A Visit to the UK's First Bitcoin ATM

A Bitcoin ATM launched this week in a café-bar in London’s hip Shoreditch district. It's been up on an interior wall of the Old Shoreditch Station for the past couple of weeks, but quietly went live just a couple of days ago.

At least according to interactive maps Coin ATM Radar and Bitcoin ATM Map, this is the country's first Bitcoin ATM. While the machines have been slowly spreading across Canada, the US, and some parts of Europe since the launch of the world's first in Vancouver last October, British bitcoiners have until now been limited to trading their bitcoins in the soon-to-be old-fashioned way.

The machine is operated by new startup Future Coins. I grabbed a coffee with 26-year-old founder Joel Raziel to find out more about bringing the tech to the UK and trading actual paper money for bitcoins.

The Old Shoreditch Station sits at the junction of Shoreditch High Street and Old Street, and became the first café in the UK to accept payment in the cryptocurrency last July. At nine o’ clock on Wednesday morning, a fashionable young crowd were getting coffee, most of them seemingly oblivious to the shiny box on the café’s back wall. I headed straight over, and Raziel talked me through the process of buying bitcoins.

The machine is from Icelandic manufacturer Lamassu and looks decidedly Apple-esque with its shiny white casing and simple interface. Raziel said he went with that model for its ease of use. “The Lamassu machine is quite simple; it sells Bitcoin and accepts sterling, whereas the more complex machines such as Robocoin, they have two functions; they sell and buy bitcoins,” he said. A Robocoin machine is also expected to launch in London soon.

The screen greets you with a “Hello” and a “start” button, and the whole process of buying bitcoins takes a matter of minutes at most. Raziel invited me to try it out using his own Bitcoin wallet on his smartphone and a crisp fiver.

As the machine claims, it's really just a matter of three steps: You press start, hold up your Bitcoin wallet QR code to the reader, then insert cash into the slot and wait for the transaction to go through; no proof of ID required. After he’d asked for the machine to operate in English, Raziel said, it initially waved customers off with a “Cheerio!” At his request, that’s now been changed to “Bye!”

Raziel unlocked the machine for me so I could take a look inside (though, perhaps wisely, he refused to let me take a photo owing to security concerns). Without giving too much away, the inner workings looked remarkably simple, the main body of the machine unsurprisingly consisting of a hefty-looking locked strongbox to store the cash entered into it. Lamassu machines can accept most notes, but this one’s been tuned for sterling only. Raziel said it could also be adapted to dispense litecoins.

Calling it a Bitcoin ATM is a bit of a misnomer; it’s more like a Bitcoin vending machine. Put money in, get bitcoins out. The system operates through BitPay and charges eight percent commission, a rate that has disgruntled some commenters on Reddit and CoinDesk.

The reason for that, Raziel explained, was to minimise his risk in the face of Bitcoin’s unpredictable value fluctuations. Currently, he has to purchase Bitcoin and put them in a wallet to resell through the machine. “With the current model we could make a considerable loss,” he said. “If we were to load the machine with, say, £1000 worth of bitcoins and they dropped in value by 40 percent, we’d have to turn over quite a lot to make that back.” An upcoming software update should allow him to link the machine directly to BitPay or BitStamp, at which point he hopes to lower the commission to around four or five percent.

I asked about security—at less than half a metre tall, I suggested it looked as if I could just pick up the Lamassu and walk off with it. “The shell itself, the casing is made of I think 3mm steel, and inside that is a very very robust strongbox, which is used for all sorts of vending machines—it’s very very solid,” he said. “The machine is also alarmed and the venue has several CCTV cameras, along with it being heavily bolted to the wall. I suppose it would be quite difficult but I applaud anyone who tries.”

The digital side of security is down to Lamassu’s programming. “They’ve been around for over a year now and I haven’t heard or read about any complaints over their security,” Raziel added.

When I attempted to research Future Coins ahead of meeting Raziel, I was quite surprised at the lack of information I could find on the company. They don’t have a website outside a Facebook page, and have about 30 Twitter followers as of this morning (which is twice as many as yesterday). It’s perhaps no surprise, then, that the ATM launched with little fanfare. “Well, Future Coins was initially launched purely to be a foundation of the Bitcoin venture, to be the financial side of things, the taxable identity, so it’s quite a new company,” Raziel said. “We only launched last week.”

Originally from Oxford, Raziel has a couple of other companies—in the entirely different areas of vitamins and property—and Future Coins is his first “technological venture.” He said he wasn’t particularly quick to join the Bitcoin game and doesn’t have a secret treasure trove of the cryptocurrency from the early days (“I’m probably the last person in the country to jump on this bandwagon!”) but was inspired to set it up after seeing a Bitcoin ATM at a conference and learning that there weren’t yet any in London.

Since he purchased the ATM a few months ago, the process has seen a few ups and downs as Bitcoin continues to mature. Fear struck him when, as the machine was on the way, Apple blocked the last remaining Bitcoin app from their app store. “I thought, hold on a second, I’m installing an ATM in a cafe predominantly used by designers. I’d give you £50 if you could find one PC or one Android phone in this venue,” he said. “That really scared me. I thought, Are people going to have to print out QR codes and bring them in? It nearly becomes as complicated as buying Bitcoins themselves, which we all know is really difficult…” But that problem can be circumvented, he suggested, by accessing Blockchain.info through your browser rather than the app.

Then there was some good news a couple of days ago, when the UK’s tax authority announced a new brief for Bitcoin, which essentially treats it as an actual currency so that Bitcoin transactions are no longer subject to VAT charges. “Beautifully, we were actually installing the machine when I took a coffee break, sat down, and discovered an article on HMRC’s revelation on their approach to Bitcoin, so it couldn’t have come at a better time,” said  Raziel. “It made the very strenuous task of getting it onto the wall a pleasure at that point.”

In the future, he plans to expand Future Coins into different directions and has some initial ideas about online Bitcoin sales platforms. Meanwhile, a second machine is scheduled to appear in Soho in the next couple of months.