Boul­derites among early adopters of Bit­coin BTM

The Denver Post - - BUSINESS - By Alexan­dra Jan­ney

Walk into the Amante cof­fee shop at 2850 Base­line Road in Boul­der on any given morn­ing and you’ll see what looks like an au­to­mated teller ma­chine sit­ting against a wall.

A hand­ful of peo­ple — a techie, a well­dressed, mid­dle-aged cou­ple — use it through­out the day. But this is not your grand­mother’s ATM. It’s a Bit­coin teller ma­chine, a por­tal into the brave new world of cryp­tocur­rency.

Some call this new kind of money the grand­est ex­per­i­ment of our time. Oth­ers fear its ris­ing power, and the rest of us have no idea what the heck it is.

Boul­der’s Eric Weiss­mann was fas­ci­nated early on with the po­ten­tial of dig­i­tal cur­rency. When the op­por­tu­nity arose to own and op­er­ate Bit­coin teller ma­chines, or BTMS, he jumped in and founded Mod­ern Ten­der. Weiss­mann thought the ar­chi­tec­ture of the code, the blockchain, had the po­ten­tial to trans­form cur­rency mar­kets.

“I was in­ter­ested in Bit­coin and thought the blockchain tech­nol­ogy was revo­lu­tion­ary, so I wanted a foothold in the space. We reached out to Amante be­cause we wanted a lo­ca­tion that was up­scale, eas­ily ac­ces­si­ble, and at­trac­tive to early adopters and the tech de­mo­graphic,” Weiss­mann said.

BTMS are still largely a rar­ity. There are 13 statewide, in­clud­ing two in Boul­der — Weiss­mann’s at Amante Cof­fee and in the tech ac­cel­er­a­tor Spark Boul­der, 1310 Col­lege Ave.

The two BTMS in Boul­der were in­stalled in Fe­bru­ary 2015. The Spark ma­chine is owned by Aurora-based Xbteller.

Op­er­at­ing out­side the tra­di­tional bank­ing sys­tem with no reg­u­la­tory over­sight, BTMS have ex­pe­ri­enced a surge in use as more peo­ple turn to cryp­tocur­ren­cies as a haven from po­lit­i­cal in­sta­bil­ity and dis­trust of govern­ment-backed cur­ren­cies.

For baby boomers, the con­cept of mo­bile money meant au­to­matic teller ma­chines. Mov­ing for­ward the mil­len­ni­als have re­de­fined the idea of mo­bile by push­ing all fi-

nan­cial op­er­a­tions on­line, and in the process, they have cre­ated en­tirely new types of cur­rency.

Cryp­tocur­rency, at its most ba­sic, is dig­i­tal money cre­ated from com­puter code.

This sys­tem emerged af­ter the 2008 stock mar­ket crash. Bit­coin, the first on the scene, was de­signed to by­pass third-party agen­cies and cen­tral banks.

As a ris­ing num­ber of users par­tic­i­pated in Bit­coin’s peerto-peer net­work, the need for a more ef­fi­cient means of buy­ing and ex­chang­ing Bit­coin grew with it. Prior to the in­tro­duc­tion of BTMS, ac­quir­ing Bit­coin was com­pli­cated and lengthy.

But BTMS are chang­ing that. Just like tra­di­tional ATMS they pro­vide ef­fi­cient ac­cess to the cur­rency on-the-go.

FT Tech­nol­ogy re­porter Sally Davies in a re­cent ar­ti­cle com­pares the re­la­tion­ship be­tween Bit­coin and blockchains to that of the in­ter­net and emails. Ac­cord­ing to Davies, blockchain is to Bit­coin, what the in­ter­net is to email. Blockchain is the broader elec­tronic sys­tem from which you can build dif­fer­ent ap­pli­ca­tions, like Bit­coin.

Us­ing BTMS isn’t cheap. The ma­chines charge a fee on each trans­ac­tion. Sim­i­lar to tra­di­tional ATMS, these trans­ac­tion fees vary be­tween ma­chines de­pend­ing on the op­er­at­ing com­pany that con­trols it. But BTMS charge fees based on a per­cent­age of the value of the trans­ac­tion. Most tra­di­tional ATMS charge a flat fee.

The av­er­age BTM fee is 10 per­cent to buy Bit­coin and 6.3 per­cent to sell it, ac­cord­ing to Coinatm­radar, the first data­base cre­ated for Bit­coin ATMS. The steep fees, ex­perts said, are due to le­gal fees and costs as­so­ci­ated with con­vert­ing Bit­coins to cash.

New Hamp­shire-based La­massu was the first to man­u­fac­ture a Bit­coin teller ma­chine in the U.S. Weiss­mann bought one to put in Amante.

“In the past, Bit­coin has been quite dif­fi­cult to ac­quire,” La­massu cus­tomer ser­vice man­ager Neal Con­ner said. “If you were ob­tain­ing it on­line, it need- ed to be through an ex­change and then ap­proved based on doc­u­ments sub­mit­ted by the user, in­clud­ing the trans­ac­tions made and proof of a bank ac­count. To do all of that takes time, so when it comes to dig­i­tal cur­ren­cies, users are will­ing to pay a lit­tle more for com­mis­sion if they’re do­ing so in­stantly via ma­chines.”

Bit­coin is no longer the only cryp­tocur­rency avail­able. Up­starts such as Ethereum, Rip­ple and Lite­coin are up and run­ning, and grow­ing fast, ac­cord­ing to Coin­desk, a mar­ket re­search firm.

World­wide, dig­i­tal coins are val­ued at nearly $80 bil­lion, but the value of the new cur­rency swings dra­mat­i­cally. Just last month it peaked at $115 bil­lion.

It’s that volatil­ity that has added to de­bate within the fi­nan­cial com­mu­nity about how these cur­ren­cies will de­velop and if they are sus­tain­able.

Most fol­low­ing the dig­i­tal cur­rency mar­ket be­lieve that a crash is very un­likely. Sharp move­ments in a mar­ket dur­ing early stages of mat­u­ra­tion is noth­ing new for cryp­tocur­rency buy­ers who at­tribute the in­sta­bil­ity to the process of form­ing an en­tirely new as­set class.

“If you think about the qual­i­ties cur­rency must posses, process will tell you that it is some­thing di­vis­i­ble, durable, uni­form, widely ac­cepted, and in lim­ited sup­ply. I think that cryp­tocur­rency rep­re­sents some­thing that has all of those traits and does so bet­ter than any (tra­di­tional) cur­rency to­day,” said Dan Briere, an an­a­lyst with New York-based Chainal­y­sis. Chainal­y­sis pro­vides soft­ware to govern­ment agen­cies and fi­nan­cial in­sti­tu­tions in­volved in bank­ing Bit­coin or in­ves­ti­gat­ing ac­tiv­ity on the blockchain.

But there has also been plenty of con­tro­versy sur­round­ing the dig­i­tal cur­rency.

In the early years, blockchain tech­nol­ogy was used for the ex­change of il­le­gal sub­stances or other crim­i­nal en­ter­prises. The se­cre­tive na­ture of the sys­tem meant that users were not re­quired to dis­close their per­sonal in­for­ma­tion when cre­at­ing a per­sonal ad­dress. There­fore such ex­changes as the no­to­ri­ous Silk Road drug chan­nel were ini­tially hard to trace and ter­mi­nate.

Jeremy Pa­passo, Daily Cam­era

A Bit­coin teller ma­chine sits in­side Amante Cof­fee in Boul­der on Wed­nes­day. BTMS are still largely a rar­ity. There are 13 ma­chines statewide, in­clud­ing two in Boul­der.

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