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?
In: 8
Basically, the actual money doesn’t move. Let’s say you have $100 in your bank account. There isn’t a special vault with your name that has a $100 bill in it. There’s a ledger that holds the records that say you have $100, and all the money that people have in the bank is kept together. Now, let’s say you transfer $50 to another account. Instead of physically moving the money, the ledger is simply updated to say you only have $50 left, and someone else’s ledger is updated to say they have $50 more than they did before. The time in between is used to verify all the security precautions that the bank has to do. Make sure the identification you used is correct and real, make sure the recipient is identified correctly, make sure you really have enough to cover it, and a bunch of other complicated stuff.
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