how do banks store digital money ?
Let’s suppose a central bank gives 10 million dollars to a local bank.
How is this money saved?
It just a excel spreadsheet with the amount of the money writted in?
What prevents the local bank to just edit the “spreadsheet” ?
Is there any sort of protocol or agreement between the central bank and local bank,
Like a blockchain or something?
In: Economics
When you deposit money into a bank, it doesn’t go into some dedicated compartment in the vault and it hasn’t been that way for hundreds of years.
Banks use double entry book-keeping. Every transaction is carefully tracked and reported. Your balance is tracked in a “book”. Before computers, this was a physical book. Now, it is done on a computer.
Editing the balance of an account without tracking the change with a transaction is illegal. It is bank fraud. It was possible before computers and it was illegal back then as well.
People seem to think that since the invention of computers that perhaps bank fraud is easier and maybe money is no longer real. This is not a new problem. People have been regulating banks for centuries. If your bank became known as a fraud bank, then everyone would withdraw their money. Computers also help in tracking transactions and implementing the regulations.
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