I just recently wrote an article about decentralized exchanges and why they are often more beneficial for trading. Today I would like to discuss one of the worst aspects of centralized platforms: ACH Transfer holding periods. (further proving why a DEX is a quality use of your time).
ACH stands for Automated Clearing House. Essentially these transactions are bank-to-bank transactions for moving money electronically in a 'fast' and 'secure' fashion on the Automated Clearing House Network.
According to the National Automated Clearing House Association (NACHA), the ACH network is a batch processing system that banks and other financial institutions use to aggregate ACH transactions for processing, which typically happens three times each business day. The ACH network processes two kinds of ACH transactions: direct deposits and direct payments. <
(https://www.investopedia.com/ach-transfers-what-are-they-and-how-do-they-work-4590120)
Though these transfers are often free, they are only processed a few times per day and thus depending on the type of service one is using, it can take a few days to process.
It is dependent on the company offering the monetary service whether or not they would instantly credit your account or wait for the process to fully work itself out.
Financial services use ACH transactions for a lot of their digital transacting because it is a simple way for them to remain compliant with national regulations regarding money being moved.
So why is it such a negative if you are using ACH transfers to fund your cryptocurrency accounts on centralized exchanges?
Doing an ACH deposit does imply that you are depositing USD or fiat currency onto an exchange. The exchanges obviously move much more quickly if you are depositing cryptocurrency as they are just subject to a certain number of network confirmations before being credited.
If you are in a position where the only currency you can put into cryptocurrency is the fiat that you already have (i.e. this is your first crypto purchase), you have a few options.
Once you own some crypto, do yourself a favor and trade on a DEX. It is seamless and does not require you to follow holding patterns enforced by governments. Cryptocurrency should be helping to create financial freedom, choose the source you want to help you accomplish this with that goal in mind.
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My name is Rob and I am a college student doing my best to get involved in the crypto world. I have enjoyed blogging thus far and thank you for reading my article! Give me a follow and let’s build the community together through consistent engagement.
