My Experience using a Bitcoin ATM(grantammons.me)
grantammons.me
My Experience using a Bitcoin ATM
http://grantammons.me/bitcoin/my-experience-using-a-bitcoin-atm/?utm_source=hn&utm_medium=web&utm_campaign=hn
11 comments
He said he was normally very cautious, which is basically an admission that he wasn't being cautious this time. The fact that he chose to throw caution to the wind once doesn't mean he isn't normally cautious. Curiosity got the best of him.
Probably better for them if they be upfront by showing buy and sell rates like other money changers.
For the whole fingerprint, photo, ID, social security, etc. dance, let's place the blame squarely on the proper shoulders here: the U.S. government. No sane business would demand these things voluntarily. Some would probably even avoid collecting them if the only penalty were civil (i.e., fines).
But anyone who fails to collect all this information while engaging in money transmission, as is the case with a Bitcoin ATM, puts themself at risk of SWAT raids and long prison sentences.
I'm also seeing that some of the same people who were mocking Bitcoin businesses before for their failure to comply with regulations _now_ are mocking Bitcoin businesses because complying with these regulations takes a really long time and is onerous. In this regard, I really have no comment beyond just pointing it out.
But anyone who fails to collect all this information while engaging in money transmission, as is the case with a Bitcoin ATM, puts themself at risk of SWAT raids and long prison sentences.
I'm also seeing that some of the same people who were mocking Bitcoin businesses before for their failure to comply with regulations _now_ are mocking Bitcoin businesses because complying with these regulations takes a really long time and is onerous. In this regard, I really have no comment beyond just pointing it out.
I agree with most of your comment, but I'd like to point out that I have never in my life had to give up my fingerprints to a bank for anything. I am comfortable asserting that it is uncommon anywhere in the US to require fingerprints to have a bank account and use an ATM.
Is this required for foreign currency exchange? Because that's all I think this machine is really doing.
Is this required for foreign currency exchange? Because that's all I think this machine is really doing.
The fingerprints are only because that's the only way to prove with a high level of confidence that the same person isn't repeatedly visiting the same ATM using different (faked) identities. This has been a big concern of the lawyers, FinCEN, and LE.
The bank doesn't have to do that because a human being can be reasonably confident that he/she isn't repeatedly serving the same person using different identities.
Also, note that the federal government has asserted that Bitcoin doesn't fall under the same laws as foreign exchanges, but rather as banks (see FinCEN's first guidance document on virtual currencies). A court could rule against this interpretation, but it's pretty unlikely.
EDIT: I should add there's a lot of grey area here as to what constitutes proper KYC procedures in this instance. I personally think a simple photograph would probably satisfy's FinCEN's concerns, but I've decided not to operate this kind of device, so it's not my own ass that's on the line. I can certainly sympathize with anyone who wants to be extra careful here since federal prosecutors and agents have been so zealous in this area.
The bank doesn't have to do that because a human being can be reasonably confident that he/she isn't repeatedly serving the same person using different identities.
Also, note that the federal government has asserted that Bitcoin doesn't fall under the same laws as foreign exchanges, but rather as banks (see FinCEN's first guidance document on virtual currencies). A court could rule against this interpretation, but it's pretty unlikely.
EDIT: I should add there's a lot of grey area here as to what constitutes proper KYC procedures in this instance. I personally think a simple photograph would probably satisfy's FinCEN's concerns, but I've decided not to operate this kind of device, so it's not my own ass that's on the line. I can certainly sympathize with anyone who wants to be extra careful here since federal prosecutors and agents have been so zealous in this area.
I guess it should be obvious that they fingerprint scan for each use of the terminal. This wasn't made clear in the article.
I am curious too as to how this is the U.S. Government's fault.
To be a money transmitter, it requires that you have a license, and it sounds like Robocoin is trying to mitigate their risk (e.g. losing their license and going out of business) by being able to prove who you are, in case they become party to illegal activity.
