Who’s afraid of crypto ATMs?

With help from Derek Robertson

It was Google Maps that sparked my interest in Bitcoin ATMs.

In one of my run-of-the-mill conversations about cryptocurrency and California — where I cover Sacramento’s tech policy beat — someone told me about crypto kiosks, where you could buy Bitcoin with cash and often total anonymity. You didn’t need a bank account and you didn’t need to make a profile on an online exchange. You could just go to a gas station and buy crypto.

It seemed like a strange way to buy Bitcoin, so I turned to Google to see where I could find such machines. I started with Los Angeles, where I lived almost a decade ago. My curiosity grew when I saw that the red pins flagging kiosk locations appeared to cluster in poor South Central neighborhoods. Still, I figured that didn’t tell me everything: In L.A., you can’t always judge a street by its neighborhood.

But when I clicked on the flags to zoom in on the street view, most of them showed photos of vape stores, check-cashing spots and gas stations in down-at-heel, cracked-plaster strip malls.

Who bought Bitcoin in these spots? And why?

It turns out I wasn’t the only person baffled and intrigued by these machines, known shorthand as BTMs (B is for Bitcoin).

In talking to companies that operate BTM machines, to regulators and to consumer advocates, BTMs started to feel emblematic of the big, passionate debate over the integrity of crypto itself.

• To industry players and Bitcoin fans, BTMs represent cryptocurrency’s “democratization” of finance. It’d be a pity to regulate them too aggressively because that could lock people out of investing in the future of money and make crypto markets model Wall Street elitism.

• To consumer advocates, they’re predatory: marketing volatile digital currencies to people without money to spare or the time to figure out whether they could lose their shirts buying Bitcoin. The proliferation of BTMs in poor neighborhoods doesn’t boost their confidence —instead it makes the operators look like they’re following the payday lender’s playbook.

• To regulators, they’re a nuanced policy problem and often a law enforcement headache. Officials don’t like to quash a business model based on bad actors — especially when they’re still trying to catch up with the ins and outs of the cryptocurrency industry. But BTMs have already made it all too easy for criminals and sex and drug traffickers to hide cash transaction at a time when law enforcers are already having to play whack-a-mole with big money laundering and other fraud schemes. In fact, the U.S. Justice Department and state attorneys general have had to shutter under-the-radar BTM networks that made a point of appealing directly to criminals.

Right now BTMs are mostly an American phenomenon, although El Salvador’s Bitcoin-loving president is a “,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://twitter.com/nayibbukele/status/1405299636013764610″,”_id”:”00000181-d547-d066-a3bb-df5769aa0000″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769aa0001″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”El Salvador’s Bitcoin-loving president is a big supporter. Earlier this year, two countries moved to shutter their machines completely — Singapore and the U.K.

Now Bitcoin’s recent crash and the turmoil across the markets could redraw the battle lines of crypto policy — and drive regulators to take a heavier hand.

Read the whole story here.

Wall Street might have escaped the worst“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.nytimes.com/2022/07/05/business/economy/wall-st-cryptocurrency-prices.html”,”_id”:”00000181-d547-d066-a3bb-df5769ae0000″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769ae0001″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”escaped the worst of the crypto market’s crash. But what about the public companies who were most bullish on it?

Take Tesla, led by Mr. “To the moon“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.urbandictionary.com/define.php?term=to%20the%20moon”,”_id”:”00000181-d547-d066-a3bb-df5769ae0002″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769ae0003″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”To the moon” himself Elon Musk, which has taken more than $650 million“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://blockworks.co/bitcoin-burdens-balance-sheets-of-tesla-block-microstrategy-and-more/”,”_id”:”00000181-d547-d066-a3bb-df5769ae0004″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769ae0005″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”more than $650 million in losses on Bitcoin alone. But that’s not even close to being the biggest hit a publicly traded company has taken: Data intelligence company MicroStrategy has lost nearly $1.5 billion to Bitcoin depreciation, including a more than $200 million Bitcoin-backed loan it took out that’s now in danger of a margin call, according to industry news site Blockworks. (The company continues to buy the dip“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://blockworks.co/microstrategy-buys-the-bitcoin-dip-draws-criticism-from-analysts/”,”_id”:”00000181-d547-d066-a3bb-df5769ae0006″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769ae0007″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”buy the dip.)

