Running a bitcoin ATM brings a lot of opportunities.On the other side such a business brings a lot of risks too.This post concentrates on two of the main risks which bitcoin ATM operators have to deal with and choose which way to follow: For simplicity reasons lets look at the case when bitcoin ATM allows buying bitcoins for cash, not selling.Every bitcoin ATM operator chooses how to run a bitcoin machine in this case: This scenario is illustrated on the following diagram (click to enlarge): When running a bitcoin ATM in such a way, operator runs a wallet or uses external wallet service provider in order to grant bitcoin ATM full access to this wallet (including private keys).The process is the following: The whole concept here is that this address/hot wallet needs to be tracked to have enough balance and operator replenishes it manually when the balance is low, so that there is no service interruption occurs.If you run a bitcoin ATM network then one address/wallet can be used for multiple machines simultaneously, or if it is not supported by a software — there should be a separate wallet used for each machine.

But the main point of this approach is that operator buys bitcoins and holds them for a period of time and there is a time lag between purchase of bitcoins by operator (T3) and selling of the same bitcoins to users (T1), e.g.when FIFO accounting method is used.bitcoin wallet makerIn order for machine to function smoothly — there should be always some liquidity available in hot wallet, which means over time these frozen funds will increase or decrease in value depending on how BTC market price moves.bitcoin etf ipoThis is an exchange rate fluctuation risk, which operator needs to absorb when operating a machine in such a  way.bitcoin casino ratingsNormally operator have an equivalent of at least $10K (usually closer to $20K) frozen in BTC liquidity for smooth operating of one machine.bitcoin paypal ceo

Since 1st of August 2016 after closed-door meetings and later Bitfinex fiasco price fell from $650 to ~$550 in a matter of just 5 days.On a $10K liquidity volume that will result in ~$1.5K immediate loss for operator.Now if you run 5 bitcoin machines, and e.g.bitcoin house arrestyou are required to have separate wallets for each machine, then loss will account for $7.5K.block bitcoin calculatorAt good locations you are probably required to have more than $10K in BTC liquidity (as this is just an amount that by chance can be bought from machine during a day), which will result in even bigger losses.how to setup a bitcoin wallet macIf operator purchased bitcoins at $650 (right before fall) and now market price is $580, if operator sells BTC with 5% premium (at $609) — that still gives immediate loss of $41 per 1 BTC sold.bitcoin crossword

This is how it works on a short term perspective.Now thinking long term, if BTC price grows — this is good for operator, as not only he earns fees from operations, but also his BTC stock increases in value over time.But looking from a different perspective, price also can fall long-term, e.g.how does bitcoin work under the hoodwhat was happening since the end of 2013 till September of 2015 (when price was steadily decreasing for almost 2 years).In this case bitcoin ATM operators lost funds all the way down.These losses were to some extent covered by fees earned from operations, but in general such economic environment will make a running bitcoin ATM business much less profitable and require operators to absorb such exchange rate volatility risk.Another way to conduct bitcoin ATM business is to use exchanges for immediate “mirroring” deals.The following diagram illustrates this approach (click to enlarge): In this case additionally to liquidity in hot wallet (which can be lower compared to example when operating using own stock) operator holds liquidity funds on exchange(-s) and whenever a transaction happens at bitcoin machine, opposite mirror deal is automatically triggered on exchange.

So whenever someone buys bitcoins from operator using machine, operator buys back the same amount of bitcoins on exchange.The process is the following: Such a process allows to minimize funds held in BTC (hot wallet can have much lower balance, as it is replenished after each purchase), or BTC fund holdings can be totally eliminated (in case BTC sent directly from exchange to users).As a result BTC exchange rate risk is eliminated or removed, but at the same time another risk appears — counterparty risk as the liquidity funds now have to be held on exchange ready to be used for mirroring deals.If exchange goes belly up, which happened partially with recent Bitfinex hack for example — then operator can lose funds stored on the exchange partially or in full.Some operators were affected recently as Bitfinex was a large exchange and many machines were running integrated with it.operator of General Bytes machine in Kazakhstan wrote on reddit: Or SunATM operator, who put a message on their bitcoin machine in Erie: In the next post we cover what is supported by each of the main ATM providers on the market with respect to above scenarios settings.

You can find bitcoin ATM locations on our map.Subscribe to our Twitter account to get latest news from bitcoin ATM industry @CoinATMRadarThe New York Teamsters Road Carriers Local 707 Pension Fund reportedly has officially run out of money as the federal insurance company has taken over payments to retirees at a reduced rate.Sadly, the Pension Benefit Guaranty Corp.(PBGC) itself is also running out of cash funds to cover union pensions, its director said Wednesday.The federal agency’s limited liquidity "is part of the spiraling U.S.pension crisis that threatens to wipe out the retirement savings of more than a million Americans," the New York Daily News reported.The New York union’s pension fund, covering 4,000 retired truckers across the city and Long Island, went belly up just last month, the Daily News reported.As it has with 70 other bankrupt union pensions, the PBGC stepped in.According to PBGC officials, the average 707 retiree was getting $1,313 a month from the union pension fund, the newspaper said.

Now that the fund is broke and dependent on PBGC’s insurance payouts, the average monthly take home is $570, agency officials said.But the PBGC only has about a decade’s worth of cash in its coffers, director Tom Reeder warned the Daily News.“We’re projected to run out of money in eight to 10 years.Many union pension plans are projected to run out in 20 years,” he explained.“There are going to be people in plans who run out of money after we do, and there will be no water in the well.” PBGC has $2 billion in assets built up over 42 years, Reeder said.Last year, when PBGC was supporting 65 bankrupt plans, it paid out $113 million a month, agency officials said.Local 707 costs PBGC $1.7 million a month, agency officials said."All of the critically underfunded pensions are multi-employers plans — meaning they were created by various companies that all employed union workers across the same industry.The Teamsters, predominantly a trucking union, has seen its pension funds devastated by stock market crashes and a shrinking emloyer base," the newspaper reported.

If the PBGC itself were to go belly up, it would have to rely solely on what it earned from incoming premium payments."Retirees could expect to see their benefits slashed by 80%.In other words, less than one-eighth of the $570 average check PBGC is able to give Local 707 retirees now," the News said.Ironically, Teamsters 707 and other Teamster pension boards attempted to submit plans that would have cut benefits in order to prolong payments to retirees but those plans were universally rejected by the Obama administration, Zero Hedge reported."The Obama administration is in denial about the necessity of cutting pension benefits under the Multiemployer Pension Reform Act of 2014 to try to put distressed multiemployer plans on sounder financial footings and make them more sustainable.It must face reality and order the Treasury Department to stop blocking action," Pensions and Investments online reported late last year.The Daily News earlier this week also pointed out that the national pension nightmare is far from over.