Introduction to Cryptocurrency ATMs Part 5

Introduction to Cryptocurrency ATMs Part 5

ATMs on financial networks. Properties of cryptocurrencies.

 

Most conventional automatic teller machines today are a part of one of interbank networks, which are computer networks that allow a financial institution on such a network to perform transactions through ATMs that belong to other institutions and vice versa, with other institutions on the network being able to allow their customers to transacts on an ATM that belongs to the institution. However, this doesn’t mean that the functionality is always going to be the same. For example, using an ATM of a different bank, a customer may be able to withdraw a certain amount of cash, but not be able to see the activity on all the accounts he or she has with the institution. Also, the owners of the ATM may choose to charge a fee for performing transactions using their ATMs. According to an article from 2015 in Wall Street Journal, the average transaction fee for using an ATM that did not belong to the customer’s bank has been $4.52. The most popular ATM networks in the United States are New York Currency Exchange, STAR and Pulse.

To allow customer access more service, many of the networks are expanding the range of functions that an automatic teller machine can perform. They are aiming to turn ATMs into self-serve terminals instead of having them be simply vaults with cash that customers can use to withdraw funds and perform no other operations.

Typically, an ATM machine would connect directly to a host via a dial-up telephone modem or ADSL telephone connection. Machines in locations with less foot traffic usually use dial-up modems while machines in busy locations use ADSL.

 

Properties of cryptocurrencies

All of this is very different from how cryptocurrencies and cryptocurrency ATMs operate. Most cryptocurrencies, including Bitcoin and Ethereum, are based on the technology called blockchain (several others use different technologies. For example, Iota uses tangle instead of blockchain).

In short, a blockchain is a way to record data so that the data becomes impossible to edit or delete. The problem that Satoshi Nakamoto, the creator of Bitcoin, has solved by launching the Bitcoin network is known as the problem of double spending. Double spending is when a user on a financial network sends funds to several parties at the same time and pretends that the funds are only going to one party. All people that use computers are familiar with the problem of double spending. Let’s say you make a few copies of a file on a computer. You can do so with just one click of a mouse. What would prevent you from sending the copies to multiple people at the same time? The answer is nothing and this is the problem that nobody before Satoshi Nakamoto was able to solve successfully. There was simply no solution to protecting information about transactions when making several duplicates on a computer is so easy. Satoshi Nakamoto has solved this problem by making all the transactions that occur on the Bitcoin network a part of the Bitcoin blockchain.

In essence, blockchain software operates similarly to a ledger with transaction records. A block of a blockchain is similar to a page in a ledger. For example, as you are reading this article, the Bitcoin blockchain has over 500,000 blocks, each of which contains records about transactions just like pages in a financial ledger contain information about transactions. You can see the latest blocks of the Bitcoin blockchain by visiting https://www.blockchain.com/en/explorer . At the very top of the home page of the website, you will see a table. The field called “transactions” shows the number of transactions that each block of the blockchain includes. The field “total sent” shows the total amount of Bitcoins that users have sent in these transactions. If you click on any number in the “height” column, you will get to the pages of individual blocks. Scrolling down the page of an individual block will allow you to see detailed information about all the transactions that occur on blockchain.

This information is available to anybody and everybody, which is a result of Bitcoin blockchain being a public network. Other cryptocurrency networks, such as Bitcoin Cash, Ethereum, and others are also public networks meaning that anybody can see the transactions that are occurring on these networks in real time.