There’s a reason the majority of the companies with big Bitcoin positions are those with direct ties to the crypto industry: to believe in crypto’s enduring value as an asset necessarily entails a belief, and a personal stake, in its actual adoption. Hence the major adopters from outside the industry being tech gadflies like Musk and “Web5” purveyor“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://cointelegraph.com/news/jack-dorsey-is-building-web5-powered-by-bitcoin”,”_id”:”00000181-d547-d066-a3bb-df5769ae0008″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769ae0009″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”“Web5” purveyor Jack Dorsey — whose Block (formerly Square) has also lost a solid chunk of change“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://finance.yahoo.com/news/bitcoin-losses-piling-companies-added-140422557.html”,”_id”:”00000181-d547-d066-a3bb-df5769af0000″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769af0001″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”also lost a solid chunk of change amid the crash. — Derek Robertson

“Web3 gaming” has drawn a lot of bad press lately, most notably in a string of hacks that left players of “play-to-earn” games like Axie Infinity“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://cointelegraph.com/news/the-aftermath-of-axie-infinity-s-650m-ronin-bridge-hack”,”_id”:”00000181-d547-d066-a3bb-df5769b00000″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b00001″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”like Axie Infinity bereft of the crypto they earned through gameplay.

That makes it slightly awkward timing for the announcement of a near-impossible lift even under the most favorable circumstances: A new, independently manufactured and developed home video game console. Meet the “Polium One,” which its creators describe as the“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://medium.com/@Polium_/polium-one-the-worlds-first-multi-chain-gaming-console-5052a44594c8″,”_id”:”00000181-d547-d066-a3bb-df5769b00002″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b00003″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”its creators describe as the “world’s first multi-chain gaming console.”

From a pure business perspective, it makes sense that entrepreneurs like the (somewhat mysterious, apparently four-person“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.videogameschronicle.com/news/the-first-nft-games-console-has-been-announced/”,”_id”:”00000181-d547-d066-a3bb-df5769b00004″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b00005″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”apparently four-person) group behind Polium would want to merge Web3 with gaming — an industry that raked in roughly $200 billion“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.yahoo.com/now/gaming-market-size-worth-usd-113000927.html”,”_id”:”00000181-d547-d066-a3bb-df5769b00006″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b00007″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”roughly $200 billion globally in 2021, a number that’s only growing). Video games like Roblox and Minecraft have already served as proofs of concept for the metaverse, and more ambitious projects like Star Atlas“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://staratlas.com/”,”_id”:”00000181-d547-d066-a3bb-df5769b00008″,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b00009″,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”like Star Atlas have promised to wed NFTs and blockchain technology to mainstream video games, whether users want them or not“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://venturebeat.com/2022/05/15/why-gamers-hate-nfts-and-what-could-change-their-minds/”,”_id”:”00000181-d547-d066-a3bb-df5769b0000a”,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b0000b”,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”want them or not.

But history is littered with failed attempts by outsiders to break into the capital-intense gaming industry, from the Nokia N-Gage“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.newegg.com/insider/the-not-quite-greatness-of-nokias-n-gage/”,”_id”:”00000181-d547-d066-a3bb-df5769b0000c”,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b0000d”,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”Nokia N-Gage to the Kickstarter cautionary tale of the Ouya“,”link”:{“target”:”NEW”,”attributes”:[],”url”:”https://www.theverge.com/2013/4/4/4180242/ouya-review”,”_id”:”00000181-d547-d066-a3bb-df5769b0000e”,”_type”:”33ac701a-72c1-316a-a3a5-13918cf384df”},”_id”:”00000181-d547-d066-a3bb-df5769b0000f”,”_type”:”02ec1f82-5e56-3b8c-af6e-6fc7c8772266″}”the Ouya. As for the Polium One, things aren’t off to a promising start: The company has already published a defensive Twitter…