Inspired by this discussion, I thought a bit about the possibility of a Bitcoin ATM machine which does not need any entity which "custodies" your Bitcoins.
Custodianship by a Bitcoin ATM company is the reason why most ATMs require KYC information (like an ID scan), and that of course takes away all the privacy of an ATM.
I had imagined first an ATM which buys and sells the Bitcoins on Bisq (or any P2P exchange). But that is also still not non-custodial, because these P2P exchanges operate with bank transfers and similar payment methods, and thus the ATM company would have to manage a bank account to create the buy/sell orders on the P2P exchange.
But I actually imagined a possible model for a non-custodial ATM. It would be however a quite complicated machine and for sure expensive to build.
The idea is that the ATM could work as a cash exchange: there would be several compartments with the cash inside the machine (like lockers or vaults), where people could deposit cash (which would of course be checked against counterfeit money). They then could set up an order on a screen on a P2P exchange, with their Bitcoin address.
Two things could happen now:
- If the order is filled, the buyer would get the Bitcoins. The seller would get a code for the ATM and would have access to the compartment where the buyer deposited the cash.
- If the order is not filled after a time frame (e.g. 24 hours) the order would be cancelled, and the buyer would get the code for the ATM and could withdraw the cash again.
Thus, the company operating the ATM would be a cash custodian, not a Bitcoin custodian, because the Bitcoins never leave the buyers/sellers addresses (only they can use the Bisq escrow). In some countries depending on the specific regulation that wouldn't make much of a difference, while in others, they could perhaps operate like lockers at train stations.
Dumb idea? Does that already exist? It's only a theoretical concept, ideas are welcome
Custodianship by a Bitcoin ATM company is the reason why most ATMs require KYC information (like an ID scan), and that of course takes away all the privacy of an ATM.
I had imagined first an ATM which buys and sells the Bitcoins on Bisq (or any P2P exchange). But that is also still not non-custodial, because these P2P exchanges operate with bank transfers and similar payment methods, and thus the ATM company would have to manage a bank account to create the buy/sell orders on the P2P exchange.
But I actually imagined a possible model for a non-custodial ATM. It would be however a quite complicated machine and for sure expensive to build.
The idea is that the ATM could work as a cash exchange: there would be several compartments with the cash inside the machine (like lockers or vaults), where people could deposit cash (which would of course be checked against counterfeit money). They then could set up an order on a screen on a P2P exchange, with their Bitcoin address.
Two things could happen now:
- If the order is filled, the buyer would get the Bitcoins. The seller would get a code for the ATM and would have access to the compartment where the buyer deposited the cash.
- If the order is not filled after a time frame (e.g. 24 hours) the order would be cancelled, and the buyer would get the code for the ATM and could withdraw the cash again.
Thus, the company operating the ATM would be a cash custodian, not a Bitcoin custodian, because the Bitcoins never leave the buyers/sellers addresses (only they can use the Bisq escrow). In some countries depending on the specific regulation that wouldn't make much of a difference, while in others, they could perhaps operate like lockers at train stations.
Dumb idea? Does that already exist? It's only a theoretical concept, ideas are welcome