They offer cryptocurrency — a decentralized, digital currency that has no government backing or regulation. Its value is volatile, fluctuating like a stock. It relies primarily on how much investors will pay and speculation on its future worth.
In the past year, dozens of cryptocurrency ATMs have gone live throughout the region to make it more convenient for people to buy and sell digital money.
Operators such as American Crypto, Bitcoin Depot, Bitcoin of America, CoinFlip, Freedom Gateway, GetCoins, RockItCoin and others have installed machines in businesses, mostly convenience stores. The ATMs also can be found inside Giant Eagle stores, Ross Park Mall and Pittsburgh International Airport. Others can be found across Westmoreland County and the Alle-Kiski Valley, in Downtown Pittsburgh and Lawrenceville, in Bethel Park and Mt. Lebanon.
A corporate competitor such as Coinstar Asset Holdings of Bellevue, Wash., has had crypto ATMs in the Pittsburgh region since 2019. Atlanta-based Bitcoin Depot has its machines scattered in about 100 businesses across the state. Nationwide, there are about 30,200 crypto ATMs, according to ATM Marketplace.
"We're expanding almost every week," said Neil Bergquist, chief executive of Coinme, the largest licensed cryptocurrency ATM network in the nation. The company operates in 48 states, including Pennsylvania, through a system of ATMs and Coinstar kiosks — such as those located at Giant Eagle stores to convert change into cash, gift cards and, now, cryptocurrency.
O'Hara-based Giant Eagle turned to Coinstar when it introduced crypto ATMs in 2019, including at a store in North Huntingdon.
"The majority of the country is crypto curious," said Bergquist, who estimates about 15% of Americans own digital currency.
Some 86% of Americans have heard about cryptocurrencies, according to the Pew Research Center. But estimates of how many Americans have put their money into the digital currency — and how many people truly understand it — vary widely.
About 21 million Americans — about 14% of the nation's adults — own a piece of the cryptocurrency world, according to Gemini, a cryptocurrency exchange regulated by the New York State Department of Financial Services. Other surveys put the number at closer to 60 million. Either way, more Americans in the past two years have been investing in the crypto market, which consists of about 17,000 options across more than 400 exchanges and holds a worldwide value of $1.8 trillion. That followed a crash of more than $500 billion on Friday alone after Russia said it might ban cryptocurrencies. China did the same last fall.
In all, the cryptocurrency market has lost $1.2 trillion in value since Nov. 8, when it topped $3 trillion, according to Bloomberg.
That plays into longstanding warnings from skeptics such as Steve H. Hanke, a professor of applied economics at Johns Hopkins University in Baltimore.
Investing in cryptocurrency does not make sense for any size of transaction, he said.
"It's very similar to going to Vegas and rolling the dice," said Hanke, one of the world's leading experts on hyperinflation. Without a balance sheet and assets to generate cash flow, "the highly speculative asset has a fundamental value of zero."
Whales, the name given to investors who own large amounts of cryptocurrency, "manipulate the market," Hanke said.
On Friday alone, some $700 million worth of cryptocurrency was liquidated worldwide.
Crypto's rise and fall
Cryptocurrency rose from the fallout of the 2008 global economic crisis.
At a time when the jobless and disenfranchised protested established financial systems, this new currency promised a digital form of money that was bulletproof to bank regulations and government control.
The currency — a creation of digital code, though some physical coins have been developed — is based on blockchain technology that uses a worldwide computer network to store and update transactions, though not names, addresses or other identifying information.
As the Los Angeles Times recently reported, "each bitcoin started as the payment some person awarded him or herself for doing the computer-intensive cryptographic work required to record transactions into the blockchain (an activity called 'mining')."
Blockchain technology, in essence, etches a digital record that is publicly accessible and is touted as eliminating the need for a secretive, centralized system. Cryptography is supposed to make it impossible for digital currency to be counterfeited or spent more than once. Like cash, though, it can be lost or stolen.
In 2021, thieves stole a record $14 billion in cryptocurrency worldwide, reported Chainalysis. Those losses — driven by theft and scams — were up about 80% from 2020, according to the Singapore-based blockchain analytics firm.
Bitcoin, the most popular cryptocurrency, was created in 2009 by anonymous inventors. In 2010, as Bitcoin's value was rising from 9 cents to $40, a Florida man traded 10,000 units for two pizzas. That would be worth about $384 million today.
On Friday, the value of one Bitcoin fell to below $40,000 — its lowest level in six months.
