a 20-something guy sitting at a laptop next to the ATM. It was none other than the CEO of ZenBox, Cailen Sullivan. He was going to babysit the ATM over the weekend, to help users and catch problems. He walked me through using the Bitcoin ATM, and also answered my many questions.
I was lucky enough to be the first person to use the Venice Bitcoin ATM, and I hold that title with honey badger-esque resolve. I am unclear if anyone used the ATM in Hollywood before me that day, but if not, then I am the first person in Southern California area to use a publicly deployed Bitcoin ATM! If you can’t tell, this excites me more than it probably would the average person.
Here is some basic info on these new Los Angeles-based Bitcoin ATMs based on talking to Cailen and my own hands-on experience.
These ZenBox-branded ATMs transact Bitcoin and paper US Dollars in both directions. They do not accept credit cards, debit cards, or any type of link to a bank account, though these types of additional funding sources could be added in the future (credit cards would increase the fee charged). You can buy as little as $1 worth of Bitcoin, which is great for easing people into the ecosystem.
Robocoin manufactures these ATMs and ZenBox buys them (and may buy other Bitcoin ATMs in the future) and brands them. On the back end, Expresscoin processes the transactions. ZenBox pays Locali, one of many companies that wanted to host a Bitcoin ATM, for the space to operate the ATMs. Cailen himself played the role of “secret shopper” to get a feel for Locali and decided that the deli seemed like a good fit.
Fees and Costs
The ATM transaction fees are set by the operator and here the fee was 5%. Since the Robocoin Bitcoin ATMs do cost money to buy and operate, it is understandable that the fees are higher than what are found on many online exchanges.
The exchange rate for trading Bitcoins and dollars is set by Expresscoin, who also holds necessary licenses to operate as a money transmitter. The rate should be fairly inline with Coinbase and Bitstamp.
1) The total value of all transactions made by one person must stay under $10,000 per day as FinCEN requires reporting of larger transactions.
2) This ATM was loaded with $100s and $20s, so if you wanted to cash out a paper wallet, you would just have to round to the nearest $20 (note that it is a very bad practice to try to partially spend a paper wallet). Cailen explained that the machines can carry two different denominations at most, but they can be anything from $100s to $1s. There’s a total capacity of 2,200 bills, and bills fed to the ATM are kept separate from the bills that the machine gives out.
3) Robocoin ATMs print the private key on your paper receipt, but not the public key. This is how most Bitcoin ATMs operate. While this ATM shows the public key text string at the end of the transaction, it would be nice to also have a QR code displayed on the screen. With such a QR code, you could easily look for the transaction on the Bitcoin blockchain. So I would advise that users take a photo of the public key when it is displayed onscreen at the end of the transaction. Cailen explained that the ATM can be configured to print the public address too, so I hope he decides to make that change (or presents the rational for not including the public key).
4) New users have to wait for their account to be approved. In my case it took five minutes. When you cash out Bitcoin to get USD, you have to wait for one confirmation. Hopefully, that’s in about 10 minutes, but that is not always predictable. The miner’s fee included in the send can affect the time it takes to resolve the transaction.
5) You must have a government-issued ID (such as a drivers license) that slides into the card slot to register. Once you have registered, you will not need to do this again.
6) You must feel comfortable giving out a phone number where you can receive a text message, a government-issued ID, a having a photo taken of you, and giving a palm scan that are all connected to you. I was fine with it, but obviously some cryptocurrency champions may have reservations about doing this.
7) While the process is fairly intuitive and minimal, there are a few steps that were not at all clear to me as a first time user. Cailen intends to provide a help sheet at the ATM to aid people in the process minimal process. If you get stuck using a Robocoin ATM and there is not anyone around who can help with questions, it might be a good idea to keep a link to this second part of this post handy. In that post, I will give the details of my attempting to use the machine in every way possible and you should be able to see how I got past the issues I encountered.
8) Again, you will pay a 5% fee for exchanging in either direction.
Next, we will release “Bitcoin ATMs Arrive in Los Angeles! Part Two“, where Rob will take us on a step-by-step walkthrough of using the ATM in various ways.