Bitcoin is coming to a store near you. In fact, check this map—it may already be available at your local deli.
Boston-based startup LibertyX rolled out the first Bitcoin ATMs nearly five years ago. Now they’ve moved from hardware to software, partnering with ATM company Genmega to create software that will turn an ordinary ATM into a Bitcoin exchange. All you need is a digital wallet app that can handle Bitcoin, and an ordinary ATM card to convert cash from your bank account into Bitcoin.
ATMs that sell Bitcoin and other so-called cryptocurrencies are becoming more and more prevalent on Boston streets. But if you find terms like Bitcoin, blockchain and cryptocurrency strange and confusing, don’t worry. It’s easy to understand by focusing on what cryptocurrencies like Bitcoin can DO, instead of what they are.
Cryptocurrency is basically digital cash, something we’re all familiar with. If you use your checking card to pay for anything, that’s digital cash being moved by your bank from your account to the store’s.
Bitcoin works much the same way, except that it stays digital forever—there’s no converting it into banknotes.
LibertyX CEO Chris Yim said he thinks of it, “as global digital cash. It has a lot of properties of cash but also it can be used anywhere online and it can be used globally.”
The other big difference is you don’t need a bank.
“You are the bank,” Yim said. “With bitcoin I can just as easily purchase something in person, at the store downstairs, or send it to my friend overseas. And the beauty is, it’s all instant and there are no bank hours, so I can send it any time of day and night.”
The ATMs make it easy and convenient to get bitcoin—but why would anyone want to trade their digital cash for the cryptocurrency? Bitcoin can be used in some of the stores where the ATMs are located, but Yim said most people don’t use them for small, in-person purchases.
“It’s so hard to buy bitcoin, as soon as they get it, they don’t want to necessarily go and use it to buy a stick of gum or some chips,” he said. “They prefer to buy it, because they want to invest, they think it’s going to increase in value, or they want it to purchase something online.”
As far as investments go, Bitcoin is not for the faint of heart. People who bought bitcoin hoping it would go up in value since its invention in 2008 could have made, or lost, a ton of money over the past 10 years. At its peak one bitcoin was worth around $20,000. But over the course of last year to dropped to around $4,000.
The cryptocurrency landscape also can be confusing. Bitcoin was the first and is still the most widely traded, but since it hit the scene thousands of other cryptocurrencies have been introduced, and thousands have died.
Boston-based LibertyX was founded in 2013, and Yim said it can be hard to navigate a field based on new and evolving technology.
“It’s a sobering thought, but a lot of the companies that started around the same time are no longer,” Yim said. “And I think that it’s really a testament to how difficult it is to build a financial technology company. But it’s been a really, really fun ride.”
Neha Narula, director of the Digital Currency Initiative at MIT, said expectations for cryptocurrency have changed since Bitcoin was invented.
“During its initial days it was very much touted as an alternative to government-backed money, an alternative in the sense that it might even replace government-backed money,” she said. “As we’ve seen it develop over the years, we’ve realized now that there’s room for all of these things in the world and that cryptocurrency might not necessarily replace government-backed money but might sort of sit alongside it or even influence it.”
Cryptocurrencies also have a lure for the increasing number of people who don’t have a bank account, the “unbanked” — something Narula said is more common among millenials.
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“It’s surprising,” she said, “there’s a large number of people even in the western world who don’t have bank accounts, who aren’t part of what we would consider the traditional digital financial system.”
But Narula sees great potential for cryptocurrencies to go mainstream—
much as email and the internet went from being the domain of academics, researchers and techno-geeks, to a part of everyday life for everyone.
“I could see something like that happening with crypto currencies: right now it’s a very specific set of people who are very sort of software inclined or people who have no other choice,” Narula said. “They don’t have access to another option.”
“As that community grows and builds and learns, eventually we’ll start building better user experiences. We’ll figure out how to integrate better with our existing applications and with people’s lives.”
For the rest of us, ATMs can offer a way in. Narula thinks they can help people getting over the psychological hurdle of accepting cryptocurrency as really ‘real.’
“You can actually walk up to one, put money in, get Bitcoin out,” she said.
“It’s tangible, you can see it happening, you can experience it, you can become a part of it. And I think that’s really meaningful for a lot of people, they need to have that kind of experience… I think Bitcoin ATMs are certainly part of the development of the technology and super cool.”
For his part, Chris Yim said LibertyX is “not going to stop until we have a location on every single street corner. Once you have bitcoin now you can think of all the tools and platforms you can build on top of it. I’m really excited to see what people are going to build on top of the platform.”
Narula recommends keeping an open mind but “definitely not putting all of your money into any of the cryptocurrencies right now,” given the wild price fluctuations.
“Something I’m a little bit worried about is that by evangelizing the technology, I’m encouraging people to put money into specific coins,” she said. “I know that’s a great way for people to feel like they’re participating and also betting on the future. But at the same time I think it’s really early days and we need to be really careful.”