8 years ago the world’s first Bitcoin ATM launched in a downtown Vancouver coffee shop. Here’s the inside story of how it happened.
We chatted with Mitchell Demeter, now president of Netcoins, about how he brought the ATM to Vancouver.
The story of the world’s first Bitcoin ATM—the machine that opened in a Waves coffee shop smack dab in the middle of downtown Vancouver eight years ago today—starts in Reno, Nevada. (I wish I had some Bitcoin to gift anyone who was able to guess that.) Reno is as off the board a city as they come, a bastion of a forgotten time under the immense shadow of its dazzling, younger sibling 449 miles southeast.
But, for the person who brought the machine to Vancouver, Mitchell Demeter, the gamble he took in a state synonymous with rolling the dice, paid off. Demeter is now president of Netcoins, a Vancouver-based company that supports the purchasing and sale of cryptocurrencies. His entrepreneurial spirit was ignited long before a plane ride to Reno in 2013.
“I've always been entrepreneurial. I was five years old selling things in kindergarten. Basically, I tried a tonne of different businesses. What actually got me into crypto was precious metals. I was into gold, silver, sound money and Austrian economics. I was really interested in the current monetary system. It didn't really make sense to me, the fact that they could just print hundreds of billions of dollars out of nowhere. Coming out of the 2008 financial crisis highlighted a lot of the injustices and imbalances in the current monetary system. That partially kicked off my interest in that area,” Demeter reflected.
This led to Bitcoin flashing across his radar. “My thought was that this wasn't sustainable. You start to look at the debt of governments around the world, their ability to print and devalue your money. And that's what got me into sound money, precious metals. Then, when I was introduced to Bitcoin, in January 2013, a lot of those same principles made a lot of sense. I knew right away, that if this could gain traction, that it had the potential to change everything. It could bring back, you know, some form of equality and fairness to monetary systems, and take it out of the hands of governments and central banks that were causing all these imbalances around the world,” Demeter recalled.
In those early days, the transactions were difficult to complete. “When I discovered [Bitcoin], it was still really difficult to buy. A friend sold me my first coin just peer to peer for cash. That's how a lot of the transactions were happening. You'd basically have to find a local miner, some tech people that were playing around with that and buy from them. Or, you could send a wire transfer out to one of these Eastern European exchanges and hope that it arrives a week later. So I knew that, if this was going to have a fighting chance, there needed to be infrastructure built around it. People needed to understand it. There needed to be a ton of education. There needed to be easier ways to buy and sell [Bitcoin], easier ways to secure it,” Demeter explained.
It wasn’t long, however, before the entrepreneurial side of Demeter’s brain started firing. He started to act as a conduit for the transactions of his friends. Demeter would track down and buy Bitcoin—$1,000 here, $500 there—and sell it to other people. Perhaps not the most lucrative financial venture—“I was actually losing money”—but an operation that proved the legitimacy of crypto, at least in Demeter’s circle. “I was just trying to get other people into the game essentially. It actually wasn't really about making money, it was just about teaching people and showing that this is a real thing.”
I was taken aback by the “I was actually losing money” anecdote. I was speaking to a person who started buying and selling in kindergarten, after all. It turns out an entrepreneur can only lose money for so long before the urge to right the financial ship and launch a business takes over.
“If we can figure out a way to buy [Bitcoin] sustainably, we could actually charge a small service fee and turn this into a business. At that point, we were still meeting people off Craigslist and Facebook Marketplace. So, you’d go meet somebody and they want to buy $500 worth of Bitcoin for me to transfer it. Then you sit in a coffee shop with this stranger for an hour while you wait for it to go through. I had a couple of partners at the time. We needed to set up a location where people know we're here every day. So, if something goes wrong, they can come back and talk to us, not give $1,000 to a guy in a bar that you're never gonna see again. We can build up a brand, we can build up a reputation, we can build up trust, we can build up community,” Demeter said.
“So, we opened up—I think it was about April, or May —we opened up a physical brokerage, just down by Granville Island. It was a storefront where we basically just had a couple of desks and people would come in. They'd buy and sell crypto. At that point, the business actually started to gain a lot of momentum really quickly. We talked about scaling that business and opening up other offices across the country. But that’s when we found a company called Robocoin that was based out of Reno, Nevada. They were starting to manufacture the hardware of the ATMs,” Demeter shared.
