I Just Bought Bitcoin at an ATM. Never Again
May 10, 2018
bitcoin, how to buy bitcoin, bitcoin atm, buying bitcoin, cryptocurrency
Did you notice the huge dip in bitcoin prices this weekend? I did.
On Friday, bitcoin dipped down as low as $8,600 a coin. Later on Saturday, it again tested the $8,600 level.
As someone who follows and analyzes stock charts, I recognized this “double bottom” as a great opportunity. I was gonna buy in! Once the rebound began, I was ready to BTFD — that is, buy the f — -ing dip.
The last time I bought bitcoin, I used Coinbase, and it was deeply, deeply annoying. So rather than buy there again, I found a bitcoin ATM near me. Instead of buying online, I went to buy bitcoin in person.
It’s a mistake I’ll never make again. Here’s why.
Lesson 1: You better come with big bucks
The actual bitcoin ATM I used is operated by Premier. I found it at my local liquor store.
I did some research beforehand so I could come correct. According to the ATM company’s website, I could make a purchase with a minimum of $5. I had about $30 in cash in my wallet, so I was good to go. Or so I thought.
When I actually went to the ATM, it warned me that it wouldn’t work without a $20 bill (minimum) being inserted first. The biggest bill I had on me was a $10.
So much for that $5 minimum.
Buying the f — -ing dip was far too tempting to give up on, though. I got back in my car, drove to a cash ATM, and got a larger bill.
Lesson 2: Buying bitcoin from an ATM is really expensive
Before I put any money into the ATM, I got a warning.
“Network fees are down,” it explained. Transactions will “incur only a $6 surcharge.”
That’s a crazy big fee on such a small purchase. But I just had to try this machine out. I hit “accept” and pressed on.
The next step was to give the machine the address for my bitcoin wallet. Because I had my paper wallet physically with me, this was a snap. I just held the wallet up to the ATM’s camera so it could scan the QR code.
With the proper-sized bills in hand, I put $30 into the machine. The bitcoin ATM then told me I could buy exactly 0.002897 BTC with that much cash. Then it asked me to confirm.
There was no indication on the screen as to the exact amount of fees this transaction would cost me. But because I’m an adventurous sort, I pressed the “Buy Bitcoin” button and completed the transaction.
Lesson 3: Those fees may not be as advertised...
Once I had the bitcoins in my wallet, I got out my calculator to see exactly how much of a fee I’d paid. I also checked the market price of bitcoin, to see how great a deal I really got.
According to Coinbase, bitcoin was selling for $8,593 when I hit the “buy” button. But the bitcoin ATM listed an exchange rate of $9,666.81 per coin.
That’s not the rate I actually paid, though. When you divide the $30 I paid by the 0.002897 BTC that I received, the effective exchange rate rose to 1 BTC = $10,356.
Written another way, my $30 in cash had just just bought me $24.93 worth of bitcoin. The total fee was $5.07, a little bit better than the $6 I was warned about.
Even with all the math laid out in front of me, I’m still confused as hell about the transaction fees. Literally no part of what I was told about the transaction was correct, aside from the fact that I’d only be getting 0.002897 BTC.
Lesson 4: Coinbase sucks, but this ATM sucked harder
When I bought bitcoin on Coinbase for the first time in December, I spent $137.70 to buy just over 0.01 BTC. The total fees on that purchase were $2.99, or just over 2.2 percent.
That felt like a huge commission at the time, especially when compared to the free stock trades I can get on Robinhood.
But the fee for using the bitcoin ATM? That wound up being over 20 percent.
I get it, you have to pay for convenience. But paying 20 percent in fees seems rough, especially when the average bitcoin ATM fee is just under 9 percent.
I know, I know — you’re not supposed to try to time the market when you buy in. But I’d thought I nailed it. Bitcoin was generally down in price when I went to that ATM, and it began to rebound literally minutes after I bought. The next day, it hit $9,600.
I should’ve felt proud and smart — that’s a massive gain in such a short time. But the rally lost a lot of luster when I realized that the market price was still below that $10,355 per coin I bought it at.
Even with perfect timing, I still lost money.
Am I giving up? Hell no
Even though I lost money — again — I’m not turned off from buying bitcoin. Just the opposite, actually. I’m definitely going to BTFD again.
That said, I definitely won’t be using a bitcoin ATM. And I probably won’t be using Coinbase, either, even if it is cheaper.
No, for my next purchase, I’m going to try a completely different third option. What, exactly, is that third option?