Three young entrepreneurs have opened what they call the world’s first ATM able to exchange bitcoins for any official currency.
The machine inaugurated on Tuesday, delivered to Vancouver in western Canada by Robocoin, a US manufacturer, stands against a wall of a popular coffee shop and resembles an ordinary cash ATM.
However, instead of cash transactions, it swaps Canadian dollars for bitcoins, the virtual currency of the Internet invented in 2008 by an anonymous computer scientist known only by the pseudonym Satoshi Nakamoto.
Customers lined up on Tuesday to use the ATM, then used their smartphones to buy coffee and muffins at the Waves coffee shop.
The ATM is the world’s first, said co-owner Mitchel Demeter, a local entrepreneur who started trading in bitcoins several years ago, then earlier this year set up Bitcoiniacs, a Vancouver storefront money exchange, with two partners, both friends from high school. He said they saw ATMs as a business opportunity.
“Nobody had an ATM; everyone was buying and selling on Web sites,” Demeter said.
Customers use a private key — like a bank PIN number — to access their online account of bitcoins on the ATM.
They withdraw cash equivalents (the conversion rate is currently about one bitcoin for US$200) from their bitcoins, or deposit cash bills. The machine transfers the money on the Internet via the Canadian VirtEx exchange.
Users can then spend their bitcoins with a smartphone, similar to how credit cards are used, or by transferring the money to purchase goods online.
“It’s the currency of the Internet, as real as any other,” he said.
The volatile currency is as yet unregulated by any government in the world, and it has had its share of notoriety by being used in the drug trade. However, Germany became the first country in the world earlier this year to declare bitcoins a “private currency.”
And earlier this month investors were startled when a senior investment officer with giant hedge fund Fortress Investment Group said bitcoins could be used as a cheaper way of transferring money in countries with weak banking systems, the Financial Times reported.
In Vancouver, bitcoins are accepted by about 15 local businesses, from coffee shops to a landscaping business.
Bitcoins are also increasingly common in several hotspots around the world, especially San Francisco, Berlin and Argentina, and accepted by online companies such as Wordpress.
David Lowy, a city businessman who used his smartphone to transfer 0.0101 bitcoins to the Waves barista for a cup of dark coffee worth C$2 (US$1.9), said Vancouver was a likely candidate to claim the first bitcoin ATM because the wealthy city is popular with Internet entrepreneurs.
One of the ATM’s first customers was Mike Yeung, a business student at Simon Fraser University, where he helped set up a university bitcoin club, one of a handful of such clubs in the world.
The club’s mission “is to educate people about bitcoin so they can adopt bitcoins in their everyday lives,” he said. “I think bitcoins are the wave of the future, because they provide maximum value and efficiency.”
Once bitcoins are more established they will commonly be used to send money around the world cheaply, the way the Internet allows people to talk with each other on apps such as Skype, he said.
He gestured at the new machine in the coffee shop, saying: “The ATM is a step forward.”