Coinbase Has Direct Deposit — Should You Use It? — Law Tzu

Recently I saw that Coinbase is offering direct deposit with zero transaction and conversion fees. This actually has me pretty excited. Not particularly because I plan to use it though.

Let me explain…

I started learning about cryptocurrency in 2016. Ever since then I’ve been dreaming about the kinds of changes blockchain technology can bring to the global economy.

I believe cryptocurrency payments are one of the ways blockchain technology can move mass adoption forward. However, I didn’t see that happening until maybe around 2025 or even 2030.

A few days ago, I logged into my email and saw there was a message about direct deposit. Of course, I immediately clicked on it, but I thought it was something that was still coming soon and they were just getting people to sign up early.

Well, I was wrong…

You can now set up direct deposit directly to your Coinbase account. As I said, I was excited but remained cautious. Following the setup process, I gathered more information about this new service.

What Are The Terms?

What I learned was actually quite interesting. Coinbase is now partnered with [a bank] that processes your deposits and converts your funds into whatever available choice of cryptocurrency you want.

There aren’t any fees to transfer the funds and convert them which is great. They also don’t share your financial information with third-party companies. There are no fees for transactions or ATM withdrawals.

I found all of these attributes to be pretty cool. There are some banks out there that offer similar benefits, but for me, converting your deposit into cryptocurrency immediately is the outlier.

While all of those things sound great to me, I’m going to wait a while to see what sorts of issues may arise after significant usage.

I don’t want to be a “beta tester” with the money I use to pay my bills and feed my children. That’s like going all-in on a brand new cryptocurrency created overnight by a YouTube influencer. You just don’t do it.

My Biggest Concerns

I have other concerns about using Coinbase as a primary banking tool as well. Since 2017 their systems have gone down, or they were performing some sort of maintenance denying access to the platform temporarily.

Knowing that these things have happened has already forced me to immediately transfer large amounts of crypto purchases to more secure wallets. I recall one morning I bought a significant amount and at first, I decided to be lazy and leave it on Coinbase.

About 15 minutes later I changed my mind and transferred it to a wallet. I didn’t want to get into the habit of bad practices. That disciplinary action paid off because later that day Coinbase shut down for a few days preventing access to the platform.

This was the first thing that came to mind once I saw that direct deposit was available. Now, I can always perform the same steps using direct deposit, but as I said earlier, I want to wait a little while to see if there are any kinks in the process before I make a commitment.

What About Decentralization?

Here is one of my biggest questions about Coinbase being one of the “pioneers” for crypto payments. How will this move affect the overall perception of the idea of decentralization? Does cryptocurrency encourage it?

Does this mean that centralized organizations will hold all of the power and we’re back at square one?

In my opinion, right now centralized organizations will likely dominate the space until mass adoption takes place. Is it helpful? I’m not sure.

I do believe that centralization is helping to speed up the process. Yet, I think once we have mass adoption, there will be a lot more developers building decentralized options that can compete with these centralized platforms.

I’m not even entirely certain what decentralized direct deposit would look like. With heavy regulations looming overhead (at least here in the United States), that could prove to be a difficult task.

Does Direct Deposit with Coinbase Encourage Mass Adoption?

You can’t have mass adoption without trust, and despite there being a significant amount of distrust in the government and the Federal Reserve, the majority of Americans still seem to trust them or other assets like gold and silver more than they trust blockchain.

I certainly can’t wait to see what global mass adoption for blockchain technology looks like in action. Can Coinbase speed that along by starting a direct deposit program?

I would say yes. Blockchain payments can solve a lot of problems. I will go deeper into my thoughts about this in a future article. Right now, I won’t go down that rabbit hole now because this isn’t pure blockchain payment.

It’s just like your bank accepting direct deposit and just changing your fiat into cryptocurrency. So I don’t think this move will encourage many people to suddenly see value in cryptocurrency over fiat. I still believe we have a lot of work ahead to reach that mass adoption milestone.

I hate making predictions in this space and usually want to avoid it, but in this case, as I shared earlier, I don’t see it happening until 2025 or 2030. I’m leaning more toward 2030 honestly.

Since I’ve shared my thoughts on this, I’d love to know what you think. I’ll be responding to the comments below. All I ask is to keep it civil and relevant to the article.

Originally published at https://lawtzu.com on February 26, 2022.