Not long ago, a Merkle colleague and I were discussing how we find ATMs – both fiat and crypto – rather fascinating devices. We discussed what they are like in various countries and cities. We agreed that they are especially helpful in getting new people into cryptocurrencies. I thought that it might be fun if we took a break from the super-serious news of the past two weeks and just fleshed out one of the other interesting aspects of crypto.
Can ATMs boost crypto adoption?
Providing easy access is key when it comes to encouraging new people to adopt cryptocurrency. Currently, to purchase cryptocurrencies, one typically needs to create an account on an exchange. These are subject to necessary – but often intimidating – verification processes. However, someone could just put a twenty or even a fiver into an ATM and receive cryptocurrency with at most a text verification. Even with high fees, ATMs are a kind of fun, low-effort entry to cryptocurrency. I think we can build on that experience.
I know a few people who literally throw away pocket change. They find it cumbersome, noisy, and unhelpful in commerce situations. What I would love to propose is an ATM that accepts literal coins, your pocket change. Currently these machines only accept bills, which many have a harder time parting with than the jingle-jangle pennies in their pockets or weighing down their purses.
Of course, with the current state of some networks, I realize that a huge problem arises from having such dust payments fill up wallets. This means that anyone really hoping to pursue the idea of a cryptocurrency ATM that accepts coins – either solely or primarily – has two options at this time. Either they must 1) create some sort of off-chain ledger which can be cashed out later, or 2) primarily use a cryptocurrency that incurs very low transaction fees.
The first option is not especially out of the ordinary. Indeed, this is how most online exchanges operate. This approach provides “instant” transactions which newcomers may be more familiar with, and they only have to learn about confirmations once they cash out. If this line were pursued, the user experience would have to be phenomenal and the operator would need the clout to back it up. Likely, this would be best handled by an exchange.
One of the issues with this option is that it requires that users download another app to check balances and move currencies. It essentially just becomes another exchange, which is one of the things we mentioned may be a barrier to entry for some. It also would be more centralized. There is a risk in any off-chain dealings that things just never get written to a blockchain. Other problems could include users never reaching thresholds necessary to withdraw, and so on.
The second option is more fun, but less likely. Essentially this sort of ATM would have to be relegated to various altcoins. There are a few that are well-poised for this, but one worth mentioning above others is Dogecoin – which already has an ATM. Dogecoin is cheap per transaction – most are 1 doge, less than a penny – fairly stable, and fun-loving. For those who are entering cryptocurrency, it is a great place to start because of the quality of its community.
The main issue with this option is that whatever alt an ATM uses, most people want bitcoin. It’s what they hear about in the news, and it’s what they’re seeing perform well. I fear that the lack of notoriety around some alts compared to bitcoin could lead to people continuing to just throw away their change rather than put it into the exciting cryptocurrency space.
Either way, I found it entertaining to think about how we might use ATMs to help increase cryptocurrency awareness and adoption. I encourage all our readers to think about how they can help, whether through industry or community.
A special thanks to Noah, host of The Merkle Podcast, for sparking this lively conversation.