To be a money transmitter, it requires that you have a license, and it sounds like Robocoin is trying to mitigate their risk (e.g. losing their license and going out of business) by being able to prove who you are, in case they become party to illegal activity.
The strict KYC/AML laws are all federal laws (many stemming from the PATRIOT act).
State money transmission laws have traditionally been oriented toward consumer protection and not toward prosecuting money laundering (and so they traditionally didn't require any IDs or other proof of identification from anyone except the business owners).
State money transmission laws have traditionally been oriented toward consumer protection and not toward prosecuting money laundering (and so they traditionally didn't require any IDs or other proof of identification from anyone except the business owners).
But how does that apply here? You specifically said:
> For the whole fingerprint, photo, ID, social security, etc. dance, let's place the blame squarely on the proper shoulders here: the U.S. government.
I don't have to take a photo, give social security, or scan a hand print when I exchange foreign currency with a money transmitter...
> For the whole fingerprint, photo, ID, social security, etc. dance, let's place the blame squarely on the proper shoulders here: the U.S. government.
I don't have to take a photo, give social security, or scan a hand print when I exchange foreign currency with a money transmitter...
>I don't have to take a photo, give social security, or scan a hand print when I exchange foreign currency with a money transmitter...
1. FinCEN has declared that a Bitcoin exchange (such as this ATM) is not subject to the same laws as foreign exchanges, but rather is a money transmitter, and thus subject to much stricter regulation (such as identification required starting at $0 instead of $1000).
2. When was the last time you exchanged foreign money in the U.S.? When I last exchanged foreign currency in the U.S. (in the past few years), I needed to provide a photo ID and my social security no. I believe this is strictly required only when you exchange over $1000, but many exchanges require them for all transactions.
3. Note that when you provide a photo ID, the end result is the same as if they had taken a photograph on the spot (your photo is copied and filed).
1. FinCEN has declared that a Bitcoin exchange (such as this ATM) is not subject to the same laws as foreign exchanges, but rather is a money transmitter, and thus subject to much stricter regulation (such as identification required starting at $0 instead of $1000).
2. When was the last time you exchanged foreign money in the U.S.? When I last exchanged foreign currency in the U.S. (in the past few years), I needed to provide a photo ID and my social security no. I believe this is strictly required only when you exchange over $1000, but many exchanges require them for all transactions.
3. Note that when you provide a photo ID, the end result is the same as if they had taken a photograph on the spot (your photo is copied and filed).
That makes more sense. Thanks.
It has been two years since I was last at a foreign currency exchange here, and things could have changed since then as well.
It has been two years since I was last at a foreign currency exchange here, and things could have changed since then as well.
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The conventional ATM experience only works because we have already gone through the pain of identifying ourselves to a bank, usually by sitting across the desk from another human being and filling out forms, during business hours. We often have to wait for an ATM card to arrive in the mail afterward. I think it's incredible that I can now go to a bar at 1AM for the same service. Plus beer and pool.
Really? I can go to walmart and buy a pre-paid atm card with cash. And then use that card at an atm. No Id process required.
It's still harder to drive to Walmart during business hours than use a Robocoin.
In many areas a round trip to Walmart will take a lot less than the 50 minutes described in the article.
Let's remember that this was the first time he used the ATM, it would appear that future interaction would only take the time to send the BTC to the robocoin wallet and wait for the confirmation (~10 min for the required 1 confirmation). 10 minutes is pretty quick IMO to convert BTC to cash, the only faster method would be using Local Bitcoins (which are the people running the ATM in this post) but that assumes you could organize, agree on a price, and meet up with another person in less than 10 minutes which I know from experience is pipe dream.
Last time I tried to get a prepaid card I still had to give out a bunch of personal info.
Yeah, we take so many things for granted. If you had said 20 years ago that you get cash in just 30 min from an ATM without a card but with your cell phone and a palm scan, they would probably advise you to see a doctor.
