The digital crypto-currency Bitcoin has been a regular news feature throughout 2013, with regular headlines about wild price fluctuations, denial-of-service attacks that have shut down online reserve-sites, and the threat of aggressive regulatory action on the part of the Federal government.
All the same, proponents of the decentralized, algorithmically-produced money have so far pressed ahead with plans to make it more widely available and practical to use. Online exchanges such as MtGox have been the most popular place for Bitcoin transactions, but have been vulnerable to the twin threat of cyber-attack and government intervention.
The notion of Bitcoin ATMs is by no means a new one and has been in the news since at least February, but a London event last week served as a reminder that the idea is on the verge of becoming a reality by the end of the year.
At the Bitcoin London conference on Tuesday, July 2, a startup by the name of Lamassu Bitcoin Ventures unveiled its prototype of a small table-top, cash-only device that will convert hard currency deposits into units of the digital currency in user accounts, called “wallets.”
The process is being designed for maximum simplicity and transaction speed. According to Lamassu founder Zach Harvey, who developed the initial prototype in his garage only last February, the process will stick to cash-only in order to sidestep the necessity of bank involvement, in keeping with the currency’s anonymous and de-centralized nature. Speaking at the conference, Harvey claimed that “you don’t need the bank’s approval to start running these Bitcoin machines. You only need cash.”
This would give the new ATM machines a distinct advantage over the online exchanges, which have already had to jump through some hoops in order to operate legally in the US. Only a few months ago, the MtGox exchange partnered with a registered California bank, thereby bringing it under the same regulatory regime imposed on all banking in the US with regard to anti-money laundering measures, as well as rules that require financial institutions to know with whom they are doing business. This could put Bitcoin under the same regulations currently imposed on companies like Moneygram International Inc (MGI) and Western Union Co (WU).
This has brought up questions about how the anonymous nature of Bitcoin, perhaps its strongest appeal, will hold up when applied to conventional banking regulation, and has been an increasing worry for proponents as it appears that the federal government is ramping up its scrutiny of digital currencies in general.
Lamassu’s machines, however, hope to circumvent these obstacles, and the company intends to begin ATM production by August, with shipments slated shortly thereafter. The machines will cost between $4,000 and $5,000, a price which is intended to make up for the fact that the company will seek to make no money on currency conversion expenses. Harvey said that the company plans to distribute its machines throughout the world, and expects them to become popular in places such as emerging market economies, as well as other areas where traditional banking is not widespread.
Lamassu is not the only company that is attempting to drive developments with its ATMs either, as another company, BitcoinATM has designed a more traditional standing ATM machine of its own which it unveiled at a conference in San Diego, California on the very same day that Harvey was showing off Lamassu’s tabletop ATM in London.
Both machines will essentially act as an interface between a user’s Bitcoin savings and denominations of local currencies. According to its website, BitcoinATM will allow users to deposit and withdraw from their wallets, while the Lamassu model will approach currency withdrawals in a more gradual fashion.
Despite the skepticism that the idea of digital currency in general has received from the more traditional investment community, the perseverance and continued development of Bitcoin in the face of some very unconventional circumstances over the past months should at least be seen as an indication that it is not going anywhere just yet. Furthermore, with a number of brick-and-mortar businesses coming around to the accepting the digital tender, most recently a pub in London, there is no telling how much further it could go.
According to Zach Harvey, it could go as far as upending the traditional banking system altogether. The Lamassu founder has claimed, however idealistically, that “Once people know that all they need to do is use a kiosk to do their banking, why do they need banks?”, and has dismissed banking systems as “old technology.”