How and why bitcoin ATMs help the underbanked

One topic that comes up at times with cryptocurrency is whether it will see widespread adoption among the underbanked. Since usually it requires some form of digital payment to purchase bitcoin, this could hold back the market for unbanked. However, bitcoin ATMs are providing a key service for this group.

Since bitcoin ATMs often are cash only, they provide a simple tool for the unbanked and underbanked to use with cash payments. This is actually playing out when one looks at the data of countries that use a lot of cash and the number of bitcoin ATMs.

Tradingbrowser.com, a crypto trading guide and exchange reviews company, recently published a study that took a look at bitcoin ATMs and found that countries with high numbers of unbanked populations also had larger numbers cryptocurrency adoption and bitcoin ATMs.

For example, 42% of Romania's population is unbanked, but more than 300,000 residents own cryptocurrency and there are 156 bitcoin ATMs within the country. In addition, 9% of all payments in Romania are made with cash. In addition, Bulgaria, which has 74% cash payments has 33 bitcoin ATMs.

However, the opposite was true in countries with low rates of cash payment, such as Sweden, where only 1% of all transactions are made in cash and the country has no bitcoin ATMs installed.

This trend doesn't follow every country, as Hong Kong has 147 bitcoin ATMs and only does 4% of payments in cash.

"The rise of bitcoin ATMs and cash payments as key drivers of adoption is a testament to the need for accessible and user-friendly infrastructure that can facilitate the seamless integration of cryptocurrency into everyday transactions," a spokesperson for Tradingbrowser said in an email. "It is worth noting that the high rates of unbanked populations in certain countries are a major contributing factor to cryptocurrency adoption rates. This highlights the need for innovative and inclusive financial services that can cater to underserved populations and empower them with greater financial autonomy and flexibility."

However, the data raises a number of questions, such as what other factors could be driving bitcoin and bitcoin ATM adoption in countries with large numbers of unbanked citizens? What role do regulations play? To learn more about this, ATM Marketplace reached out to Daniel Larsson, senior editor at Tradingbrowser.com in an email interview.

Q. The data shows unbanked countries having a higher number of bitcoin ATMs. Why do you think this is the case?

A. We think it's a lack of traditional banking infrastructure and the need for alternative financial solutions that have pushed the installation of these Bitcoin ATMs in highly unbanked countries. For nations that mostly depend on cash, Bitcoin ATMs seem to provide a more accessible and user-friendly way of transacting with cryptocurrencies.

Q. How does bitcoin benefit the underbanked?

A. Since blockchain is a decentralized network, unbanked people do not have to go through a centralized system such as a bank in order to transfer value in a secure way. Bitcoin transactions are also much faster and in many ways cheaper than traditional banking transactions, making it an easier way to conduct financial transactions.

Q.Do regulations play a role here? In other words, are underbanked countries softer on crypto regulations?

A. From our point of view, regulations may play a role in the adoption of cryptocurrency in unbanked countries since many of these nations have fewer regulations or more permissive regulations regarding blockchain and cryptocurrency. However, this depends on the nation as we've also seen highly unbanked countries with more strict regulations toward cryptocurrency to avoid fraud and money laundering.

Q.Do you see bitcoin ATMs growing in underbanked countries? Why or why not?

A. Yes, we do. If the trend persists and there are no barriers put in place by governments there should be no reason for these bitcoin ATMs to keep providing financial support in unbanked nations. Also, as more people become aware of these ATMs, the demand is likely to increase. Additionally, as the infrastructure for traditional banking in regions with highly unbanked populations does not change overnight we can speculate that in the growth of bitcoin ATMs will continue in the near term.