Ireland's first bitcoin ATM now opens for business in Dublin city centre

Thursday 13 March 2014 19.27
Ireland's first bitcoin ATM is now available in Dublin city centre
Ireland's first bitcoin ATM is now available in Dublin city centre

The Central Bank has warned that users of bitcoin vending machines in Ireland will not enjoy the same protections as those buying recognised currencies from regulated financial institutions.

The warning came as the country's first bitcoin ATM became operational in Dublin.

The machine, which converts physical euro cash into the digital currency, is being operated by Bitvendo, a bitcoin vending business started by a number of Irish and international digital currency enthusiasts. 

Bitcoin is a virtual digital currency that is not backed by real assets and has no central authorities governing it. 

Each bitcoin is introduced to the system slowly over time, surrounded by a complex mathematical puzzle, and can only be unlocked by experts using high powered computers - a process known as mining.

This slow release guards against inflation, and a finite number of 21 million Bitcoins will have been released by 2140.

In order to use the desktop device, which is located in mobile phone accessory shop GSM Solutions on Upper Abbey Street, users must first download and set up a digital wallet in which to store their bitcoins. 

The user then scans a digital QR code, generated by their digital wallet, at the vending machine and enters the amount of euro cash they wish to convert into bitcoins. 

The conversion takes place at an exchange rate dictated by a selection of different bitcoin exchanges, which is updated in real time, and the digital currency is then lodged into the user's digital wallet. 

Bitvendo charges 3%-5% commission on each transaction. The company plans to roll out more bitcoin ATMs around the country over the coming months, beginning in Waterford. 

But the Central Bank has said that it does not recognise or regulate bitcoin.

As a result, consumers do not enjoy the same protections that they are entitled to with recognised currencies, it cautions. 

Many technology and financial experts have expressed scepticism about digital currencies such as bitcoin because they are not based on tangible assets like traditional currencies.

They are also prone to wild fluctuations in value and are not generally recognised or regulated by central banks and currency regulators around the world.

The hacking into and collapse of a number of large high profile bitcoin exchanges has also raised concerns about the currency's future.

Most recently the world's biggest bitcoin exchange, Mt Gox, filed for bankruptcy protection after it lost 850,000 bitcoins worth $477m when its computer system was hacked.