Where We Went Wrong Buying a Bitcoin from an ATM

Where We Went Wrong Buying a Bitcoin from an ATM

The very first mistake was buying the Bitcoin.

If you’ve observed our movie from today, you’ve caught a peek of the saga that was our attempt to buy and then subsequently sell a Bitcoin at SXSW. In retrospect, it wasn’t a very bright idea. But we were nosey, not only of the prospect of using cyptocurrency as a fungible good for making purchases, but also of the promised capability to turn Bitcoin into real cash dollars. Both of those goals were theoretically possible in that week in Austin, which had hosted a latest Texas Bitcoin Conference–spurring several local businesses (read: food trucks) to commence accepting Bitcoin as a novel marketing tactic. Austin was also home to one of the very first Bitcoin ATM operators in the nation, with no fewer than three places in the city to make automated in-person transactions. Yes, here was a machine that promised not only to slurp up your dollars to transfer fractions of Bitcoin to your digital wallet, but also let you cash out of virtual currency for Uncle Sam-backed bills.

Oh, if only it was that effortless.

Something we didn’t indeed explain in the movie (because we frankly still don’t entirely understand it ourselves) is how the Bitcoin ATM system worked. The ATMs are built by a company called Robocoin, a Las Vegas-based commenced founded by two brothers who were previously making Bitcoin-for-cash transactions locally, in person. According to a Wired report, Mark and John Russell, desired to find a way to automate the process using a machine, while still working within the still-evolving regulatory guidelines set by US government for Bitcoin transactions. Naturally, they teamed up with a Nevada slot machine maker to begin making prototypes. Honestly, the warning signs were all there.

Because of those tricky (and still muddy) regulatory requirements, Robocoin doesn’t actually run its kiosks. They just make them and sell them to operators for $20,000 a pop. Their very first customers set up shop in Canada, where Bitcoin trading regulations are more lax–the machine doesn’t need identification verification to take or dispense cash. Austin-based Bitcoin Agents was the very first operator to install Robocoin machines in the states (a Hacker Dojo in Mountain View wasn’t far behind), putting machines in three locations timed to open with the Texas Bitcoin Conference and SXSW. Handlebar was where we ended up buying our Bitcoin, and where I spent the next few days dangling out to attempt to get it give our money back.

I still have that .97 Bitcoin in my digital wallet.

Buying the Bitcoin from the Robocoin ATM was at least a straightforward process. It happened like you spotted in the video–I had to create an account with the Bitcoin Agents through the Robocoin machine, providing it my telephone number (for SMS verification), creating a PIN, scanning my palm, letting it take my photo, and then also scan a copy of my driver’s license. That’s a entire lot of private information, which in retrospect was pretty stupid of me. Bitcoin Agents holds on to that identification data to serve with government anti-money laundering laws, but there’s no promise that they can’t be hacked or won’t use that information for suspect ventures in the future. Anecdotally, my identity hasn’t be stolen yet, but I have received on average one strange telemarketing call a week since signing up for Robocoin–the very first of which was from an adult talk service just hours after providing the Robocoin machine my phone number.

There’s also the matter of the transaction fee, which for one Bitcoin (

$617 at time of purchase) was $38, or over 6%. Robocoin operators make money from these fees, which they charge for both buying and selling of Bitcoins. These fees are just one of the sources of controversy regarding Bitcoin ATMs; in Vancouver, the Robocoin operator had to hire a part-time chaperone to see over the kiosk and prevent other traders from intercepting customers with the promise of lower-cost or free transactions.

The largest hassle was in attempting to get our money out from the Robocoin machine, selling the Bitcoin back to Bitcoin Agents. The process here was exceptionally convoluted and opaque. After logging back into the machine with my phone number, PIN, and palmprint, the kiosk slobber out a receipt with a QR code indicating the wallet address of Bitcoin Agents. The idea was that I would use my wallet to send the Bitcoin value to the operator, with the promise that after receipt, the machine would dispense the equivalent in cash–minus the transaction fee.

My mistake was in not paying a “miner’s fee” after sending the Bitcoin to the operator. This was a step that wasn’t made clear in the selling process, neither by the Robocoin machine or my Blockchain app. The way I understand it now, transactions have to be confirmed by the Bitcoin network, with the data of that transaction being affixed to fresh blocks of data that’s generated by the mining process. The data blocks keep a permanent record of all the transactions taking place in the network, but miners don’t have to include your transactions in freshly mined blocks. That’s why the miner fee exists–it’s a petite fraction of a Bitcoin to incentivize miners to link your transaction to their blockchains and therefore validate it. Merchants and operators typically require the arbitrary number of six confirmations before considering the transaction legit. And the typical transaction fee–0.0001 BTC–was not made clear when I sent the Bitcoin to Bitcoin Agents.

