VANCOUVER, B.C. (10/31/13)--The world's first Bitcoin ATM went live Tuesday in Vancouver, Canada, exchanging cash for anonymous virtual currency through a palm-scan security system. Meanwhile, experts warn that the virtual currency has risks.
The automated teller is set up in a Vancouver coffee shop. It is the first of five ATMs bought by the Canadian firm Bitcoiniacs from Nevada-based producer Robocoin (The Canadian Press Oct. 29).
The machines exchange Bitcoins for Canadian dollars through Canada's VirtEx exchange. The transactions themselves will be anonymous.
New users create a virtual wallet by scanning their palm. Users who already have a Bitcoin wallet select how much money they want to spend, insert the cash, and scan a bar code to have Bitcoins transferred.
Transfers are made through a peer-to-peer network and are posted on a public ledger available to those who use the currency.
In August, Tradehill, an exchange for Bitcoin, moved its customer accounts to $3.8 million Internet Archive FCU, an institution in New Brunswick, N.J., recently opened by Internet Archive (Bloomberg Aug. 28).
Issues with the security of Bitcoin have surfaced, experts said. The anonymous nature of Bitcoin and hacker knowledge make it difficult for law enforcement agencies to track fraud involving the cyber currency (CNBC Sept. 16). Bitcoins are not subject to anti-money-laundering laws.
Also, Bitcoins are not insured as are deposits in most financial institution accounts, nor are they covered for fraud protection, as most credit and debit cards are.
Wallets kept on a centralized cloud-based drive are more vulnerable than those on a local drive, according to Alex Ferrara, a partner at Bessemer Venture Partners.
Experts have been unable to determine how much hackers have penetrated the Bitcoin network, but anecdotal evidence suggests it will grow with the cybercurrency's growing acceptance, CNBC said.