I had a similarly poor experience[1]. Many people are retorting that you have to go through this process with all financial institutions. To those, I say you're missing the point. We still have to answer a lot of questions regarding regulation around cryptocurrencies, but part of the allure is that you shouldn't have to jump through a bunch of hoops to use bitcoin. Furthermore, the first (and only) time I dropped by the bitcoin markup was astronomical.
It's naive to think we'll resolve this overnight, but until then there's no point to using a robocoin ATM.
[1] http://www.jauntworthy.com/blog/2014/2/21/first-impression-o...
It's naive to think we'll resolve this overnight, but until then there's no point to using a robocoin ATM.
[1] http://www.jauntworthy.com/blog/2014/2/21/first-impression-o...
The main problem is the PII like palm prints, driver ID etc. and no ATM operator right in his mind can leave that step out if the ATM handles dollars in any amount.
Fuck banks, fuck their anti-money-laundering regulations and fuck the politicians for the "war on drugs" which actually led to the creation of said anti-money-laundering rules.
Fuck banks, fuck their anti-money-laundering regulations and fuck the politicians for the "war on drugs" which actually led to the creation of said anti-money-laundering rules.
I agree with you that all the privacy invading things here are a big problem, but why do you blame banks for AML/KYC? I mean, there's plenty of other things to blame banks for, but the ID, photo, etc. requirements are due solely to the policies of our government.
Banks have traditionally resisted those rules, because they know people don't like them.
Banks have traditionally resisted those rules, because they know people don't like them.
They enforce KYC/AML measures only for the small fishes, but openly deal with drug dealers and other questionable entities.
Either you go the full route and demand compliance from everyone, or you go the full-opposition route and do everything in your power to really fight the regulation.
The "hybrid" approach chosen by many banks is just criminal.
Either you go the full route and demand compliance from everyone, or you go the full-opposition route and do everything in your power to really fight the regulation.
The "hybrid" approach chosen by many banks is just criminal.
Fair objection.
Actually, it was largely "Terrorism!" that motivated the anti-money-laundering regulations that are the issue here.
No change to the sentiment, I just wanted to be sure you were damning the correct politicians for the correct reasons.
No change to the sentiment, I just wanted to be sure you were damning the correct politicians for the correct reasons.
KYC regulations were in effect way before 9/11, same for currency trading restrictions (made ineffective/impossible with Bitcoin).
Oh, and indeed I forgot another point, the "OMG child porn!" faction...
edit: Oh, of course no amount of KYC regulations prevented big banks from doing business for and with big drug cartels... I wonder whom those regulations were drafted for, anyway. Can't be drug lords or terrorists, so whom else?
Oh, and indeed I forgot another point, the "OMG child porn!" faction...
edit: Oh, of course no amount of KYC regulations prevented big banks from doing business for and with big drug cartels... I wonder whom those regulations were drafted for, anyway. Can't be drug lords or terrorists, so whom else?
Oh, currency trading restrictions are quite possible to effectively restrict unless you're meeting in person and exchanging cash for Bitcoin. If a government explicitly bans Bitcoin (and enforces those laws), there won't be enough liquidity in Bitcoin conversions with that currency to execute trades. Many countries that restrict currency trades also restrict currency exports; so you're not likely to find much of that nation's currency abroad.
This isn't a new problem; FX traders call them restricted currencies. It's actually pretty hard to get large amounts of things like Russian Rubles and Indian Rupees; it's possible to get large amounts of currency if you're a big bank; but you often have to work a deal with the government/central bank that's not going to be in your favor.
This isn't a new problem; FX traders call them restricted currencies. It's actually pretty hard to get large amounts of things like Russian Rubles and Indian Rupees; it's possible to get large amounts of currency if you're a big bank; but you often have to work a deal with the government/central bank that's not going to be in your favor.
I'd have imagined the central banks of restricted-currency countries would like to sell $currency in order to increase their stocks of dollars, Euros or gold and make it hard to "cash out".
