Where to Buy Cryptocurrencies: ATMs vs. Online

Buy Jun 16, 2020

Coinmap has already mentioned the best ways to buy Bitcoin and altcoins with cash, and rightfully so: these are some of the most familiar ways to by Bitcoin instantly so you can get started in the world of crypto. But have you noticed that even cheapest Bitcoin ATM can have crazy fees? With some locations charging around 15% in transaction fees, buying crypto only with cash can really hurt how quickly you can build your portfolio—often using an online crypto exchange is a much better and more convenient option. Each of these methods exists for its own very good reason, offering unique benefits that the other can't. And that's why the Coinmap blog exists too: we're here to provide some clarity by comparing crypto ATMs to online marketplaces so you know the best ways to buy cryptocurrencies based on your situation. We'll also leave you with an explanation of why our sister site Invity.io is the best site to buy Bitcoin online, so read on!

Benefits of ATMs

Building the crypto ecosystem

Soon after the creation of Bitcoin in 2009, eye-catching kiosks began appearing in cafés and shopping malls all over the world. For people who saw and investigated these flashier versions of the cash-and-card machines everyone has used, Bitcoin ATMs were the first introduction many had to this revolutionary new development in finances. They began to spread with increasing speed, and today many thousands of crypto ATMs dot the world as a signal of the strength and the global nature of the crypto ecosystem. You can check out just how far they have spread on Coinmap's crypto heatmap.

Their fairly commonplace nature also means that crypto ATMs are true lifelines for those who rely on virtual currencies to participate in the global economy: people in developing or unstable countries, the unbanked, and people with limited access to their own internet connection. From a 30,000-foot view, the very existence of crypto ATMs is one of their greatest benefits, truly allowing Bitcoin and altcoins to function as borderless currencies with no single, centralized base of power.

Anonymous Bitcoin purchases

But the most fundamental benefits of cryptocurrencies aren't just their independent, decentralized nature; privacy too has always been a core concern for crypto users. And rightly so: with rising authoritarianism and governments naming terrorist groups seemingly at random, now may be the best time to disconnect or at least obscure the connection between your identity and your money. Most crypto ATMs allow you to make anonymous Bitcoin purchases, at least up to a certain amount. And even if you aren't able to buy Bitcoins without verification, the required information may be as little as a phone number.

Buying crypto at a Bitcoin ATM or another cash-based way offers the highest level of anonymity.
Woman with mask holding Bitcoin by Marco Verch, licensed under CC BY 2.0.

Drawbacks of ATMs

High transaction fees

Even though the Bitcoin ATM network is vital to the health of the crypto ecosystem, it's not without some weak points. First among these are the often high fees that come with purchasing digital currencies from ATMs. Even "normal" Bitcoin ATM fees can make up around 10% or 15% percent of your transaction, meaning you'll either get less crypto than you might expect or you'll pay a lot more for the same amount you could get elsewhere. You also need to carefully read the fine print—assuming you can find it at all—to make sure of the fees, since each ATM is different. Some see this as a premium you pay for anonymity, but doing so too often can just feel like a hassle.

Purchase limits

Common sense dictates that it's not a good idea to carry around wads of cash, even if you are going to make a purchase or deposit within minutes. The same is obviously true when that purchase is Bitcoin, except even if you did take the risk, you may not be able to complete a large transaction at all. This is because most crypto ATMs have daily transaction limits; many of these are around USD 1,000, but some are as low as a few hundred dollars. Again, each ATM is different in this respect, so it's very possible that if a sudden change in the markets make it the best time to buy Bitcoin, you may just miss your chance to cash in bigtime if the nearest Bitcoin ATM has really low limits.

Not always available or secure

While daily limits may frustrate some prime opportunities, that's not the last potential road bump you need to keep in mind if you choose to buy crypto using an ATM. The fact is that most ATMs are inside businesses or other semi-private spaces, and this semi-public/semi-private status presents two real problems.

