Cypriot vending machine markets in everything?

by on March 27, 2013 at 2:21 am in Current Affairs | Permalink

I don’t think this is a joke, and it is only a plan, and not a mainstream business project, in any case my apologies if I have been tricked by an early April Fool’s joke:

Upon examination of the marketplace and many discussions with Justin O’Connell (TDV Newsletter & Gold Silver Bitcoin), as well as another key strategic partner of ours, I have decided to move forward with what I believe could be the next multi-billion dollar business venture: Bitcoin ATM.

But that isn’t all. It is wholly our intention at Bitcoin ATM to put the company in the right position to open its very first ATM in Cyprus. If we did this now, and we are moving quickly to make this so, we would be the only functioning ATM on the island.

That is from “The Dollar Vigilante,” hat tip goes to Mike K.

8 March 27, 2013 at 4:25 am

People are using Bitcoins to get around capital controls.

Ray Lopez March 27, 2013 at 4:32 am

Looks like a Photoshop fake. Two ATMs next to it are Thailand ATMs. Good publicity for Bitcoin though.

dan1111 March 27, 2013 at 5:39 am

The article and website don’t claim to have an actual ATM, just a business plan to create one. I think the photo is intended as a hypothetical illustration of their concept.

Not that I think it will actually happen.

Statspotting March 27, 2013 at 5:03 am

I have a feeling Yahoo paid for Summly in Bitcoins.
http://statspotting.com/did-yahoo-pay-for-summly-in-bitcoins/

rpl March 27, 2013 at 5:51 am

I don’t get it. Why would you even want an ATM for bitcoins? The whole point of digital cash is that you don’t have to convert it into physical form to spend it. What would a bitcoin ATM even dispense? There are no such things as bitcoin notes.

As to having the “only working ATM on Cyprus,” that’s true only for the Cypriots that had the foresight to convert their savings to bitcoin before the banks closed. If I had to guess how many people in Cyprus would actually be in a position to take advantage of a bitcoin ATM, I’d pick something in the low single digits.

This sounds like a plan concocted by someone who has only a shaky grasp of how both ATMs and bitcoins actually work.

dan1111 March 27, 2013 at 6:20 am

The article explains what it does. You deposit real money and it becomes bitcoins in your account, or you withdraw bitcoins in the form of real money.

So it is really a bitcoin money changer.

rpl March 27, 2013 at 8:03 am

Yeah, I read the article, and the whole plan doesn’t make any sense. The case for using one of these machines to make a deposit is even weaker for than the case for making withdrawals because (unlike withdrawals) deposits can’t be done anonymously. You have to hold the deposit for at least as long as it takes for someone to come look in the envelope and make sure that what was in the envelope matches what was typed into the keypad. So, a would-be depositor is taking his nice, anonymous, not-subject-to-bank-levy Euro notes and depositing them with an entity that will almost certainly be regarded as a bank and therefore subject to the levy. How many people do you suppose will be lining up to do that? (What’s that? You’re planning on using bill scanners to read the bills right then and there? Standard ATMs don’t come equipped with those, so now you’re talking about designing and fielding custom hardware with a capability that is only useful during a crisis that will probably be over by the time you bring the device to market. On top of all that, the authorities will probably still consider you a bank and demand you open your accounts to them. Good luck with that.)

On top of all the technical issues, there is still the question of why you would want to do any of this conversion. If you’re holding Euro notes, and the people you want to trade with accept Euros, then converting to bitcoins offers you no advantage. Likewise if you’re holding bitcoins and the people you want to trade with accept bitcoins. Meanwhile, the number of people who are holding bitcoins but can only transact in Euros is too small to build a business around servicing, particularly since you can’t count on repeat business. Once they’ve changed their bitcoins to Euros they’re done with you (and by the way, what are you going to do with all those Euro notes you now have stuck in Cyprus?)

I could go on to dissect all the other edge cases, but I think the point is made. Like I said, to imagine that a bitcoin ATM is useful, it is not enough to fail to understand how either ATMs or bitcoins work; you really have to be pretty clueless about both of them.

av March 27, 2013 at 10:31 am

I thnk you’re missing the obvious usage, the basic business case that could support one is low cost remittances from Cypriots working in other parts of the world. If buying Bitcoin from an exchange and then sending it to the Cyprus bitcoin ATM has lower costs or faster service then using Western Union or Moneygram then people have a reason to use it.

rpl March 27, 2013 at 12:19 pm

Are there that many Cypriots working overseas and sending remittances back to Cyprus? Surely, if that were your business plan you’d be better to put your first machine in someplace like the Philippines, where you know there are a lot of remittances being sent, and you won’t be seen as trying to skirt banking regulations to boot. Also, if remittances are such an obvious application, then why is all the talk in the linked article about the banking crisis?

Besides, it’s not obvious that introducing bitcoin into the mix is going to reduce the costs. You have two currency conversions, possibly through two different middlemen, so there is that much more opportunity for fees to proliferate. Moreover, the ATM operator has many of the same costs that Western Union or Moneygram has (keeping cash on hand to facilitate transactions, transporting cash from where it happens to be to where it needs to be, and so on). So, it’s not at all obvious that going through them will be cheaper than existing providers. It’s not obviously more convenient either, since the sender and receiver have to handle the actual transfer of funds and changing of currency. If there’s any delay in putting the transaction through, they get to absorb the exchange rate risk too. If part of the value proposition here is suckering people in with a low explicit fee while sticking them with a bunch of hidden costs, then I remain unimpressed.

bob March 27, 2013 at 10:42 am

You fail to realize that this has nothing to do with an actual business plan, and a lot with the fact that people that hold large amounts of Bitcoin have plenty of interest in drumming up PR.

Once you consider that those people are no different than people hawking penny stocks, a whole lot of the news generated about this digital commodity makes a whole lot more sense.

Dan Weber March 27, 2013 at 11:35 am

There’s a big difference between “owning Bitcoins” and “having an account where someone says you own Bitcoins.”

The ATM could, conceivably, transfer Bitcoins near-instantly from one of their wallets to one of your wallets, and you could verify online that this was happening. (Remember, all Bitcoins are stored in the cloud.) You could buy $10 worth, verify that it did the right thing, then buy some more and more.

Note that you can’t do any kind of “charge-back” on Bitcoins. Once you transfer them away from your wallet, they’re gone, baby. Any service that offers to give you Bitcoins in quantity needs to have some other kind of serious anti-fraud measures.

What’s that? You’re planning on using bill scanners to read the bills right then and there? Standard ATMs don’t come equipped with those.

Have you deposited anything at an ATM in the past 3 years? Those really are standard now.

Bernard Guerrero March 27, 2013 at 1:49 pm

Way to bypass capital controls?

Foxbox March 28, 2013 at 1:33 am

Ciprus doesn`t have foxbox?
http://www.foxbox.lt/?page_id=1456
Intengrate into foxbox btc and here we go :D In Lithuania ;)

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