So instead of the transaction being confirmed in the 15-minute average it usually takes, our Bitcoin was lost in limbo for over a day. I sent a support email to Bitcoin Agents, and received a text message the next day (they matched my name to my phone number, I assume) from Mike Piri, the proprietor of the Austin Robocoin machines explaining the situation. Fortunately, Mike agreed to refund the transaction for exactly what I had sent to the machine, but by that time I was already on a flight back to San Francisco. The Bitcoin still remains in my wallet, having now depreciated to $480

Was it foolish to give so much private information and cash to machine? Absolutely. Our mistake was not understanding how Bitcoin transactions and confirmations work, and this test was an expensive learning practice. Still, we got a stupid movie out of it, and it’s hopefully a cautionary tale about the risks of Bitcoin and experimental technologies. We’ll make fools of ourselves any day so you won’t have to.

Where We Went Wrong Buying a Bitcoin from an ATM

Where We Went Wrong Buying a Bitcoin from an ATM

The very first mistake was buying the Bitcoin.

If you’ve observed our movie from today, you’ve caught a peek of the saga that was our attempt to buy and then subsequently sell a Bitcoin at SXSW. In retrospect, it wasn’t a very bright idea. But we were nosey, not only of the prospect of using cyptocurrency as a fungible good for making purchases, but also of the promised capability to turn Bitcoin into real cash dollars. Both of those goals were theoretically possible in that week in Austin, which had hosted a latest Texas Bitcoin Conference–spurring several local businesses (read: food trucks) to commence accepting Bitcoin as a novel marketing tactic. Austin was also home to one of the very first Bitcoin ATM operators in the nation, with no fewer than three places in the city to make automated in-person transactions. Yes, here was a machine that promised not only to slurp up your dollars to transfer fractions of Bitcoin to your digital wallet, but also let you cash out of virtual currency for Uncle Sam-backed bills.

Oh, if only it was that effortless.

Something we didn’t truly explain in the movie (because we frankly still don’t totally understand it ourselves) is how the Bitcoin ATM system worked. The ATMs are built by a company called Robocoin, a Las Vegas-based commenced founded by two brothers who were previously making Bitcoin-for-cash transactions locally, in person. According to a Wired report, Mark and John Russell, desired to find a way to automate the process using a machine, while still working within the still-evolving regulatory guidelines set by US government for Bitcoin transactions. Naturally, they teamed up with a Nevada slot machine maker to begin making prototypes. Honestly, the warning signs were all there.

Because of those tricky (and still muddy) regulatory requirements, Robocoin doesn’t actually run its kiosks. They just make them and sell them to operators for $20,000 a pop. Their very first customers set up shop in Canada, where Bitcoin trading regulations are more lax–the machine doesn’t need identification verification to take or dispense cash. Austin-based Bitcoin Agents was the very first operator to install Robocoin machines in the states (a Hacker Dojo in Mountain View wasn’t far behind), putting machines in three locations timed to open with the Texas Bitcoin Conference and SXSW. Handlebar was where we ended up buying our Bitcoin, and where I spent the next few days stringing up out to attempt to get it give our money back.

I still have that .97 Bitcoin in my digital wallet.

Buying the Bitcoin from the Robocoin ATM was at least a straightforward process. It happened like you spotted in the video–I had to create an account with the Bitcoin Agents through the Robocoin machine, providing it my telephone number (for SMS verification), creating a PIN, scanning my palm, letting it take my photo, and then also scan a copy of my driver’s license. That’s a entire lot of individual information, which in retrospect was pretty stupid of me. Bitcoin Agents holds on to that identification data to conform with government anti-money laundering laws, but there’s no promise that they can’t be hacked or won’t use that information for suspect ventures in the future. Anecdotally, my identity hasn’t be stolen yet, but I have received on average one strange telemarketing call a week since signing up for Robocoin–the very first of which was from an adult talk service just hours after providing the Robocoin machine my phone number.

There’s also the matter of the transaction fee, which for one Bitcoin (

$617 at time of purchase) was $38, or over 6%. Robocoin operators make money from these fees, which they charge for both buying and selling of Bitcoins. These fees are just one of the sources of controversy regarding Bitcoin ATMs; in Vancouver, the Robocoin operator had to hire a part-time chaperone to observe over the kiosk and prevent other traders from intercepting customers with the promise of lower-cost or free transactions.

