Ever walked up to a Bitcoin ATM, only to be met with frustrating transaction limits? Or maybe you've felt confused as to why you need to scan your ID just to buy or sell a small amount of Bitcoin?

"This is open-source money; my keys, my coins; my rules" is the mantra every Bitcoiner holds dear.

So what's the deal here?

For many users who aren’t familiar with why these measures are in place, this can be extremely frustrating. After all, Bitcoin ATMs were designed to bring convenience and liquidity, right?

While these additional steps might seem like inconvenient hurdles, in reality, both daily limitations and verification checks are crucial for maintaining the security and integrity of the ecosystem. These rules ensure that Bitcoin ATM networks remain operational and can expand under the current rules-based order put forward by governments.

In an ideal world, anyone could walk up to a Bitcoin ATM with no ID, no passport and just a private key and get as much cash as they would like, but we do not live in the ideal hyperbitcoinised world yet.

Until then, Bitcoin ATMs will have to work within the parameters provided and enforce certain safeguards.

AML (Anti-Money Laundering) and KYC (Know Your Customer)

Just like any other financial institution, Bitcoin ATMs have to comply with a strict set of rules and regulations to keep you and your funds safe. Anti-money laundering (AML) and know-your-customer (KYC) laws are put in place specifically to safeguard financial transparency and prevent illegal activity.

Withdrawal Limits and Verification Tools

In order for these security measures to work effectively, daily withdrawal limits and verification methods are required, and the two go hand-in-hand. Although these limits apply to everyone, they are tiered according to the level of risk involved.

For example, those with incomplete verification face lower thresholds, while fully verified users enjoy higher limits. This system serves as a crucial safeguard, effectively deterring scams, preventing large-scale money laundering, and discouraging anonymous transactions that could fund illegal activities.

In addition, Bitcoin ATMs need to maintain a balance between physical cash and digital Bitcoin, and this directly impacts withdrawal limits. To meet user demands, limits are adjusted according to the machine's liquidity. In high-traffic areas, this often results in stricter limits to ensure they can operate smoothly.

Overall, withdrawal limits contribute to a more secure and accountable cryptocurrency ecosystem for everyone involved.

Types of Verification

Although the level of verification required changes depending on how much users want to withdraw, Bitcoin ATMs usually make use of either physical or digital verification methods.

Document Verification (Physical):

Built-in scanners are used to verify physical identification documents, such as identity cards, passports, or driver's licenses. This method primarily serves to detect fraudulent documents by ensuring their authenticity.

Electronic Verification (Digital):

Bitcoin ATMs also make use of various digital methods to verify user identity. Common electronic verification techniques include:

• Phone (SMS) Verification: Users enter their mobile phone number and receive a verification code via SMS to confirm ownership.
• Facial Recognition: The ATM makes use of a built-in camera to check your identity.
• QR Code Scanning: Users scan a QR code with their mobile wallet application to ensure accurate Bitcoin address entry.
• Wallet App Integration: Some ATMs integrate with popular wallet applications through APIs for streamlined address and identity verification.
• Email Verification: Certain ATMs send a verification link to a user-provided email address to confirm ownership.

How to Use A Bitcoin ATM and the Verification Steps Users Can Expect

These steps may differ slightly between providers, and some may offer more than one cryptocurrency, but they are generally as follows:

Verification (Initial Steps):

• The ATM will prompt users to select whether they want to buy or sell Bitcoin.
• Depending on the transaction amount and local regulations, the ATM might require initial verification.
• This often starts by entering a mobile phone number, followed by an SMS verification code sent to the user's phone. The user will then enter the same code into the ATM.
• For larger transactions, the ATM will request further verification.

Verification (Advanced Steps):

• If required, the ATM will prompt the user to scan their government-issued ID (driver's license, passport, etc.). Alternatively, users may need to include their social security number.
• Some ATMs may also use facial recognition to match the user's face to the ID photo.
• The ATM's software will verify the authenticity of the ID.

When Buying Bitcoin:

• The ATM will display a QR code representing the user's wallet address.
• Users will be able to scan the QR code with their mobile wallet app.
• The user will then insert cash into the ATM.
• The amount of Bitcoin the user will receive will be displayed, based on the current exchange rate and any fees.
• The user will confirm the transaction.
• The ATM then sends the Bitcoin to the user's wallet address.
• Lastly, the transaction is broadcast to the Bitcoin network and added to the blockchain.

To Sell Bitcoin:

• The ATM will display a QR code representing the ATM's wallet address.
• The user will then send Bitcoin from their mobile wallet to the ATM's wallet address.
• Once the transaction is confirmed on the blockchain, the ATM will dispense physical cash to the user.
• The amount of cash dispensed is based on the current exchange rate and any fees.
• Some operators, like Unbank, also allow you to exchange your Bitcoin using Venmo or Paypal.

Transaction Confirmation:

• Users can expect the ATM to provide a printed receipt with transaction details. They can also track the transaction on the Bitcoin blockchain using a block explorer.

Fees:

• Depending on the provider, Bitcoin ATMs might charge fees for their services, which could be higher than online exchanges. These fees are displayed on the ATM screen before the user confirms the transaction.

What Happens When ATM Operators Break the Rules?

Although not always convenient, those who try to avoid or navigate their way around these rules and regulations risk criminal charges, lower withdrawal limits, stricter forms of verification, hefty fines, or even being shut down entirely.

As a result, users would be directly affected.

ATM closures could block access to funds, creating significant disruptions for individuals who rely on these machines for quick and convenient transactions.

Stricter verification would cause transaction delays, adding friction to an otherwise seamless process and potentially deterring users from utilizing Bitcoin ATMs altogether.

Furthermore, lower withdrawal limits could increase fees due to multiple smaller transactions, impacting the affordability of accessing cryptocurrency.

This domino effect highlights the importance of choosing compliant operators. When Bitcoin ATM operators disregard regulations, it not only jeopardizes their own business but also compromises the trust and accessibility that users rightfully expect.

The Importance of Choosing Reputable Service Providers

While daily limits and verification tiers at Bitcoin ATMs might seem like obstacles, they are essential components of a secure and compliant cryptocurrency ecosystem. These measures, driven by regulations and security needs, protect both users and operators from fraud and illicit activities.

By understanding these security regulations and choosing reputable operators, you gain control over your funds, ensuring they remain both safe and readily accessible.

At Unbank, we understand that navigating the world of cryptocurrency can sometimes feel complex. That's why we're committed to providing clear, transparent, and secure services, empowering you to make informed decisions about your financial future.

We also believe buying Bitcoin should be as easy as sending a text. We strive to keep things as painless, efficient and easy as possible, whilst maintaining and adhering to all necessary rules and regulations to keep you safe.

Ready to experience the Unbank difference? Download the App, or find your nearest Bitcoin ATM to experience the perfect balance of both security and convenience.