CoinSafe Releases ‘Virtual Bitcoin ATM’ Apps for Merchants
US-based company CoinSafe says its new mobile and desktop apps can turn any local business into a ‘bitcoin ATM’, or face-to-face bitcoin exchange.
The CoinSafe apps are free to use and allow businesses to trade bitcoins directly with walk-in customers.
CoinSafe says the software is “designed to be used by someone who has no idea what bitcoin is”, and that a staff member merely needs to confirm that funds have been received before releasing the payout amount in either bitcoin or cash.
The apps are HTML5-based, so are able to run on any device or platform a business might have on hand. CoinSafe says, when designing the apps, it focused on simplicity for the uninitiated user, and that it does not charge any fees to use its service.
See the company’s explanatory video:
CoinSafe co-founder and CEO Michael Flaxman said the software provided business owners with a less risky, more flexible option for getting bitcoin into their customers’ hands without having to purchase or maintain ATM hardware.
He told CoinDesk:
“We just launched, but the interest has been overwhelming. I think merchants really like the idea of having a bitcoin ATM, but when you’re running a business it’s hard to justify a $10,000 investment in a machine whose future seems so uncertain. Bitcoin ATMs and vending machines make a lot of sense once you’re doing hundreds of transactions per day, but unfortunately most stores aren’t seeing enough volume yet to recoup their investment.”
He further said that CoinSafe would provide a map on its website showing the locations of businesses who had signed up to the service.
Security and fees
The company will not have access to any user’s private keys and will encrypt all customer information in transit to its services, its website says. It also recommends that businesses keep larger amounts of bitcoin in cold storage.
Businesses paying out cash for bitcoins only do not have to give API access to CoinSafe at all, so long as they provide a bitcoin address by which the transaction can be confirmed. The service uses standard transaction fees of approximately 0.0001 BTC (about 6 US cents).
Everything is handled automatically: CoinSafe takes care of fees when the customer is buying bitcoin with cash, while wallet software takes care of fees when users sell bitcoins for cash.
Since merchants are allowed to set a markup on the average market price, CoinSafe transparently displays the markup to customers so they can see whether they are getting a good deal or not.
CoinSafe’s offering is similar to BTC China’s ‘Picasso‘ mobile app, also marketed internationally as an ‘anywhere ATM’ solution to allow both businesses and individuals to set percentage price commissions and trade bitcoins face-to-face.
In both cases, the apps replicate bitcoin ATMs’ basic functions as a way to trade without using a full exchange, and a business does not necessarily have to accept bitcoin for its goods or services to function as an ATM/exchange.
The apps, however, offer customers an alternative to the rigmarole and potential risks of setting up accounts and dealing with individuals on Internet-based cryptocurrency markets.
The regulation issue
One potential problem for businesses using the apps is that exchanges that trade fiat currencies for digital ones online are, in some countries, subject to strict know-your-customer (KYC) and anti-money laundering (AML) regulations forcing them to collect identifying and personal material from every customer.
In several jurisdictions, they are also considered money transmitters and must apply for the requisite licence.
Hence, it is unlikely a local business would have the resources or procedures to undergo financial world-level compliance procedures.
Flaxman, whose company is based in Seattle, discussed the possible effects New York’s ‘BitLicenses’ plan would have on the bitcoin ecosystem, saying:
“It’s hard to say what effect the proposed regulations will have. While the US hasn’t been that friendly towards bitcoin businesses in the past, we’re hopeful that the government won’t get this too wrong for too long. I think most people want the jobs and innovation to stay here and not get shipped overseas.”
Face-to-face traders using services like LocalBitcoins and Mycelium’s Local Trader exist in a similar grey area. Two Florida men were charged in February with violation of anti-money laundering and money transmission laws, after using LocalBitcoins. One of them, Michell Abner Espinoza, had traded only 150 BTC in six months.
LocalBitcoins itself is not involved with this or any other similar case.
On its FAQ page, CoinSafe says regulatory issues are still unclear and vary from place to place, and requests that users relay their experiences back to its team.
This story was co-authored by Nermin Hajdarbegovic.
Image and video courtesy of CoinSafe