Bitcoin and cash: ‘Like peanut butter and jelly’
“This is what we realized very quickly when we launched the first bitcoin ATM, when we built our wallet: that ultimately, where bitcoin has the biggest opportunity to win — and why we blend so well with the ATM and kiosk industry — is that bitcoin and cash are like peanut butter and jelly.”
Robocoin CEO Jordan Kelley was looking to exploit the bitcoin opportunity to the fullest, and he found the perfect setting for this mission right in his home town of Las Vegas during the recent ATMIA U.S. 2015 conference. There, he explained to his audience how they can tap into the new Robocoin Wallet SDK (software development kit) to begin offering bitcoin transactions. And most importantly, that they can do so with the knowledge that they’ve got KYC and AML covered.
Kelley began his presentation with a brief recap of Robocoin, which rolled out its first bitcoin ATM just a little more than two years ago.
“One of our co-founders, Mark, was meeting guys in coffee shops and buying and selling bitcoin for a big bag of cash — maybe $5,000–10,000,” Kelley said. “But demand quickly outstripped him. … And he’s like, ‘Wow, I can’t really scale my business. I’m just a guy in Las Vegas selling bitcoin in Starbucks.”
So, Kelley said, Mark called his brother John, who was completing his Master’s degree in computer science, and asked him to build a bitcoin ATM. Which he did.
As in so many tech ventures, the three co-founders started out in a family garage, where they worked to turn an off-the-shelf financial services kiosk from a company called Turnkey Kiosks into their first bitcoin ATM. Then they went to work filing patents — for the machine itself, and for the system and method of buying bitcoin with a kiosk.
A group of bitcoin dealers in Vancouver, British Columbia, got wind of the machine, leading to the installation of Canada’s first-ever bitcoin ATM in a Vancouver coffee shop.
The machine completed C$1 million in Canadian dollars ($793,800) in transactions within its first month of operation, charging a transaction fee of 5 percent. (Today on average, a Robocoin machine averages $26,000 per month in transaction value, generates about $1,300 per month in fee revenue, and averages about 115 unique transactions, Kelley said.)
Making the process ‘human-friendly’
But as they sat in the coffee shop and watched “bitcoiniacs” flock to the new machine, Kelley said, he and his partners began to see that there was work yet to be done if they were to achieve their company’s founding objective — “to make the acquisition, the storage and the use of bitcoin human-friendly.”
Clearly, attaining the objective of fluid cash-to-bitcoin and bitcoin-to-cash exchange required more than a physical device to accept and dispense money. It also required a medium that could accommodate a seamless process. A Robocoin wallet.
” … [W]hich as of right now is something along the lines of a global banking platform, if you will,” Kelley said. “The customer can take their cash, they can take it to a machine, similar to the way you would at a Bank of America (ATM), and you can turn that cash into bitcoin. That bitcoin is directly deposited into your Robocoin wallet. So now we’re in the wealth storage business, and we’re doing it really, really well. We’ve built an unbelievably secure wallet that adopts best practices in technology.” And they patented it, too.
The bitcoin user can acquire a Robocoin Wallet in one of two ways — online at wallet.robocoin, or at the machine using the following process:
- customer enters mobile number and receives verification text from Robocoin;
- customer creates and verifies a personal identification number;
- using the front-facing camera on the machine, the customer takes two photos — one of a valid official ID and one of his face.
This information is processed and verified by both human and digital means, allowing Robocoin to fulfill know-your-customer requirements and also comply with local anti money-laundering regulations, Kelley said.
Enter the traditional ATM
Kelley presented the Robocoin Wallet as a high-value ancillary money transfer service that ATM operators can provide to their customers — and provide with ease, thanks to a new software development kit offered at no cost by Robocoin.
“Right now the world’s cash infrastructures — ATMs, kiosks and cash tellers — are searching for margin-expanding opportunities, increased foot traffic and more useful features to offer their customers,” Kelley said. “[If I’m a deployer], I wouldn’t mind if my ATM had a bit of a higher margin and I didn’t have to expend a whole lot of energy or effort to execute that. …
“I’d be really stoked if I had an extra 115 or so customers coming in on a monthly basis. And delivering more unique products means more engagement, more use, more activity, more money.”
The SDK allows to claim a piece of the $681 billion in remittances made annually by three billion unbanked and underbanked adults around the world, Kelley said.
He likened the solution to “Android for ATMs,” a product that adds bitcoin remittance capability to an ATM with a few lines of code. This accomplished, customers are then able to buy and sell bitcoin, send remittances and receive cash — all at the ATM.
Great. But what about ATMs that only dispense cash and kiosks that only take it in? And what if the device doesn’t have a camera? Online wallet enrollment takes care of the latter, Kelley said.
As for limits to functionality, kiosks in remitter markets such as the U.S., and ATMs in receiver markets such as Mexico, India and the Philippines would be ideally suited to offer the value-added service, he said.
“We’re really sitting in a beautiful position right now to create a decentralized network utilizing the world’s cash ATMs, kiosks and tellers, to connect them all to a network that allows their customers to benefit,” Kelley said. “We have the ability to create a global bank, a global banking infrastructure overnight.”
photo courtesy katheirne hitt | flickr