The first of these is simple availability. Most stores close, usually for the evening. And if a Bitcoin ATM is located in a closed store...well, the ATM is closed too. It might seem like this adds a certain layer of security to a cryptomat, but during the hours that the space is open, it's highly likely that no one is keeping a very close eye on the ATM sitting over in the corner. This is why ATMs are particularly vulnerable to scams, and Bitcoin teller machines are no different. But for crypto users that want an alternative to ATMs, there's another solution...

Bitcoin ATMs are often vulnerable to scams. If something seems fishy, don't proceed!
This low-tech Bitcoin scam is surprisingly effective by Winnipeg Police Service via CCN.com.

Benefits of Online Purchasing

Lower fees

The web is where virtual currencies are most at home; after all, crypto couldn't exist without the global internet network. As such, online crypto exchanges are super convenient since they're available 24 hours a day and from any computer (that's connected to a safe internet connection!). But perhaps the best part is that since this virtual infrastructure doesn't require any special machines or in-person checks, the fees for buying crypto online are much lower—usually around 5% or less—than buying through an ATM. This will save you a lot of money in the long run and will allow you to consolidate your crypto position much more quickly.

A word of warning: some exchanges still seem reluctant to be transparent about their fees, hiding details deep in the terms of service or requiring you to make an account to see what your transaction will look like. The Buy crypto feature at our sister site, Invity.io, on the other hand, incorporates transaction fees into every free quote, and they've laid out their schedule of fees in a simple, easy-to-read format.

There's also a hidden benefit to buying online: options. Some Bitcoin ATMs are appropriately named in that they only allow you to buy Bitcoin. Most online exchanges, on the other hand, typically allow you to buy the top crypto currencies as well as some more obscure options directly. This may not save you much in purchase or exchange fees, but what it will do is save your tax bill: in most places, trading one cryptocurrency for another is a taxable event, but simply purchasing is not. So why trade Bitcoin for Ether if you could just buy Bitcoin and then buy Ether? Take that, Uncle Sam!

Greater security

In addition to the potential tampering that comes with BTC ATMs being left in fairly public areas, another security threat is that you don't always know who put the gadget there in the first place. What is their reputation? And if something goes wrong, what's the likelihood that they'll be able to help you? Perhaps counterintuitively, the reputations of online exchanges are typically much easier to determine. Some time spent on social media, reading reviews, or browsing news articles will likely give you a good idea of if you want to do business through a particular exchange.

If you use Invity, you can even feel confident in skipping the research step altogether, since they fully vet each purchase and exchange provider before incorporating them into their comparison tool. This ensures that each partner provides error-free transactions, a high level of customer service, and complete compliance with legal requirements.

Drawbacks of Online Purchasing

Sharing more info

But nothing's perfect, and that includes buying crypto online. The major drawback of this method is that you usually can't buy Bitcoins without verification. Most purchase and exchange providers require that you complete a short, legally mandated "know your customer" (KYC) procedure, usually involving sending a photo of yourself and of an identity document. Simple, yes, but you also have to trust that whoever is keeping your documents is doing so safely.

Invity.io ensures that its purchase and exchange partners keep your personal information secure.
Data Security by Blogtrepreneur, licensed under CC BY 2.0.

Here again is where Invity outshines other platforms connecting you to places to buy crypto. Invity doesn't keep your info—in fact, it doesn't see it at all—but it does carefully verify that the companies who facilitate your trade not only comply with all KYC but also take industry-standard steps to keep customer data safe.

So with this info in the back of your mind, you should be well prepared to purchase Bitcoin or altcoins under any circumstances life may throw at you. Keep in mind that buying crypto is the only way to participate in the world of crypto!

Cover photo: The first cryptocurrency ATM designed and built in Poland by Shitcoins.club by Paweł Balaryn, licensed under CC BY-SA 4.0; Online Shopping by Eldridge Maddox, licensed under CC BY-SA 2.0; boxing glove and explosion courtesy of KindPNG.com.

Coinmap gives you the best places in the world to spend cryptocurrencies. But before you spend crypto, you have to get some: our companion project Invity.io gives you the best all-in-one place to buy, exchange, and save digital currencies.