The Danger of Bitcoin ATMs

Bitcoin ATMs are machines that can be used to purchase Bitcoin with cash. They are especially useful for those without accounts in traditional banking and those in countries with tough restrictions on Bitcoin. Unfortunately, recent news articles have brought up a dark side of these machines.

Yes, it is true that using a Bitcoin ATM can be dangerous, and we are here to explain why. So, before you head out to turn your cash into Bitcoin, keep reading so you can know what you need to do to keep yourself and your money safe.

Are Bitcoin ATMs Dangerous?

Inherently, Bitcoin ATMs are not dangerous on their own. They provide an easy way for an individual to buy Bitcoin with cash, something which otherwise wouldn’t be possible.

That being said, it has recently come to light that many Bitcoin ATMs have security flaws that can be exploited, allowing malicious human actors to use the machines to cause fiscal harm.

Related: The General Bytes Bitcoin ATM Hack

How Bitcoin ATMs Can Become Dangerous

There are several ways that an individual can exploit a Bitcoin ATM and we will go into each of them below.

1. Physical Robbery

Because Bitcoin ATMs take cash for Bitcoin, they have a spot within the machine to store cash, similar to any ATM. Like fiat ATMs, Bitcoin ATMs must be physically reinforced to prevent individuals from busting open the machine to get the cash or busting a window and dragging the machine away.

While most ATMs are too heavy to drag away with human force, there are incidents where a thief will connect the machine to their car and then drive away, causing damage to the building where the Bitcoin ATM was located.

2. Being Hacked

Unfortunately, it is possible to hack a Bitcoin ATM. This means that with the right knowledge, a thief can use their digital prowess to get the machine to give them Bitcoin or cash without paying anything. This can be harmful to the company which has so graciously decided to host the ATM in their building.

3. Malware

Just like any other machine or computer, Bitcoin ATMs are susceptible to malware. A thief or criminal could install malware on the machine either in person, or remotely, and this malware could give them access to future transactions and data input into the machine.

Thieves can use malware to steal information like private keys, or to manipulate transactions in their favor. The worst part is, the individual using the machine may not know they have been targeted until it is too late.

4. Data Interceptions

If that weren’t enough, most Bitcoin ATMs use a server or internet connection to a server in order to process transactions. A digital criminal who knows how to intercept data passing through the network can steal private keys and more.

Additionally, as happened in one case, criminals who gain access to the machine can change the wallet address of the machine, directing funds to their own account instead of that of the machine.  

Overall, Bitcoin ATMs, while useful machines, can also be dangerous pieces of computer equipment, so if you plan to use one in the future, you’ll want to take a few precautions.

How to Protect Yourself from Bitcoin ATM Scams

As you can imagine, due to the nature of Bitcoin, if you get scammed by a Bitcoin ATM, there is no way to get your money back—as transactions are irreversible. This means, that if you ever have to use one, you’ll want to take a few precautions to protect yourself.

1. Verify Why You Are Using the Machine

First and foremost, there are very few situations where using a Bitcoin ATM is necessary. The only reason you should be using one is because you want to buy Bitcoin to invest and only have cash.

If you have been told by someone or a company to use a Bitcoin ATM for a transaction, it is likely a scam—do not do it. If you have a regular debit card, you can buy Bitcoin on several legal platforms like Coinbase and Binance, and there is absolutely no reason to use a Bitcoin ATM—therefore, if someone has asked you to do so, be suspicious.

2. Check the Company Which Owns the Bitcoin ATM

Bitcoin ATMs aren’t backed by any one entity, rather almost any business or company can invest in one for a steep initial fee. As such, you should only use Bitcoin ATMs at reputable businesses and companies, as criminals are less likely to have access to these machines.

Look for Bitcoin ATMs on this website located in businesses (NOT on the street), and the more famous the business, the better. Plus, if you need help using the machine, you are more likely to find legitimate help in these locations.

Related: Bitcoin ATMs Doubled in 2018

3. Check the Recipient Address

One final way to check the legitimacy of a Bitcoin ATM is to check the recipient’s BTC address before sending your Bitcoin. A tool like Chainabuse makes this easy, as all you have to do is type in the address and see if there have been warnings of scams or abuse.

In general, if a rating on Chainabuse is above 70% risk, we recommend looking for another machine or contacting the machine operator (there is usually a phone number on the machine) for help.

If you follow these three checks before using a Bitcoin ATM, you should be able to keep your information and your money safe. Of course, there is always a risk involved when using a Bitcoin ATM, so keep this in mind if you intend to use one.

All in all, we are a huge fan of Bitcoin ATMs because they make Bitcoin accessible to the masses. We are, however, sad that criminals use the machine for personal gain and advise anyone intent on using a Bitcoin ATM to take some personal safety precautions beforehand to ensure you keep control of your money.

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