When I transfer money from my bank account to another, the money disappear immediately from my account but they appear after one or two days in the other account.
Where exactly is my money during this period? Who hosts it? Am I insured against loss? What happens if the the sender’s or the receiver’s bank bankrupts at that exact time?
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Imagine two sheets of paper. One is the record of your account. One is the record of the grocery store’s account. You spend $100 at the grocery store, and the grocery store tells the bank.
The bank goes to your sheet of paper and writes “send money to the bank, minus $100”. Then the bank writes on the other sheet of paper “received money from you, plus $100”.
After the bank writes down the “send money to bank, minus $100” message on your ledger, but before they write down “received money from you, plus $100” message on the grocery store’s ledger, the records are not yet meaningful or valid. The accounts are imbalanced. It is an error state that needs correcting and has no real meaning. The bank would find that it has $100 but does not know where it came from, and either you or the grocery store is going to be angry.
Every transaction the bank handles has this same setup: there are two sheets of paper involved, and moving money involves subtracting money off one sheet and adding it to the other one. This system of writing down the record in exactly two places each time is called “double-entry bookkeeping.”
One really cool thing about double-entry bookkeeping is the total value of all the ledgers always add up to exactly zero, which makes it pretty easy to notice this sort of problem immediately.
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