Bitcoin, As Explained By the Experts Behind the LibertyTeller ATM
Boston has one of the country’s first-ever Bitcoin ATMs, but how the heck does it work?
Bitcoin can be confusing. Really confusing. It’s also not widely used and extremely volatile, which makes those who want to invest in the digital currency skeptical of taking the first steps to try it out.
That’s why the owner of one of the country’s first-ever bitcoin ATM machines—located at South Station—is standing by his recently unveiled business concept explaining to passerby that are curious about the paperless currency exactly how it works.
For the last two days, Chris Yim, cofounder of LibertyTeller, has fielded questions from at least 100 users that approached the device to turn their cash into bitcoin, in less than a minute.
“It’s really simple to use,” said Yim, an MIT graduate, and business student at Philadelphia’s Wharton School. “With this ease of access, the adoption of [bitcoin] is going to go through the roof. It’s an exciting time for everyone in the industry.”
For those that are wary of trekking into the world of digital money, there’s a detailed explainer on LibertyTeller’s website that outlines all of the lengthy steps a user has to go through in order to either obtain bitcoins, or transfer bitcoins from a paper wallet to a digital one (more on that later).
It’s heady, to say the least, and we had a tough time trying to break it all down. So we asked Yim to explain it all in laymen’s terms, and try to convince us that bitcoins aren’t just techie fads like Segways and Google Glass:
Are you with the bitcoin machine right now?
Yes I am, I am just sort of monitoring it. Actually, our core mission is to increase bitcoin access and awareness and part of that is getting out there and evangelizing what bitcoin is, and at least in the beginning, we plan to just be here, answer people’s questions, and shepherd them through the process. In the medium term, we have plans to automate it, so the machine can just be there, and it’s pretty self explanatory.
So do you guys always have to be there?
We launched yesterday, so we are looking for the best path forward, but we will operate between 9 a.m. and 9 p.m., and we will have to be here for security and [from an] education perspective. We are working with a few people to figure out if there’s a way to make it secured to the ground, so we don’t have to [take it with us]. It’s a pretty nice piece of machinery, with cash inside, to leave alone.
People put cash into it, not debit cards?
Exactly. It’s cash to bitcoin in 30 seconds. It’s as simple as walking up and doing it.
A lot of people are confused by bitcoin. Can you break it down in the simplest terms?
I really think it’s just as simple as thinking of it as internet cash. This is something like cash that has the ease of a credit card, but instead of having to enter your billing information and security code and all that kind of stuff, all you do is have your smartphone or address, and you submit that, and it sends your bitcoin to the merchant. It’s that quick. If you think about the typical checkout process online, it might take two or three minutes. But with bitcoin, it shortens it to 30 seconds.
Sounds risky. Is there more safety in buying things online with bitcoin, rather than using a bitcoin ATM?
Our ATM allows you to buy bitcoin, once you purchase it it’s yours and you hold it. You can then use it to buy online pretty much anywhere that accepts it. For merchants, they are able to save three to four percent of what they are paying with Visa or MasterCard merchant fees. Those companies largely charge that because of the fraud or chargebacks, so effectively what bitcoin wants you to do is take these costs out of the system, and actually there’s great benefits for the consumer as well.
That makes more sense. But a lot of people seem to be wondering if this whole thing will stick around for the long term, or be used all the time.
I’d say for online purchases, this is a no-brainer. I think that bitcoin will always be around. It’s been around for five years, and has been improved all the time. People call it a fad, but tell me a fad that has been around for five years. It’s unheard of. And there’s ways now to make it more accessible to the average person. If you think about currency, the larger the pool of people who believe in it, accept it, and support it, the more valuable it is. And we are really seeing that point here. That’s why we have this machine. Everyone knows how to use an ATM, so this is probably the easiest thing for the average Joe to go [use]. We really believe in the power of the community, and that’s really something we are trying seize: get bitcoin out there so people can use it, ask merchants to accept it, and then it starts this cycle where in the end everyone is better off.
How did Boston become one of the first cities to officially launch a bitcoin ATM machine?
I’m from the Boston area originally. I went to MIT and grew up in North Andover, and I think Boston is this awesome epicenter of tech-savvy and highly educated people that like to be on the leading edge of innovation. And it’s a large metropolitan city, so it made a lot of sense to come back here. Bitcoin is still a largely early adopter, and requires some level of technical knowledge. But there are a ton of people still interested in it so we felt that it made sense to use this as the first launching point for our brand. We wanted to pick a place that had the best attributes while playing entirely within the rulebook.
Are you worried about federal regulations trickling in once bitcoin becomes more popular?
Yes, it’s always a potential issue that may arise. But we have an awesome lawyer, and awesome compliance program and advisor, and that’s the core of being compliant and having that one step ahead of what is going to happen. Regulations can change, but we wont do anything that’s illegal. As long as regulators see you can have innovate bitcoin businesses that aren’t illegal, and that it can drive innovation and revenue to cities—that’s something that rings true for a lot of politicians that want to see their city flourish, or be on the leading end. If people view it as innovative, they will go there.
Do you think it will be difficult for bitcoin to take off?
You control your money, that’s never happened before. People love the idea of owning and having their money. One thing I am excited about is there are a lot of entrepreneurs and startups working on ways to bridge the gap and allow people to have security in a consumer friendly way [to use bitcoin], and I really believe that 2014 is going to be the year that it happens. A lot of really smart venture capital money is going into it, people like us are coming out and making it easier to purchase, and I think the confluence of all these different factors will result in a safer, more enjoyable bitcoin experience for everyone.
When you’re at South Station, how do you explain bitcoin?
Normally what we do, we have paper wallets we are giving away with money on it. We show them how you scan the public address so they can add money to it, then all you do is insert the cash and then you have the bitcoin. Some people bring smartphones with them so we help them with the importing process where they can take that money and put it onto their mobile wallet. Then they can take that to any store that accepts it, and spend it. It’s a much more interactive experience, than, you know, going to a website, or reading about the protocol. Everyone has slightly different knowledge and questions about it, but a lot of people have been appreciative that we have answered in a really easy-to-understand way what bitcoin is and why it’s important to them.
What are paper wallets? We thought this was all online.
Assuming you don’t have any of the technology, you can create a paper wallet that has two codes on it. One is the code you use to receive bitcoin, and the other is a private key, which you use to spend bitcoin. For mobile, they take these and integrate them into software to make it easier to track your corresponding public and private keys.
Got it. What happens from here with bitcoin and your ATM?
We already have more ATMs in our plans, but we are focused on making this one as efficient as possible. I think there is a lot to learn about what people want based on what questions people ask. We want to make it a completely automated experience. It took a long time, but now we are live and really excited.