In addition to the Glocks and Remingtons that have long been available at Central Texas Gun Works, customers can now buy something new: bitcoins.
A bulky blue machine in the lobby of the gun store in Austin, Texas, is one of the first in the country to allow users to buy and sell bitcoins for cash.
“I drove about 20 miles to come use the ATM,” said Mitch Frink, who took $160 out of the machine in its first week in operation. “I wanted to be able to say, ‘Yeah, I sold bitcoin for straight cash and could get it within 30 minutes.’”
The machine, built by the Las Vegas company Robocoin, is a somewhat odd creation.If bitcoin is aimed at moving the world toward a cashless future, how long will a cash-dispensing machine for the virtual currency last, particularly when it is more awkward to use than a traditional bank ATM? Just to create an account, Robocoin users have to provide state-issued identification and a palm scan.
But Robocoin’s growth is recognition that, at least for the foreseeable future, even virtual currency users are going to occasionally need cold,hard cash to live in the real world.
At the same time, the difficulty of turning cash into bitcoin online has created demand for easier ways to buy virtual currencies. The allure of providing this service has drawn in several companies hoping to build a machine that will make bitcoin available to people on the street.
The most successful newcomer is Lamassu, run by two brothers in New Hampshire who designed a sleek, stripped down machine. Because it takes cash for bitcoin but does not dispense cash, it has fewer security features, making it simpler to use and cheaper to install. The machines, which cost about $5,000, have been shipped to more than 80 places around the world.
Lamassu’s goal is to make it as easy to buy bitcoin as it is to buy a soda from a vending machine. All users have to do is scan the QR code - a two-dimensional type of bar code - for an existing bitcoinwallet and insert cash. No contact is necessary with bitcoin exchanges, which often have long account verification processes and expensive money transfer requirements.
Most of Lamassu’s competitors are aiming to allow users to also turn existing bitcoin holdings into cash. A Canadian company, Bit Access, has been shipping units around the world, and Genesis Coin, a San Diego company, is introducing its first machine, the Genesis1, which it is selling for around $15,000.
The Robocoin units, which are specially manufactured in Arizona, cost $20,000, but the company managed to introduce its devices before almost anyone else. The first Robocoin machine went into a coffee house in Vancouver last October. The next machines were introduced in Austin during the South by Southwest Interactive Festival in March.
The four units in Austin are operated by local companies that bought them from Robocoin and are responsible for keeping them stocked with cash and compliant with regulations.
“This is like going on an exchange, but with cash, in person,” said Nick Morphis, a cofounder of CoinVault, which operates two of the machines.
The process of getting cash out of the machine is somewhat complicated, even if a customer already has a bitcoin wallet. Users first sign up for a Robocoin account by providing a phone number, a palm print and a state ID, which is scanned in. These measures keep the transactions in compliance with money-laundering regulations.
After an account is set up and cash is requested, customers must wait at least 10 minutes for the transaction to be confirmed by the bitcoin network. When the confirmation comes through, the customer receives a notification by phone and can return to the machine to pick up the cash. To pay for the service, the ATM operator charges 5 percent of each transaction.
After using the Robocoin unit at Central Texas Gun Works, Frink said, “It’s definitely not as quick as going to my Bank of America ATM and getting cash out.”
But, he added, “bitcoin is still in its infancy.”
Business, Pages 24 on 04/07/2014