It depends on whether their currency is inflated or deflated relative to its market value. In a case like China, their currency is artificially deflated, so they will happily trade dollars for yuan all day long (but not the other way around). In a case like Argentina or Zimbabwe, the official exchange rate is something like 10 to $1, but the man on the street will give you 50 to $1.
Basically, with restricted currencies, you can often trade easily one way but not necessarily the other. The idea behind this is to make it easy to bring your money into the country on favorable terms, but hard to take it out (so you have to spend it there and repatriate the money through transfer of goods). In an inflationary system, you often have a capital class in power in a country, and high inflation keeps them in power since they own all the means of production. Unfavorable exchange rates and high prices discourage foreign investment, which can be desirable in corrupt or autocratic regimes. More often than not though, long-term high inflation is unintentional and a sign of bad monetary policy.
Basically, with restricted currencies, you can often trade easily one way but not necessarily the other. The idea behind this is to make it easy to bring your money into the country on favorable terms, but hard to take it out (so you have to spend it there and repatriate the money through transfer of goods). In an inflationary system, you often have a capital class in power in a country, and high inflation keeps them in power since they own all the means of production. Unfavorable exchange rates and high prices discourage foreign investment, which can be desirable in corrupt or autocratic regimes. More often than not though, long-term high inflation is unintentional and a sign of bad monetary policy.
The "rawness" he describes has nothing to do with Bitcoin, and everything to do with the laws surrounding fiat money.
It has to do with the "rawness" of the industry around Bitcoin. The laws around financial instruments don't magically disappear just because it's technically possible to make transactions without them. They exist for a reason, and if you want to make a business that deals in financial instruments, you have to follow them.
It seems to me the "rawness" has everything to do with bitcoin and its decentralized design.
1- Needed to create an account for "their" exchange. 2- Needed to transfer bitcoin into their exchange. 3- Needed to wait for transaction to get validated in the blockchain 4- Get money.
You could reach and say that all the PII and initial setup was to comply with laws about banking/money laundering. But that took 7 mins of a 45 min process.
1- Needed to create an account for "their" exchange. 2- Needed to transfer bitcoin into their exchange. 3- Needed to wait for transaction to get validated in the blockchain 4- Get money.
You could reach and say that all the PII and initial setup was to comply with laws about banking/money laundering. But that took 7 mins of a 45 min process.
> 3- Needed to wait for transaction to get validated in the blockchain
This process is slow and I don't see how it can possibly get faster.
The best I've come up with is you have a second money-apparatus that moves more quickly. It probably wouldn't have a lot of the currency-like properties of bitcoin. I guess the analogy is that sending bitcoin is like writing a cheque, and this faster thing would be like using a credit card.
This process is slow and I don't see how it can possibly get faster.
The best I've come up with is you have a second money-apparatus that moves more quickly. It probably wouldn't have a lot of the currency-like properties of bitcoin. I guess the analogy is that sending bitcoin is like writing a cheque, and this faster thing would be like using a credit card.
Well, step 2 (20m) is also due to regulatory compliance
The long wait times and multiple trips may explain why there are such long lines in so many pictures of Bitcoin ATMs.
I had a terrible experience last weekend.
I went down to the corner to get some money out of the ATM. I walked up and stuck in my card and the ATM wouldn't give me any money: said something about my card not being supported. So I walked into the bank building adjacent to the ATM and asked them about it.
Well, first I had to wait in a line: there were two people in front of me so that took about 5 minutes. Then they explained that the ATM didn't work because I didn't have an account with that bank, and would I like to open an account? I said sure, go ahead, then they started asking me all kinds of intrusive questions.
They wanted to see my driver's license and they even wanted to know my social security number! I asked them why they needed this information and they muttered something about the "US Patriot Act"[1]. Anyway, it took another few minutes for them to collect all this, then they said they needed a few moments to run it past some lists. (Apparently the US government keeps some lists of terrorists and whatnot -- I told them I wasn't on any of the lists but they insisted on checking anyway.)
