Lamassu’s Zach Harvey Shares Data on the Growing Use of Bitcoin ATMs
Lamassu is a bitcoin ATM manufacturer that started in 2013 with the goal of making it “as simple as possible to get bitcoin.” There are now hundreds of these bitcoin ATMs around the world, and one of Lamassu’s co-founders, Zach Harvey, recently shared some data related to how these machines are used at a Bitcoin meetup in Milan.
While a recent article in the New York Post warned bodega owners against putting bitcoin ATMs in their stores due to potential use by darknet market customers, Harvey stated his belief that most of the bitcoin ATM users are using the devices for speculation on the bitcoin price, which he sees as the biggest use case for the digital asset right now.
According to Harvey, Lamassu set up their business in a decentralized, distributed manner where they manufacture the machines in Portugal and then sell them to operators around the world.
“The reason we did this in a way that is more distributed is because we felt the system would be a lot more robust if every one of these individual operators ran the machines themselves, had their own bitcoin wallets from which to send to the end user, had full control over their user data, there would be no single point of failure, and it would also be more in the spirit of Bitcoin,” said Harvey at the recent meetup.
Harvey went on to discuss data related to the use of bitcoin ATMs, problems associated with increased congestion on the Bitcoin network, and a specific example of why he thinks bitcoin is going mainstream.
Who Uses Bitcoin ATMs?
According to Harvey, the people who use bitcoin ATMs are mostly non-tech savvy users who want to get their first taste of digital currency. Harvey added that bitcoin ATMs tend to attract these types of users due to a focus on convenience and user experience. The Lamassu co-founder also claimed that a new user can complete a transaction in 20 to 30 seconds, while someone familiar with the machine can be done in less than ten seconds.
Two of the key selling points of bitcoin ATMs mentioned by Harvey were that users don’t have to go through the process of connecting a bank account with an exchange and the machines can feel like a safer option than meeting up with a random person found on a P2P bitcoin trading marketplace like LocalBitcoins.
According to Harvey, the selling points of bitcoin ATMs are so strong that many people are willing to pay the 10 to 15 percent exchange fees that come with them. He claimed that the more popular bitcoin ATMs get around 50 transactions per day and “sometimes you’ll even have queue at some of the machines.”
“If you’re around a bitcoin ATM, there really is no easier way of [getting some bitcoin],” Harvey later added.
Having said that, Harvey indicated that many of the bitcoin ATMs in the United States include some sort of identity verification due to Know Your Customer and anti-money laundering regulations. The level of identity verification required tends to vary, depending on the amounts involved and where the bitcoin ATM is located.
Harvey also shared data from one of their operators, who owns 14 machines, that indicated these bitcoin ATMs tend to be used for low-value transactions.
“These are people that just want to get the first experience — see what it’s like to get into bitcoin,” said Harvey. “If they really just want to see what it’s about — feel a little bit of the magic of bitcoin — they’re going to start with a low amount.”
“If you look at machine number 13, there’s almost 90 percent of transactions that are under $100,” Harvey added.
According to the data shared by Harvey, 20 to 30 percent of the transactions at these particular bitcoin ATMs are for less than $10.
Network Transaction Fees Have an Effect on Bitcoin ATMs
During his appearance at the Bitcoin meetup in Milan, Harvey also discussed the effect that increased congestion on the Bitcoin network has had on bitcoin ATMs. He noted that operators asked for the functionality to add a flat fee or the complete removal of the $5 and $10 transaction amounts when on-chain transaction fees get into the $1–$2 range.
Harvey also noted that roughly 90 percent of the transactions that are usually processed by bitcoin ATMs would become uneconomical if on-chain bitcoin transaction fees reached $10.
Due to demand from their operators, Lamassu plans to add altcoins, such as ether and zcash, to their machines in the coming weeks. These altcoins feature shorter confirmation times, which can be helpful in situations where a user wants to trade their cryptocurrency for physical cash.
“It’s not as secure as a bitcoin confirmation, but it’s more secure than a zero-confirmation of bitcoin,” Harvey said of confirmations on other cryptocurrency networks.
Due to Bitcoin network congestion and poorly implemented fee estimation software on users’ mobile wallets, Harvey noted that some users have had to wait over a day to get their cash out of a bitcoin ATM.
In terms of unconfirmed bitcoin transactions, Harvey stated that not many operators have had issues with accepting them.
Bitcoin Going Mainstream?
Although Lamassu also has machines in North America, Europe, Asia, Australia and New Zealand, Canada has become their most active userbase. According to data shared by Harvey, the Toronto area alone has around 50 Lamassu bitcoin ATMs.
“Several years ago, [this] would have seemed like way too many, and now it’s starting to be something that’s the norm as bitcoin goes more mainstream,” said Harvey of the density of bitcoin ATMs in Toronto.
When sharing data related to the proliferation of Lamassu’s bitcoin ATMs around the world, Harvey showed a screenshot of an email he received from a convenience store owner in Toronto.
“Customers are coming into my store, and they’re telling me, ‘Why don’t you have a bitcoin ATM?’” Harvey paraphrased from the email. “Can I please get one placed here?”
This is the same area that already has roughly 50 bitcoin ATMs around it.
Watch the full presentation here.