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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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July 26, 2021

Do You Want Bitcoin with Your Coffee?

Seeing the "Buy BitcoinOff-site link here" sign in the window stopped me in my tracks on my quick run into the convenience store around the corner. Bitcoin is for sale where I get coffee and candy, too? While I don't go to convenience stores often, I am used to seeing the cash dispensing ATM and Lotto kiosks. It never occurred to me that I could buy Bitcoin from a kiosk—just like getting money from an ATM.

My perception of most cryptocurrenciesOff-site link has been that they are laden with mystery and in the hands of an elite few. It has to be mined electronically, it isn't tethered to any payments safety policy, its value is wildly volatile, it's dependent on a convoluted password that cannot be recovered if lost (think about recent headlines about those who lost their passwordsOff-site link and can't retrieve millions in languishing Bitcoins), and its anonymous nature lends itself to perhaps nefarious activities.

A bit of history: Bitcoin was launched in 2009 by an anonymous source. It was the first blockchain-based cryptocurrency and remains the most popular, valued today at more than $600 billion. Currently, there are more than 10,000 publicly traded cryptocurrencies valued at more than $1.29 trillionOff-site link as of July 22, 2021. From July 2020 to July 2021, the number of U.S. Bitcoin crypto kiosks increased from 6,445 to 19,545Off-site link, a huge jump in just one year. For more details about Bitcoin, read this excellent overview Adobe PDF file format by my colleague Doug King.

I tend to be risk-averse, so buying cryptocurrencies wouldn't be something I would sink significant money into. I wonder, though, how many people are buying Bitcoin to have made it worthwhile for the store to give up premium space to house the machine? Has Bitcoin become so mainstream that people purchase it like a lottery ticket? Are these machines as easy to operate as an ATM?

I later brought my informal payments research partner (also known as my husband) to the store to make a trial Bitcoin purchase. As he tapped the screen to make his selections, I snapped photos to track his progress. The machine was fairly easy to operate: he keyed in his cell phone number, received a text message with a code to validate on the kiosk, created a PIN, entered his birth date, read the terms and agreed to them, selected the dollar amount he wanted to buy from three tiers (a minimum of $5 up to $499; $500 to $1,999; and $2,000 to $15,000), inserted a $5 bill (they take cash only for smaller purchases), and received a printed QR code and password to use for later redemption, with an option for an emailed receipt. The cost of the convenience was 20 percent of the value purchased (the percentage decreases to 15 percent in the next higher tier, and so on).

We paid $5 to learn about it (0.00013032 was the amount of Bitcoin it purchased). Soon after, my husband lost his ticket. Fortunately, he found it and is trying to figure out how much his investment is worth. Maybe it will be enough to buy a cup of coffee at our next visit.