Here come the Bitcoin ATMs

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Sure, it's a virtual currency that isn't tied to any government banking system, but you might start seeing a Bitcoin ATM in your neighborhood.

This will happen if 42-year-old media entrepreneur Jeff Berwick has his way. Berwick is working to open a pair of ATMs in Los Angeles and Cyprus in the next two weeks. He claims "that orders are coming in by the hundreds from 30 different countries."

This is an exciting time for the virtual currency as the "value" of Bitcoins have surged after the run on banks and ATMs on the troubled island nation of Cyprus. Judging by the gyrations of the market and the doubt surrounding the Euro, an entire sea of business school thesis will be written about the Bitcoin and its current bubble.

So how does a Bitcoin ATM work? Take it away, CNN Money:

"Somewhat like a traditional ATM, says Berwick. Instead of connecting to your bank account, the software he and his team has developed is installed on an ATM and converts cash to Bitcoins stored in a Bitcoin wallet or extracts cash based on what's stored in your personal Bitcoin account.

Berwick will charge roughly $10,000 to ATM operators to maintain the machines and then split fees with those operators. He expects those fees to be around 3%. That's slightly higher than what you'd pay to get cash from an ATM outside your banking network."

Despite its virtual origins, some very real governments are setting rules for the Bitcoin. Last week, the Financial Crimes Enforcement Network inside the Treasury Department updated their anti-money laundering rules for new currencies like Bitcoin. CNN reports that some members of Silk Road, an online drug bazaar, use it as their currency of choice.

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