Coinstar is that company that counts your change next to the machines for recycling cans and bottles at different grocery stores. That seems like a pretty mundane and boring business. But the company has a “fleet” of tens of thousands of these coin counting machines in at least 10 different countries, including the U.S. It has grown phenomenally over the last 30 plus years.
Starting sometime in 2017, the company laid plans for getting involved in cryptocurrencies. They have partnered with Coinme, a digital currency exchange company, to form a system for being able to buy cryptocurrencies when you have your coins counted up. They announced this partnership in 2018. As of May 2020, there wre over 3500 Coinme bitcoin “ATMs” throughout the country. By December 2020, they claimed to have added another 5,000 such units.
They had conducted market research which supported this business model. One survey reported that 23% of those surveyed would purchase cryptocurrencies at a kiosk. Surprisingly, over half would use the cryptocurrency as an investment. The implications are that these kiosks may become a platform for yet other services. If, for example, one thinks in terms of the wide range of initial coin offerings (ICOs) on the market, it follows that Coinme could act as a type of broker. As other services emerge, it becomes easy to imagine an “ecosystem” managed by both Coinstar and Coinme.
An unanswered question is whether these services will eventually allow you to transfer the crypto to other exchanges or to one’s digital wallet. Additional fees would likely be added in this case.
The companies represent that the transaction costs 4%. However, one end user put online a photo of his voucher. It had the time stamp, the 4% fee, a 3% exchange rate surcharge, and additional 4% taken with no explanation. In other words, he spent one dollar and got back 89 cents. As the system grows, an question is whether or not these charges will come down. While these companies offer a convenience, there are competing means of getting crypto.
These kiosks have provided a surprising source for end-uses. There was a dramatic 40% spike in transactions at these kiosks in February 2021. There was a suggestion, which has not been confirmed, that, also, the $1200 relief checks were used extensively for these crypto transactions.
There are certainly many questions about the future of this kind of service. It is unique, convenient and expensive. The challenge is to continue to innovate.