The largest hassle was in attempting to get our money out from the Robocoin machine, selling the Bitcoin back to Bitcoin Agents. The process here was exceptionally convoluted and opaque. After logging back into the machine with my phone number, PIN, and palmprint, the kiosk slobber out a receipt with a QR code indicating the wallet address of Bitcoin Agents. The idea was that I would use my wallet to send the Bitcoin value to the operator, with the promise that after receipt, the machine would dispense the equivalent in cash–minus the transaction fee.

My mistake was in not paying a “miner’s fee” after sending the Bitcoin to the operator. This was a step that wasn’t made clear in the selling process, neither by the Robocoin machine or my Blockchain app. The way I understand it now, transactions have to be confirmed by the Bitcoin network, with the data of that transaction being linked to fresh blocks of data that’s generated by the mining process. The data blocks keep a permanent record of all the transactions taking place in the network, but miners don’t have to include your transactions in freshly mined blocks. That’s why the miner fee exists–it’s a puny fraction of a Bitcoin to incentivize miners to link your transaction to their blockchains and therefore validate it. Merchants and operators typically require the arbitrary number of six confirmations before considering the transaction legit. And the typical transaction fee–0.0001 BTC–was not made clear when I sent the Bitcoin to Bitcoin Agents.

So instead of the transaction being confirmed in the 15-minute average it usually takes, our Bitcoin was lost in limbo for over a day. I sent a support email to Bitcoin Agents, and received a text message the next day (they matched my name to my phone number, I assume) from Mike Piri, the holder of the Austin Robocoin machines explaining the situation. Fortunately, Mike agreed to refund the transaction for exactly what I had sent to the machine, but by that time I was already on a flight back to San Francisco. The Bitcoin still remains in my wallet, having now depreciated to $480

Was it foolish to give so much individual information and cash to machine? Absolutely. Our mistake was not understanding how Bitcoin transactions and confirmations work, and this test was an expensive learning practice. Still, we got a foolish movie out of it, and it’s hopefully a cautionary tale about the risks of Bitcoin and experimental technologies. We’ll make fools of ourselves any day so you won’t have to.

Where We Went Wrong Buying a Bitcoin from an ATM

Where We Went Wrong Buying a Bitcoin from an ATM

The very first mistake was buying the Bitcoin.

If you’ve observed our movie from today, you’ve caught a peek of the saga that was our attempt to buy and then subsequently sell a Bitcoin at SXSW. In retrospect, it wasn’t a very bright idea. But we were nosey, not only of the prospect of using cyptocurrency as a fungible good for making purchases, but also of the promised capability to turn Bitcoin into real cash dollars. Both of those goals were theoretically possible in that week in Austin, which had hosted a latest Texas Bitcoin Conference–spurring several local businesses (read: food trucks) to commence accepting Bitcoin as a novel marketing tactic. Austin was also home to one of the very first Bitcoin ATM operators in the nation, with no fewer than three places in the city to make automated in-person transactions. Yes, here was a machine that promised not only to slurp up your dollars to transfer fractions of Bitcoin to your digital wallet, but also let you cash out of virtual currency for Uncle Sam-backed bills.

Oh, if only it was that effortless.

Something we didn’t truly explain in the movie (because we frankly still don’t totally understand it ourselves) is how the Bitcoin ATM system worked. The ATMs are built by a company called Robocoin, a Las Vegas-based began founded by two brothers who were previously making Bitcoin-for-cash transactions locally, in person. According to a Wired report, Mark and John Russell, desired to find a way to automate the process using a machine, while still working within the still-evolving regulatory guidelines set by US government for Bitcoin transactions. Naturally, they teamed up with a Nevada slot machine maker to embark making prototypes. Honestly, the warning signs were all there.

Because of those tricky (and still muddy) regulatory requirements, Robocoin doesn’t actually run its kiosks. They just make them and sell them to operators for $20,000 a pop. Their very first customers set up shop in Canada, where Bitcoin trading regulations are more lax–the machine doesn’t need identification verification to take or dispense cash. Austin-based Bitcoin Agents was the very first operator to install Robocoin machines in the states (a Hacker Dojo in Mountain View wasn’t far behind), putting machines in three locations timed to open with the Texas Bitcoin Conference and SXSW. Handlebar was where we ended up buying our Bitcoin, and where I spent the next few days draping out to attempt to get it give our money back.

