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Bitcoin ATM

Tim Bray wrote about using the Bitcoin ATM in Vancouver. The experience clearly isn’t on par with traditional bank ATMs, but it is a fascinating experiment. Can a Bitcoin ATM get significantly closer to a regular bank ATM? Would it even need to in order to get a decent number of people to use it?

If an existing sizable bank started trying out Bitcoin that would be a significant move. I would imagine a number of regulatory issues would come up.