After a few more minutes they came back and said I was fine. They transferred money from my existing bank and handed me a new ATM card. I tried it and everything worked smoothly this time.
I don't think anyone should use this bank. The process took me half-an-hour or more and it was really awkward.
[1] - http://www.fincen.gov/statutes_regs/patriot/
I went down to the corner to get some money out of the ATM. I walked up and stuck in my card and the ATM wouldn't give me any money: said something about my card not being supported. So I walked into the bank building adjacent to the ATM and asked them about it.
Well, first I had to wait in a line: there were two people in front of me so that took about 5 minutes. Then they explained that the ATM didn't work because I didn't have an account with that bank, and would I like to open an account? I said sure, go ahead, then they started asking me all kinds of intrusive questions.
They wanted to see my driver's license and they even wanted to know my social security number! I asked them why they needed this information and they muttered something about the "US Patriot Act"[1]. Anyway, it took another few minutes for them to collect all this, then they said they needed a few moments to run it past some lists. (Apparently the US government keeps some lists of terrorists and whatnot -- I told them I wasn't on any of the lists but they insisted on checking anyway.)
After a few more minutes they came back and said I was fine. They transferred money from my existing bank and handed me a new ATM card. I tried it and everything worked smoothly this time.
I don't think anyone should use this bank. The process took me half-an-hour or more and it was really awkward.
[1] - http://www.fincen.gov/statutes_regs/patriot/
I've never seen a case where an card wouldn't work in another bank's automated ATM machine. I know this used to be the case, but there are a bunch of logos on the back of my card, and a bunch of logos on various ATMs, and as long as there is an intersection of at least on of those logos it should work.
And there is a big difference between giving basic proof of ID information to a regulated financial institution, vs. handing it over to an unknown entity.
And there is a big difference between giving basic proof of ID information to a regulated financial institution, vs. handing it over to an unknown entity.
The comment was a parody of the post, showing how you go through much the same process to use a cash ATM the first time -- establishing an account, providing ID, having your account approved, etc. As for your last sentence, Bitcoin exchanges are regulated financial institutions, they don't have the choice of not collecting identification even if they're unknown to you. Anti Money Laundering (AML) and Know Your Customer (KYC) policies are not optional for money transmitters.
Yeah the cool thing about real ATMs is they're all connected up through the national/international transfer networks, and it Just Works. I've withdrawn from ATMs with the same card on three different continents (with only the fear that someone might have put a skimmer on the card slot, but given recorded history I'd rather take my chances with that than with anything bitcoin)
Just FYI: ATM stands for Automated Teller Machine, so your sentence expands to "automated automated teller machine machine" :)
I know -- that's why I threw automated at the beginning (inside joke). But adding "machine" at the end seems to happen a lot (and feels natural) when an acronym transitions to a stand-alone name. I wonder if there is a name for this phenomenon?
It is called RAS syndrome. http://en.wikipedia.org/wiki/RAS_syndrome
Author here. I see what you did there but I disagree. The whole point of bitcoin is anonymity and convenience of transacting. What I did was essentially "buy" US dollars using my bitcoin, through this device.
The fact that this device wanted to establish and verify my identity seemed unnecessary to me and counter to what I think are bitcoin's strongest qualities.
The fact that this device wanted to establish and verify my identity seemed unnecessary to me and counter to what I think are bitcoin's strongest qualities.
>The fact that this device wanted to establish and verify my identity seemed unnecessary to me and counter to what I think are bitcoin's strongest qualities.
Why do you think the device needed to establish and verify your identity? Do you think they installed all those expensive ID verifying devices for the hell of it?
I'll be blunt: they only did it because they know they'll likely go to jail if they don't collect that information.
Why do you think the device needed to establish and verify your identity? Do you think they installed all those expensive ID verifying devices for the hell of it?