I still have that .97 Bitcoin in my digital wallet.

Buying the Bitcoin from the Robocoin ATM was at least a straightforward process. It happened like you spotted in the video–I had to create an account with the Bitcoin Agents through the Robocoin machine, providing it my telephone number (for SMS verification), creating a PIN, scanning my palm, letting it take my photo, and then also scan a copy of my driver’s license. That’s a entire lot of private information, which in retrospect was pretty stupid of me. Bitcoin Agents holds on to that identification data to serve with government anti-money laundering laws, but there’s no promise that they can’t be hacked or won’t use that information for suspect ventures in the future. Anecdotally, my identity hasn’t be stolen yet, but I have received on average one strange telemarketing call a week since signing up for Robocoin–the very first of which was from an adult talk service just hours after providing the Robocoin machine my phone number.

There’s also the matter of the transaction fee, which for one Bitcoin (

$617 at time of purchase) was $38, or over 6%. Robocoin operators make money from these fees, which they charge for both buying and selling of Bitcoins. These fees are just one of the sources of controversy regarding Bitcoin ATMs; in Vancouver, the Robocoin operator had to hire a part-time chaperone to witness over the kiosk and prevent other traders from intercepting customers with the promise of lower-cost or free transactions.

The fattest hassle was in attempting to get our money out from the Robocoin machine, selling the Bitcoin back to Bitcoin Agents. The process here was amazingly convoluted and opaque. After logging back into the machine with my phone number, PIN, and palmprint, the kiosk drool out a receipt with a QR code signifying the wallet address of Bitcoin Agents. The idea was that I would use my wallet to send the Bitcoin value to the operator, with the promise that after receipt, the machine would dispense the equivalent in cash–minus the transaction fee.

My mistake was in not paying a “miner’s fee” after sending the Bitcoin to the operator. This was a step that wasn’t made clear in the selling process, neither by the Robocoin machine or my Blockchain app. The way I understand it now, transactions have to be confirmed by the Bitcoin network, with the data of that transaction being affixed to fresh blocks of data that’s generated by the mining process. The data blocks keep a permanent record of all the transactions taking place in the network, but miners don’t have to include your transactions in freshly mined blocks. That’s why the miner fee exists–it’s a puny fraction of a Bitcoin to incentivize miners to link your transaction to their blockchains and therefore validate it. Merchants and operators typically require the arbitrary number of six confirmations before considering the transaction legit. And the typical transaction fee–0.0001 BTC–was not made clear when I sent the Bitcoin to Bitcoin Agents.

So instead of the transaction being confirmed in the 15-minute average it usually takes, our Bitcoin was lost in limbo for over a day. I sent a support email to Bitcoin Agents, and received a text message the next day (they matched my name to my phone number, I assume) from Mike Piri, the possessor of the Austin Robocoin machines explaining the situation. Fortunately, Mike agreed to refund the transaction for exactly what I had sent to the machine, but by that time I was already on a flight back to San Francisco. The Bitcoin still remains in my wallet, having now depreciated to $480

Was it foolish to give so much private information and cash to machine? Absolutely. Our mistake was not understanding how Bitcoin transactions and confirmations work, and this test was an expensive learning practice. Still, we got a ditzy movie out of it, and it’s hopefully a cautionary tale about the risks of Bitcoin and experimental technologies. We’ll make fools of ourselves any day so you won’t have to.

Where We Went Wrong Buying a Bitcoin from an ATM

Where We Went Wrong Buying a Bitcoin from an ATM

The very first mistake was buying the Bitcoin.

If you’ve observed our movie from today, you’ve caught a peek of the saga that was our attempt to buy and then subsequently sell a Bitcoin at SXSW. In retrospect, it wasn’t a very bright idea. But we were nosey, not only of the prospect of using cyptocurrency as a fungible good for making purchases, but also of the promised capability to turn Bitcoin into real cash dollars. Both of those goals were theoretically possible in that week in Austin, which had hosted a latest Texas Bitcoin Conference–spurring several local businesses (read: food trucks) to embark accepting Bitcoin as a novel marketing tactic. Austin was also home to one of the very first Bitcoin ATM operators in the nation, with no fewer than three places in the city to make automated in-person transactions. Yes, here was a machine that promised not only to slurp up your dollars to transfer fractions of Bitcoin to your digital wallet, but also let you cash out of virtual currency for Uncle Sam-backed bills.

Oh, if only it was that effortless.

