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Bitcoin ATM is 'horrible for money laundering,' co-creator says

Colin Neagle | June 8, 2013
Why the Bitcoin ATM may not be the best option for illegal activity, and where it could start popping up soon.

These advantages are broader for those using the Bitcoin ATM when dealing in cash, Harvey says. Convenience stores, for example, deal in cash every day, making them susceptible to robbery, be it from thieves or employees looking to skim a few dollars out of the register. Depositing cash into a Bitcoin ATM would remove that risk, transferring the money into a digital currency that is stored in an online wallet.

The potential for these use cases is what prompted Harvey and his co-founders to work on the Bitcoin ATM full-time. He and his brother were running an online guitar store based out of Manchester, N.H., as they experimented with Bitcoin in their free time. Roughly six months ago, they landed on the Bitcoin ATM, which excited enough people to convince them to launch Lamassu and build the device. They showed an operational product demo of the device at last month's Bitcoin 2013 conference, and plan to begin production later in the summer. The company plans to sell the device for $5,000 for an individual unit, with a reduction for wholesale orders.

Lamassu has already seen global interest in its Bitcoin ATM, and Harvey is particularly interested in providing the device to third-world nations with limited banking resources. He compares the potential for Bitcoin in these regions to the boom in cellphone sales. With limited landline telephone resources in many third-world nations, cellphones became massively popular because private companies could build and distribute them without relying on a government-provided infrastructure. The Bitcoin ATM could accomplish a similar goal by providing a currency system to those who were previously limited to cash-only transactions.

"They would [meet] all those banking needs using Bitcoin, and they won't ever have to use a bank account," Harvey says.

For the time being, Bitcoin as a movement has its own issues to sort out, and Harvey acknowledges that. Security will need to improve for the online Bitcoin services that have been targeted for theft, but many in the industry believe that will progress as the system matures. Alternative digital currencies, such as Ripple or TerraCoin, stand to fragment the market, but Harvey says a simple software update could enable the Bitcoin ATM to support them.

Naturally, as the market expands, more services will emerge to help bridge the gap between today's tech-savvy Bitcoin enthusiasts and everyday consumers who could benefit from it, Harvey says.

"The Bitcoin protocol itself is extremely simple. It's just a matter of what services support it to make it really simple for those who are not tech-savvy," Harvey says. "And that's the kind of service I expect to see during this year and next really start to pop up.

 

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