What an ATM Machine Says About the Future of Bitcoin

Moneybox
A blog about business and economics.
Oct. 31 2013 1:05 PM

What an ATM Machine Says About the Future of Bitcoin

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Curtis Machek, left, uses the world's first bitcoin ATM at Waves Coffee House in Vancouver.

Photo by David Ryder/Getty Images

Matthew Yglesias is on vacation.

Bitcoin ATMs aren’t a pipe dream anymore. Though too much fondness for the virtual currency will still get you laughed out of many parts of America, the modest debut of an ATM in Vancouver is a big step toward the mainstream. In the long term, it will be a critical test for the currency’s viability for regular use.

As reported in the Guardian, the ATM is “next to the espresso bar in a trendy Vancouver coffee shop” and was attracting lines of people. It allows people to buy Bitcoins and convert Bitcoins to cash, enabled through hand and barcode scanners. The company that actually built this ATM is Robocoin; here you can check out a how-to Robocoin video, which doubles as a proof of concept. (You may wish to mute your speakers.)

Another important recent step for Bitcoin’s acceptance into the mainstream was the shutdown of Silk Road—which had earned Bitcoin the kind of reputation that the Mos Eisley spaceport might envy. A more important change came when the currency survived the shutdown virtually unscathed.

Without an army, bank, or government behind it, the perennial question for Bitcoin has been: Why would anyone use this? The answer inevitably relies on the premise that there is some value to having an alternative currency—stability, anti-bank effects, lower transaction fees, etc.

But the cost of utilizing any alternative currency must be less than the benefits one gets from using it. Kashmir Hill over at Forbes did an excellent anecdotal experiment back in May by living only on Bitcoins for a week. One effect was her “Bitcoin week diet,” produced by the need to travel far to find food that she could purchase with Bitcoins. She lost five pounds.

The Vancouver ATM directly answers the shortcomings Hill discovered in her experiment. It doesn’t mean Robocoin, or any of its inevitable competitors, will succeed. This ATM and its ilk may well be the canaries in the Bitcoin coalmine, waiting to reveal whether Bitcoin will thrive and become useful for everyday people, or wither into niche techno-history.

Sean Vitka holds a J.D. from Boston College Law School. He was a legal fellow at the Open Technology Institute and a Google Policy Fellow at Georgetown Law.

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