Are bitcoins evolving into a real-world currency? That question is prompted by news that the world's first bitcoin ATM was set up in Canada earlier this week.
The machine, located in a coffee shop in Vancouver, allows users to buy, sell and trade the virtual currency, as well as to deposit cash or checks or withdraw bitcoin in any of 60 national currencies, up to $3,000 daily.
The ATM was developed and deployed by Robocoin, a company that intends to make bitcoin what it calls "grandma friendly." Robocoin CEO Jordan Kelley told news media that, with this ATM, his company is "bridging the gap and bringing reality to this digital currency." The owner of the coffee shop where the ATM is located and Robocoin each make a commission on transactions.
The Robocoin ATM is fully automated and has a hand scanner for ID authentication, as well as the ability to read government-issued identification.
Bitcoins are attempting to emerge from their somewhat underground reputation for being used in less-than-kosher transactions, such as the recently shutdown online drug operation called Silk Road. Last August, New York officials subpoenaed 22 companies using bitcoins because of possible money laundering or other illegalities. Included in the subpoenas were VC firms Google Ventures and Andreesen Horowitz.
The currency is encrypted computer code that is stored in a virtual wallet, and only a limited number of bitcoins are being created so as not to generate inflation.
Users can buy and sell bitcoins in such exchanges as Mt. Gox in Tokyo, and the current value of one bitcoin is about $200. The Robocoin ATM allows for currencies to be exchanged according to real-time data on exchange rates from Canada's VirtEx exchange. Robocoin has said that its ATM machine complies with various currency laws, including those involving money laundering.
Coinfloor Trading Platform
The $20,000 machines will next be located at commercial establishments in Toronto and Montreal, and Robocoin says it has received inquiries from organizations in Australia, Kenya, Ireland and more than a dozen other countries.
Roger Kay, an analyst with industry research firm Endpoint Technologies Associates, told us that the U.S. federal government "keeps a jealous eye out" for other currencies in its borders, so that even if the bitcoin ATM got a better foothold in Canada it might face an uphill climb across the border in the U.S.
In London, an operation called Coinfloor attempted to open for business on Tuesday, but the Web site shut out many investors because of what Coinfloor says was "overwhelming demand." Coinfloor says it is the most advanced bitcoin trading platform around.
In Oslo, Norway, a man named Kristoffer Koch bought an apartment in the central part of the city recently with the returns he had made from buying -- and forgetting about -- $24 of bitcoin. He bought that amount of bitcoins in 2009, as he was conducting research on encryption. In April, he remembered the purchase when he read about their soaring value, as his 5,000 Bitcoins had ballooned to being worth about $700,000. It took him a day to remember his password, and he redeemed about a fifth of that amount.