Bitcoin, a digital “cryptocurrency,” is now being dispensed at a local grocery on 17th and Mission streets that installed a Bitcoin ATM – the third of its kind in the Mission District, and the first to appear at a market.
“At first I thought, what the hell is this?” said the nephew of the market’s owner, who gave his name as Raj. “I thought it was just going to be sitting there, but I’ve actually seen a couple of transactions happen since we first got it in a few weeks ago.”
Two Bitcoin ATMs are installed and open to the public at 20Mission Hive, the artist and merchant collective on 20th and Mission streets that was bought by bitcoin investor Jared Kenna last month.
Harry Patel, the owner of Mission Groceries, said he was approached by a representative of Coinsource, a company that is working to establish a national network of bitcoin ATMs and owns the Mission machine, about hosting the ATM at his store. “It’s good for me, because it adds foot traffic,” said Patel, who said he’s seen “about 15 to 20” people use the ATM since it was installed earlier this month. The company makes private compensation arrangements for merchants hosting its machines.
Bitcoins can be used for purchasing items from vendors that accept them, but are primarily used for online purchases and wire transfers. At present, one bitcoin equals $422.49, but the value has fluctuated between $368 and $439 in the past year.
“It’s like emailing money, except bitcoin is its own type of money,” said David Wachsman, the spokesperson for Coinsource. “Imagine an in-game currency in a video game but with real life applications.”
At the ATM, users deposit cash in exchange for downloading the digital currency onto a “digital wallet” on their phones. Alternatively, a user can print a paper receipt with a barcode that can be scanned into a users “digital wallet” using an app. The convenience fee for the Mission Groceries bitcoin ATM is at 7 percent above market price, according to Coinsource Managing Partner Sheffield Clark.
Amazon currently accepts bitcoin as alternative payment for online gift cards, and other companies including Target and Expedia have joined the crypto-currency bandwagon. The smalltime grocer in the Mission that was approached by the bitcoin ATM distributor for its central location.
“It’s kind of interesting that San Francisco is at the tech center of the world, but there are [few] bitcoin machines in the city,” said Wachsman. “This is Coinsource’s first machine in San Francisco, but it won’t be the last.”
Wachsman said that demand was driving the idea of installing bitcoin machines in accessible neighborhoods in cities across the country. “We think there will be a lot more use of it going forward,” he said.
In the Mission, Wachsman said that the digital currency will most likely be used by community members to send money, or to invest.
“It’s a great use for international remittance because it’s totally safe,” he said. “It also benefits the unbanked. If you don’t have enough money for a bank account but you don’t want to carry your money or store cash on you, bitcoin lets you store funds.”
There are drawbacks to putting your money in. The Mission Bitcoin ATM is a one-way machine, meaning that bitcoins cannot be traded in for cash.
“You buy bitcoin with it, but you can’t sell it or pull out U.S. dollars,” said Wachsman, who added that some 90 percent of bitcoin ATMs operate in a similar way. Bitcoin ATMs, such as the one at Mission Groceries, remain rare because building out their infrastructure requires “an incredible amount of time and manpower,” he said.
Though he said he originally expected the machine to earn some goodwill from the from the Mission’s tech crowd, Raj said that so far he has been surprised to see diversity among the demographic of bitcoin users that have come into Mission Groceries looking to purchase the digital money.
“The people that have used the ATM don’t seem completely ‘technical’ and some I wouldn’t have ever expected to use bitcoin,” said Raj. “I’m a tech guy myself, and it must be kind of taking off if people are transferring money using it.”
Raj speculates that his uncle must have taken “a gamble” by deciding to place the machine in his store. “Seems like it was one business man helping out another business man,” he said.
But Wachsman said that Mission Groceries was chosen somewhat strategically for its accessibility to public transportation and late hours. The grocer is open until 2 a.m., seven days a week.
“It’s central, and a place where people are comfortable going in at various hours and feel safe,” said Wachsman.