Buying A Bitcoin ATM Isn't A Great Investment When You Buy One With Bitcoin

Mar 3 2014, 10:48am CST | by

Buying A Bitcoin ATM Isn't A Great Investment When You Buy One With Bitcoin
Photo Credit: Forbes Business

Last month there seemed to be a race on to place the first physical bitcoin ATM in the United States. Just as Robocoin was announcing its plans to power up the first such machine in Austin,  a California man stole all the thunder by announcing that his bitcoin ATM made by a company called Lamassu had already been up in running in an Albuquerque, New Mexico cigar shop for a few days.

The following day, another Lamassu machine surprisingly showed up in Boston.

But the man behind the actual first American bitcoin ATM is Eric Stromberg, who chose to set it up in New Mexico because the state’s laws (or rather, the lack of money transmission statutes) were friendlier to the cryptocurrency-in-the-real-world venture than back in his previous home state of California, where a $250,000 bond would have been required.

Stromberg ordered his Lamassu ATM last summer at a cost of $5,000, which he paid for with about 43 bitcoins at the time. Had he held on to those bitcoins instead, he could have seen them increase in value by as much as 600 percent, going by today’s bitcoin prices.

“If I had held those bitcoins, they would be worth six times as much now. But that’s looking in the rearview mirror,” he told Coindesk.

That opportunity cost makes it unlikely that Stromberg’s investment in the first American bitcoin ATM to operate will pay off anytime soon. He’s been limiting transactions on the machine to a maximum of $1,000 in value and charges a seven percent markup. And to call the machine a true ATM is something of a misnomer — it’s more of a currency exchanger that simply takes in cash and converts it to the digital currency.

So the road to profitability could be long for Stromberg and his ATM, but such has been the tale of most things bitcoin so far.

Source: Forbes Business


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