I'll be blunt: they only did it because they know they'll likely go to jail if they don't collect that information.
> The fact that this device wanted to establish and verify my identity seemed unnecessary to me and counter to what I think are bitcoin's strongest qualities.
They don't collect that data because they want to, they collect it because they are forced to by the US government. This is a similar process that you would have to go through to open a bank account at any US bank. You make it seem like "It took over 45 minutes" but this was your first withdraw, subsequent withdraws would only require the ~10 minutes to confirm your deposit of BTC into the robocoin wallet. 10 minutes to (reliably) convert BTC to cash is unheard of. As I said in another comment, the only faster method would be to use Local Bitcoins (The people running the ATM you used) but I doubt you could finish one of those transactions in less than 20 or even 30 minutes.
They don't collect that data because they want to, they collect it because they are forced to by the US government. This is a similar process that you would have to go through to open a bank account at any US bank. You make it seem like "It took over 45 minutes" but this was your first withdraw, subsequent withdraws would only require the ~10 minutes to confirm your deposit of BTC into the robocoin wallet. 10 minutes to (reliably) convert BTC to cash is unheard of. As I said in another comment, the only faster method would be to use Local Bitcoins (The people running the ATM you used) but I doubt you could finish one of those transactions in less than 20 or even 30 minutes.
The problem here is that you and your government have different goals. The operator of the bitcoin ATM probably has no desire to know your identity or fingerprints but your government requires them to obtain it in the name of maintaining control over crime and the money supply.
Of course, placing the blame on the government instead of the ATM operator doesn't invalidate your observations, but it may alter your view of the solutions.
Of course, placing the blame on the government instead of the ATM operator doesn't invalidate your observations, but it may alter your view of the solutions.
Banks want to quantify their risk as exactly as possible for their asset models. These regulations generally reduce the overall banking system's risk at the cost of compliance. Generally the cost of compliance is far lower than the cost of the hedges against risk.
I'm not convinced that Bitcoin ATMs will be able to get past these restrictions in countries with hyper-complex financial regulatory structures. However, if digital currency succeeds, paper money is sort of a backwards compatibility feature, since the majority will be using their phone (or future unknown digital device) to transfer money independent of a centralized banking network.
I'm not convinced that Bitcoin ATMs will be able to get past these restrictions in countries with hyper-complex financial regulatory structures. However, if digital currency succeeds, paper money is sort of a backwards compatibility feature, since the majority will be using their phone (or future unknown digital device) to transfer money independent of a centralized banking network.
Pretty sure it just scans a palm ID and not fingerprints but I never use these things to sell anyways, only to buy which takes less than a minute after filling it with cash. I always use local bitcoins for in person no ID cash exchange just because I shouldn't have to fill out a passport application to sell a few coins.
I've heard from someone close to the project that it's an IR image of palm vein structure, which is a reliable biometric ID. a quick google search confirmed[0]: “We actually do palm vein scanning, which we think is far more secure, private and accurate than fingerprint. The palm vein scan is actually an infrared image of the customer’s palm vein patter—the second most unique form of biometric authentication. This biometric data is stored by our partner, Fujitsu,” [Jordan] Kelley said.
I agree, I know several btc enthusiasts in Austin that won't use the thing b/c biometrics.
may not be original source [0]-http://computer-medics.biz/robocoin-rolling-out-first-bitcoi...
I agree, I know several btc enthusiasts in Austin that won't use the thing b/c biometrics.
may not be original source [0]-http://computer-medics.biz/robocoin-rolling-out-first-bitcoi...
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no. you're not. If you were, you would absolutely not have gone through this crazy procedure.
>But I couldn’t help but think that they were shifting the exchange rate to their favor (which happened to be the case for my transaction)
Of course they are - that's how they pay for actually providing you with a service. Running that ATM, filling it with actual bank notes, (sometimes manually) approving new accounts, all of this costs money which they make by "shifting the exchange rate to their favor"