ATM builder seeks transformation of money transfer business with bitcoin
By RILEY SNYDER Los Angeles Times
Hami Oerner and Itzik Lerner, right, learn how to use a new bitcoin ATM machine at Hacker Dojo in Mountain View, Calif., in April. Robocoin is California’s first permanent 24/7 bitcoin ATM machine. (Gary Reyes/Bay Area News Group/MCT)
LAS VEGAS — In a makeshift office — a living room crowded with desks, monitors and a beanbag chair — programmers are hacking away on computers, aiming to make their mark on the multibillion-dollar financial services industry.
This condo on the 19th floor of a high-rise in the heart of downtown is the headquarters of Robocoin, the maker of automated teller machines that turn bitcoins, the growing virtual currency, into hard cash. The bitcoin ATMs, in the view of the startup’s founder, would challenge traditional money transfer services such as Western Union.
“I regard the financial system in general and the players in that as our competitor,” said John Russell, the 25-year-old founder of Robocoin. “Western Union is on our cross hairs big-time. ... The process of wire transfers, international wire transfers — we’re going to smash them, we’re going to crush them. We’re going to totally disrupt that environment, and that’s what I’m most excited about.”
Since it was created four years ago, the bitcoin virtual currency has primarily existed online, its use limited mostly to shopping or speculators trading it like a stock.
But with Robocoin ATMs — there are now 30 around the world — consumers can buy bitcoins or exchange them for dollars or euros, creating an easy way for bitcoin owners to get cash to buy products and services.
(Lamassu Bitcoin Ventures, based in Manchester, N.H., has developed the Bitcoin Machine, which accepts cash and converts it to bitcoins.)
With the underlying infrastructure now mostly in place, investors and analysts say bitcoin ATM expansion is imminent — 600 or more machines are projected to be installed in the next six months, and investors are ready to put millions of dollars into the few companies that produce and sell the ATMs.
Though the technology behind bitcoins and other digital currencies is complex and poorly understood, most mainstream bitcoin companies are working to make the experience simpler. Users can go to a website like Coinbase or to a bitcoin ATM, create an account and buy bitcoins with dollars.
Bitcoin ATMs allow users to buy bitcoins with cash and sell bitcoins for cash, which is attractive for users trying to stay anonymous. They compete against a cottage industry of brokers who operate bitcoin exchanges.
Russell, who founded the company with his brother Mark Russell, was inspired to start Robocoin after the two found that going through a broker was highly inefficient.
“One of my favorite quotes is ‘Never send a human to do a machine’s job,’” from the 1999 science fiction film “The Matrix,” he said,
John Russell first learned about bitcoins as a member of an undergraduate libertarian group at the University of Nevada, Reno. There, he focused largely on libertarian-centered activism, founding a group focused on dismantling the student government and filming midnight arrests of drunk freshmen in the hopes of catching potential police abuses.
Despite his political views, Russell said bitcoin use isn’t only for tech nerds or fans of Ayn Rand.
“Bitcoin is apolitical,” he said. “It’s a (software) protocol, it’s no different than HTTP. How you want to interpret that or the implications of that are for the political scientists and the academics among the community.”
The federal government’s highly publicized raid on the online illegal drug market Silk Road in October 2013 was for many outside the bitcoin world the first glimpse into the currency’s potential to circumvent traditional financial institutions. Investigators estimated that nearly $1.2 billion worth of transactions were conducted on Silk Road, entirely in bitcoins.
The current market cap for bitcoin based on current prices is around $7.8 billion in U.S. dollars, with more than 2,700 transactions per hour.