It may be a virtual currency, but bitcoin now has a very tangible presence in Victoria with the Island’s first bitcoin ATM installed at Hemp & Co. on Government Street.
The bitcoin machine, which was installed over the weekend, is only the fifth such ATM in B.C. — and one of only 18 others in Canada according to bitcoinatmmap.com, which monitors the machines around the world.
“The trick has always been how do you get bitcoin,” said Scott Sheldrake of Bitbrokers, a new Victoria company that installs the machines.
“It used to be you could mine it [done through a complicated, slow and expensive computer processing system], but those days are long gone, or you could agree to meet up with someone who had bitcoin to make an exchange, but now there’s this.”
The machine is a slightly larger version of a regular ATM.
It is hooked up to the Cointrader online exchange in Vancouver and when customers sign in they can either buy or sell bitcoin.
If you’re buying bitcoin — the ATM will allow you to up to $3,000 worth per day — you insert money and the machine will direct the bitcoin to whatever wallet you choose, such as a virtual wallet on a smartphone or a bitcoin account online, Sheldrake said.
To sell bitcoin from a virtual wallet, a customer sends bitcoin to the address of the ATM and a claim ticket will be printed. After confirmation, which can take about 20 minutes, the claim ticket can be redeemed for cash dispensed from the ATM.
Sheldrake said he and his partners Ryan Price and Ming Leung use machines manufactured by Robocoin, which made the world’s first bitcoin ATM that was introduced in Vancouver in October last year.
“We went with them because that machine allows two-way transactions to buy and sell,” he said. “We thought it was important for people to see the full circle and so at any time if people are worried about [the virtual currency], they can sell it.”
While bitcoin is becoming better known and used — there are now five companies in Victoria accepting bitcoin for payment in person, though many more accept it online — it is still a fringe player. Its volatility and the collapse of the Mt. Gox bitcoin exchange has left many reluctant to try the currency. Mt. Gox filed for bankruptcy earlier this year after it reported it lost 650,000 bitcoins worth nearly $400 million.
Bitcoin has also been used in the underground market. The U.S. government is planning to auction $18 million worth of the virtual currency this month. The 29,000 virtual bitcoins to be auctioned were seized from the Silk Road website, which was a major sales point for illegal drugs and other underground goods.
Sheldrake said they hope the new Victoria ATM will help bring bitcoin more into the mainstream.
“Our goal is to continue to grow the use of bitcoin and make it easier to get,” he said.
The other goal is to make money. Bitbrokers takes a five per cent cut of transactions — customers who use the ATM to buy $100 of bitcoin will actually get $95 worth.
Sheldrake said he’s not sure what to expect in terms of use, but notes the first Vancouver bitcoin ATM did more than $1 million worth of transactions in its first month.
Bill Finley isn’t sure what the traffic will be like, but he’s sure it will be good for business at his Hemp & Co. store. “I have had three examples already of people coming to the store just because we take bitcoin. They would not have come in otherwise.”
He said he expects there will be the curious and the bitcoin aficionados coming into the store, which sells clothing made from hemp.
For Finley, it will be a six-month trial with the ATM.
“If it becomes too much of a bitcoin hangout, I may have to reconsider,” he said with a laugh.
Finley has been accepting bitcoin at the store since October, and while it hasn’t proved a huge sale-generator, he estimates they do one bitcoin transaction a week.
“It gets me in touch with a [market] that I wouldn’t be in otherwise,” he said.
