What are bitcoin ATMs doing in small bodegas throughout New York City?
It’s well known that digital currencies like bitcoin can be used for illicit things such as money laundering. That is, it seems to be common knowledge to everyone except the operators of the small grocery stores that are allowing bitcoin, the original digital currency, into their places of business.
But that may be changing.
Bitcoin ATMs look similar to their US dollar cousins — and are in fact usually placed right next to them.
The way they work is simple: You put cash into them and you either get a paper receipt showing how much bitcoin you own along with a code that you use to retrieve your booty or the transaction is recorded via a “wallet” app on your smartphone.
Some bitcoin ATMs even allow you to withdraw US dollars from your cryptocurrency wallet — although most of the Big Apple bitcoin ATMs are one-way streets: They only allow deposits.
Unlike a financial transaction at a bank or a regular bank ATM, your bitcoin activity can’t be traced, so no one will know how your bitcoin is spent or where it was withdrawn.
Sure, some restraints are being put into place, but largely the transaction is between you and the person who gets the bitcoin.
And that’s exactly what makes some people like this form of currency so much. Large transactions — especially international movements of money — can escape government regulation.
This freedom is also what is making some governments — including the one in Washington — so nervous.
Mark Williams, a finance professor at Boston University, isn’t a fan of bitcoin and the other digital currencies.
“It’s another form of a laundromat,” Williams told me earlier this week. “You come in with a suitcase [full of money) and you come out with a digital representation. It supports nefarious activities.”
A few legit companies allow you to purchase products using bitcoin. But don’t try to buy a baloney sandwich at your neighborhood deli with bitcoin — even if the deli has a bitcoin ATM in the corner.
In fact, it’s clear from some phone calls and visits I made over the past two weeks that most of the owners and workers in those stores don’t know what bitcoin is all about.
Or, at least that’s what they are claiming.
One worker in a bodega on Courtlandt Avenue in the Bronx said the store had a bitcoin ATM, but he didn’t know much about it. “We don’t talk [to the customers]. They use it, they leave,” he told me by phone.
He said some of the people he recognized from the neighborhood, which means that others must be coming from elsewhere to use the bitcoin ATMs.
An employee at an Upper West Side deli said this about the bitcoin ATM traffic in his place: “I have no idea what they are doing on the machine. I don’t even know how to use it.”
That was the consensus of the people I spoke with. Sure, folks with family in financially struggling countries, say, in Venezuela, could be sending cash back home — but it is impossible to tell.
A company called Cottonwood Vending owns more than 40 Big Apple bitcoin ATMs.
Someone from the company explained the basic process to me before I identified myself as a reporter. When, as instructed, I e-mailed for more information, nobody called me back.
Obviously, the stores get paid for placing the machines at their locations. Someone said the going rate is around $500 a month, although I couldn’t confirm that.
The ATMs take up so little room that I can see why store owners would go for that. But that’s only if the bitcoin machines don’t cause any problems.
The money isn’t worth it if the machines bring scrutiny — and recently they have done just that.
I’m told by sources that federal investigators have been paying special attention to stores with bitcoin ATMs.
Why? First, there’s the possibility of illegal activities. But even beyond that, these bitcoin ATMs — which take a hefty fee for deposits, somewhere around 6 percent — are good resources for people who don’t have bank accounts.
And people who don’t have bank accounts are often in this country illegally. In the age of Trump, these ATMs “bring too much heat,” said an investigator.
I recently visited one New York City bodega that at one time had a bitcoin ATM — but it was gone.
“Too much trouble,” said the guy behind the counter. He wouldn’t elaborate.
Bitcoin ATMs have recently disappeared from other NYC stores, too, I’m told.
You’ve probably read a lot about bitcoin lately. Its value has increased roughly 240 percent over the past year, to $2,266.62 as of Wednesday.
I’m going to get nasty reactions for saying this, but I believe bitcoin is a confidence game. But then again, so too are all the currencies of the world.
The US dollar has a value because people who use it are confident that Washington will be there to back up its currency if something goes wrong.
The same is true for the Japanese and their yen, the Europeans and their euro, and the Chinese and their yuan.
But bitcoin and other digital currencies have no government backing them. If bitcoins collapse in price, who ya’ gonna call?
Well, don’t call the bodega owners. They don’t know anything.