Startup offers 17 area ATMs for soaring bitcoin
Company seeks to democratize access to digital currency
Few commodities are hotter right now than bitcoin, the world’s most popular digital currency, which has rocketed up to around $18,000 from less than $1,000 since Jan. 1. And in the Bay Area, getting your hands on some is as easy as a trip to an ATM.
Coinucopia, a Sacramentobased startup, offers instant access to bitcoin at 17 automated teller machines in northern California, in locations as varied as the South Bay’s Westfield Valley Fair mall, a Berkeley gas station and an Oakland liquor store. The company’s aim? To democratize access to a currency that for years was accessible mostly only to digital insiders.
But as the bitcoin rush has gotten hotter, Coinucopia and other firms that offer digital currency ATMs are facing new competitors. Now, consumers can make swift transactions through
a popular bitcoin exchange, buy and sell the digital currency through a mobile payments app, and even trade new bitcoin futures. That’s good news to many — but it comes with some caution flags, since bitcoin exchanges often come with high fees, and the currency remains extraordinarily volatile.
Created in 2008, bitcoin has had a meteoric ascent, linked to a soaring stock market that has prompted more people to consider riskier bets. This month, the launch of a new futures market gave investors the opportunity to bet on bitcoin’s price. Last week, an exchange run by Cboe Global Markets Inc. launched the first U.S. bitcoin futures, and the CME Group Inc. is launching a rival contract at its Chicago Mercantile Exchange.
Early years
In its first few years of existence, bitcoin was worth little because of its decentralized structure with no government or bank backing. Its reputation as a hot spot for black-market activities made many people wary.
But over time, more investors were drawn by the success of blockchain, a publicly visible, mostly anonymous ledger system of bitcoin transactions. The transactions are verified using a network of powerful computers, which are individually owned by “miners,” bitcoin enthusiasts who check every transaction.
Several Bay Area businesses now accept the digital currency as payment for goods and services, including Coupa Cafe in Palo Alto, the San Jose Earthquakes soccer team and travelbooking website Expedia.
If you buy bitcoin at a Coinucopia ATM to store up, or spend as you wish, you’ll pay extra for the convenience. Every transaction has a 10 percent to 15 percent fee based on the volume and available supply of bitcoin at the time, said Rick Perry, Coinucopia’s operations manager.
Coinucopia offers its ATM services to anyone, from existing bitcoin investors to people on the margins of society who don’t have access to basic banking services, Perry said. “That’s why we wanted to have (ATMs) in high-end areas like Westfield Valley Fair and low-end places like gas stations,” he said.
Coinucopia also aims to supplant Moneygram and Western Union — moneytransfer services popular among low-income immigrants — in the future, said Perry.
Despite the current global fascination with bitcoin, Coinucopia takes a long-term view of the digital currency — as it has since the company opened in 2014. The company believes bitcoin, even after its recent surge, remains undervalued.
“I think all of us try to check ourselves and stay objective,” said Perry. “We are at the level of internet circa 1993, when the World Wide Web was just getting started. There is so much more to go.”
ATM transactions
Coinucopia’s bitcoin ATM transactions soared 82 percent per month between 2016 and 2017, Perry said, but he wouldn’t disclose the actual number of transactions or the total value of bitcoin bought by customers.
Businesses that host Coinucopia’s ATMs appear to have little insight into how popular the machines have been. Four places in the East Bay and South Bay, including the Westfield Valley Fair mall, said they had no data tracking how many people use the ATMs. One gas station in San Jose described the foot traffic to Coinucopia as “a lot.”
Bitcoin ATMs, including Coinucopia, generally only take cash for bitcoin to ensure instant bitcoin purchase. When bought online through exchanges like Coinbase and Bittrex, bitcoin transactions can take days — even more than a week — to finalize as the transactions need to be verified and recorded on blockchain.
“Bitcoin transactions are irreversible,” said Perry. “The competitive edge is: We give you bitcoin in 10 to 15 seconds.”
But that edge may be thinning. Coinbase, the most popular online bitcoin exchange, announced in October that it would offer instant purchase of bitcoin and other cryptocurrencies by tying the purchases to a bank account. And mobile payment app Square Cash announced it will allow most of its users to buy and sell bitcoin.
Yet Coinucopia sees bitcoin ATMs as bringing a possible financial revolution where the people, and ATMs, seize back power and independence from big banks and corporations.
“We don’t want this to be another thing for Wall Street,” said Perry. “We are supposed to be taking power from Wall Street.”