It still remains the shining star of digital currencies, accounting for nearly 40% of the market, according to CoinMarketCap. Bitcoin had a record value of more than $69,000 in November. At the time, some analysts predicted it could reach a $100,000 valuation.
The next most-valued cryptocurrency, Ethereum, is worth less than $3,000 — down from a high of nearly $5,000 just 10 weeks ago. It holds just less than 20% of the market. The other cryptocurrencies, some worth fractions of pennies, account for 3% of the market.
"Most of them will not survive," said Kenneth Dupre, a former money manager who is director of business data analytics at Saint Vincent College near Latrobe.
Hitting Main Street
Green Tree-based Fort Pitt Capital Group gets questions about investing in cryptocurrency on a daily basis, said Carter Henderson, a portfolio manager.
The challenge for investors is the volatility, Henderson said. The rise and sudden fall in the value of Bitcoin is one example.
For those reasons, Henderson said he advises clients to invest only 1% to 2% of their wealth in crypto. That conservative path gives them exposure to the developing market without endangering the majority of their assets.
Henderson said he sees more crypto investors being institutions, which are more willing to take the risks and can ride out the highs and lows.
But Henderson said he believes in the crypto market.
"One hundred percent," he said. "Cryptocurrency is here to stay."
The likelihood of Bitcoin maintaining its value is stronger because the supply has been capped at 21 million — of which about 19 million have been mined.
"Bitcoin is here to stay," Dupre said. "With a limited supply, it's like digital gold."
Sheila Reed of Plum, an Allegheny Valley School District teacher who previously worked with retirement accounts, helps connect people who want to invest in crypto with NovaTech, a Caribbean-based firm that has trading expertise in the market. That is safer, she said, than trying to go it alone.
"A lot of people end up losing money because they don't know what it is about," Reed said.
Others warn investors to be careful.
"Don't put more money into cryptocurrency than you can't afford to lose," said Antony Davies, associate professor of economics at Duquesne University's School of Business. In the crypto world, there is Federal Deposit Insurance Corp. backing as with money kept in a bank.
Bergquist's advice: "Purchase it, and forget about it."
Most crypto users of Coinme, which has partnered with Coinstar in its ATM network, are first-time investors. With their meager holdings in virtual wallets, they can use debit or credit cards to turn dollars into cryptocurrency.
Most who own cryptocurrency have invested about $1,000, on average, according to a survey last summer by Finder, an online information platform. The median amount is about $200 in a digital wallet, which safely stores passwords for owned cryptocurrencies and makes the currency accessible to send and receive.
A top company executive last week said Google Pay could become a "comprehensive digital wallet," including for crypto payments. The online brokerage company Robinhood Markets also said it will provide digital wallets to 1,000 customers and expand the offering this year to more of the 1.6 million people on its waitlist for a crypto wallet.
Major companies that take cryptocurrency for purchases include AT&T, Microsoft, Home Depot, PayPal and Tesla, among others.
Expanding reach, if not interest
A Bitcoin Depot ATM stands on the edge of the Westmoreland Mall food court in Hempfield, near the Subway sandwich counter. Shoppers and walkers breeze by, clutching bags or making their laps. Diners often sit at the adjacent tables. Few, if any, give the machine a glance.
Katie Gauvain of North Versailles works at Forever Young Beauty store, which is within sight of the machine. She said, from what she has seen, it attracts little interest.
Despite that, there is a vision of growth, said Connor Alexander, owner of Pittsburgh-based Freedom Gateway. His ATM company has 60 crypto ATMs in stores in Allegheny, Beaver, Erie, Washington and Westmoreland counties.
"We've seen a 150% increase in usage since 2018," said the Mt. Lebanon native, whose company places machines mostly in smaller convenience stores.
One is located inside the Jeannette Food Mart on Harrison Avenue.
"People are using it once in a while," said owner Bhuwa Acharwa, who also has a Freedom Gateway ATM in his Trafford store.
Still, Acharwa said he is not yet ready to invest in cryptocurrency.
Bob Ahad, owner of Freeport Corner Grocery in Natrona Heights, said he sees people come in once a week or biweekly and acquire cryptocurrency. His wife has dabbled in crypto, but Ahad said he plans to remain on the sidelines.
"I don't have that kind of money," he said.
© 2022 Tribune-Review (Greensburg, Pa.). Distributed by Tribune Content Agency, LLC.