Reno is justifiably not a city that’s on many people’s radar. But, it does seem fitting, given the Wild West nature of Bitcoin at the time—not to mention cryptocurrencies are sometimes labeled “frontier tech.”
Demeter and a partner flew down to a city that was once the frontier of America. Like many great businesses, Robocoin was operating, at its onset, out of a garage. As the garage door slowly opened, the world’s first Bitcoin ATM came into view. Demeter saw only a prototype but knew right away it was special. He placed an order for the first five machines Robocoin could crank out, all with a larger plan. But, this is where the Wild West nature really shone through.
“The plan was to basically go and set up ATMs across the country but we were still trying to get the banks to understand what we were doing. We were dealing with a lot of cash and were concerned about chargebacks and different things. A wire transfer can be returned. So, we're worried about fraud, so we don't spend a lot of cash. The banks look at us as a money service business but registered regulators hadn't heard of Bitcoin. The banks couldn't work with an unlicensed money service business and the money service business regulators said that you're not a money service business. So there's a little bit of a chicken and egg problem there,” Demeter said with an exasperated sigh.
Despite the challenges, Demeter and co. found a safe haven across False Creek from their Granville Island brokerage. The owner of the Waves coffee shop near the Vancouver Art Gallery was a progressive thinker in terms of finance, already accepting cryptocurrency in exchange for lattes.
“The owner was a little bit forward-thinking. The owner’s son actually managed that location. He understood what we were thinking and where the industry has gone. I forget the exact number of ATMs around the world now but the vision was that these should be in coffee shops and retail stores all over the world. This was the pilot. If this works then we can put these everywhere, just like a regular ATM. It really has come true,” Demeter reflected.
Aside from the owner’s views on Bitcoin, the Waves ticked a few other boxes for what Demeter wanted in a location.
“We wanted a central spot. It was a large place where we could hold meetups but we didn’t think we needed our own, full-on office downtown. We wanted to be in an open public space where there are people around. Then it's safe for people to be dealing with cash and dealing with crypto. You’ve got that public presence. Also, it just seemed like a good fit. It turned out to be a really good partnership with them because we brought a ton of people into the store. We kind of put them on the map to a certain extent. Basically, they're open long hours, and it's a good, safe, central place for people to gather and transact,” he recalled.
And transact they did. The line wrapped around the block on October 29, 2013—some people even waited for two hours.
“We got a ton of press from the new launch which was great. It highlighted the industry and the potential for the industry. Because of the press—we actually published a bunch of our numbers that we were doing and the numbers were incredible—we had lineups down the block. People were waiting in line for two hours just to come in and buy some Bitcoin at the ATM, which was pretty incredible,” he said.
The warm reception continues to this day for Demeter. “I was down at a Bitcoin conference in Miami in June and I went to a dinner for Bitcoin ATM operators. I met a guy that runs a network of like 5000 ATMs. He told me that he saw our launch in Vancouver and it inspired him to look into and get into the industry. He was like, ‘If you hadn't launched that ATM in Vancouver, I wouldn't be in this business.’ That’s pretty cool,” he justifiably gushed.
Following the success of the October 29 launch, Demeter moved his business across False Creek from Granville Island permanently. “We combined the Bitcoin ATM for a lot of the main business while also running that brokerage model that we had created initially. We moved our office into the Waves, actually. We ran that brokerage model and information centre alongside the Bitcoin ATM there,” he explained.
Demeter described 2013 as a “hype cycle” that slowed slightly as the calendar flipped over to January 2014. Demeter and co. continued building out their business over the next year, eventually selling it in 2015. After a quick detour to real estate, Demeter was again brought into the world of cryptocurrencies, joining Netcoins in 2018.
Since rejoining the industry, he is even more bullish than he was in 2013. “Even though it's been eight years since the launch of the ATM, I think the real innovation in Bitcoin is just getting started. Part of what got me excited about Bitcoin, back in the early days, was the low-cost, scalable transactions. As the network got more congested, that hasn't really been possible. But, there's some innovation happening right now, with things like the Lightning Network, that is actually going to bring Bitcoin to life in a big way,” he said, referring to the innovation that sees near-instantaneous Bitcoin transactions.
Demeter then looked south, past Reno and into El Salvador. “You're starting to see that happen with the adoption of Bitcoin in El Salvador. I think that a lot of people feel like they missed it. But, we're only in the second inning right now. The next 20, the next 30 years—even the next three, four years—we're really going to see Bitcoin come to life. It's still early.”
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