Something we didn’t indeed explain in the movie (because we frankly still don’t entirely understand it ourselves) is how the Bitcoin ATM system worked. The ATMs are built by a company called Robocoin, a Las Vegas-based began founded by two brothers who were previously making Bitcoin-for-cash transactions locally, in person. According to a Wired report, Mark and John Russell, dreamed to find a way to automate the process using a machine, while still working within the still-evolving regulatory guidelines set by US government for Bitcoin transactions. Naturally, they teamed up with a Nevada slot machine maker to begin making prototypes. Honestly, the warning signs were all there.

Because of those tricky (and still muddy) regulatory requirements, Robocoin doesn’t actually run its kiosks. They just make them and sell them to operators for $20,000 a pop. Their very first customers set up shop in Canada, where Bitcoin trading regulations are more lax–the machine doesn’t need identification verification to take or dispense cash. Austin-based Bitcoin Agents was the very first operator to install Robocoin machines in the states (a Hacker Dojo in Mountain View wasn’t far behind), putting machines in three locations timed to open with the Texas Bitcoin Conference and SXSW. Handlebar was where we ended up buying our Bitcoin, and where I spent the next few days suspending out to attempt to get it give our money back.

I still have that .97 Bitcoin in my digital wallet.

Buying the Bitcoin from the Robocoin ATM was at least a straightforward process. It happened like you spotted in the video–I had to create an account with the Bitcoin Agents through the Robocoin machine, providing it my telephone number (for SMS verification), creating a PIN, scanning my palm, letting it take my photo, and then also scan a copy of my driver’s license. That’s a entire lot of private information, which in retrospect was pretty stupid of me. Bitcoin Agents holds on to that identification data to obey with government anti-money laundering laws, but there’s no promise that they can’t be hacked or won’t use that information for suspect ventures in the future. Anecdotally, my identity hasn’t be stolen yet, but I have received on average one strange telemarketing call a week since signing up for Robocoin–the very first of which was from an adult talk service just hours after providing the Robocoin machine my phone number.

There’s also the matter of the transaction fee, which for one Bitcoin (

$617 at time of purchase) was $38, or over 6%. Robocoin operators make money from these fees, which they charge for both buying and selling of Bitcoins. These fees are just one of the sources of controversy regarding Bitcoin ATMs; in Vancouver, the Robocoin operator had to hire a part-time chaperone to see over the kiosk and prevent other traders from intercepting customers with the promise of lower-cost or free transactions.

The thickest hassle was in attempting to get our money out from the Robocoin machine, selling the Bitcoin back to Bitcoin Agents. The process here was exceptionally convoluted and opaque. After logging back into the machine with my phone number, PIN, and palmprint, the kiosk drool out a receipt with a QR code indicating the wallet address of Bitcoin Agents. The idea was that I would use my wallet to send the Bitcoin value to the operator, with the promise that after receipt, the machine would dispense the equivalent in cash–minus the transaction fee.

My mistake was in not paying a “miner’s fee” after sending the Bitcoin to the operator. This was a step that wasn’t made clear in the selling process, neither by the Robocoin machine or my Blockchain app. The way I understand it now, transactions have to be confirmed by the Bitcoin network, with the data of that transaction being fastened to fresh blocks of data that’s generated by the mining process. The data blocks keep a permanent record of all the transactions taking place in the network, but miners don’t have to include your transactions in freshly mined blocks. That’s why the miner fee exists–it’s a puny fraction of a Bitcoin to incentivize miners to link your transaction to their blockchains and therefore validate it. Merchants and operators typically require the arbitrary number of six confirmations before considering the transaction legit. And the typical transaction fee–0.0001 BTC–was not made clear when I sent the Bitcoin to Bitcoin Agents.

So instead of the transaction being confirmed in the 15-minute average it usually takes, our Bitcoin was lost in limbo for over a day. I sent a support email to Bitcoin Agents, and received a text message the next day (they matched my name to my phone number, I assume) from Mike Piri, the possessor of the Austin Robocoin machines explaining the situation. Fortunately, Mike agreed to refund the transaction for exactly what I had sent to the machine, but by that time I was already on a flight back to San Francisco. The Bitcoin still remains in my wallet, having now depreciated to $480

Was it foolish to give so much private information and cash to machine? Absolutely. Our mistake was not understanding how Bitcoin transactions and confirmations work, and this test was an expensive learning practice. Still, we got a foolish movie out of it, and it’s hopefully a cautionary tale about the risks of Bitcoin and experimental technologies. We’ll make fools of ourselves any day so you won’t have to.

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