How Banks Work
Banks started off by just simply storing money in vaults and keeping it safe for people and allowing them to be able to take the money out at any time. What the bank then does is turn the money that you put in to your account into data that is added to your bank allowance. This allows banks to use your physical money that you put in to make more money from it.
Banks started off by just simply storing money in vaults and keeping it safe for people and allowing them to be able to take the money out at any time. What the bank then does is turn the money that you put in to your account into data that is added to your bank allowance. This allows banks to use your physical money that you put in to make more money from it.
When you are getting paid by your employer, the employer in
charge of the salaries sends
information (string of data) to the bank to subtract the total being paid from their account, and add the data to your allowance in your account, which means that the money in your account is not physically being put into your bank account, instead it’s all just data.
information (string of data) to the bank to subtract the total being paid from their account, and add the data to your allowance in your account, which means that the money in your account is not physically being put into your bank account, instead it’s all just data.
Because of this, these days physical money is becoming less
of a thing that people have, with less and less money being stored in local
banks and all of the physical money being stored in a central bank and having
it all done electronically. When physical money is turned into strings of data
it also means that it can get transferred easily which means that people now
days can go online easily and be able to transfer money to others without any
physical interaction of giving the physical money to the other person. However
people believe that because of this, other people that may have gotten your
bank account details can easily send all your money to themselves.
Online Banks
With businesses moving online without having physical shops
open, some banks have done the same, one example of a bank that has done that
is called ‘Egg’ which is a former British internet bank setup in Derby. It was
only possible to operate an Egg bank account over the internet or through their
call centre as they did not have any physical banks open. Because of Eggs
online presence meant that they could offer much better bank deals than other
places as they did not have to spend money on physical banks and staff and work
the bank from an office.
With businesses moving online without having physical shops
open, some banks have done the same, one example of a bank that has done that
is called ‘Egg’ which is a former British internet bank setup in Derby. It was
only possible to operate an Egg bank account over the internet or through their
call centre as they did not have any physical banks open. Because of Eggs
online presence meant that they could offer much better bank deals than other
places as they did not have to spend money on physical banks and staff and work
the bank from an office.
Online Bank Security
Some people may argue that online banking is safer than
physical banking however some people disagree. Banks have trouble these days
persuading people that online baking is safe even though with today’s threats
of security like ‘phishing’ where people get send letters and emails from
people pretending to be banks to try and get your private bank information, as
well as the threat of hackers breaking into banks and stealing bank information
or through a special method that they use to duplicate your bank website and
enter fields that ask you for your card pin and other information that only you
should know and not even your bank.
Some people may argue that online banking is safer than
physical banking however some people disagree. Banks have trouble these days
persuading people that online baking is safe even though with today’s threats
of security like ‘phishing’ where people get send letters and emails from
people pretending to be banks to try and get your private bank information, as
well as the threat of hackers breaking into banks and stealing bank information
or through a special method that they use to duplicate your bank website and
enter fields that ask you for your card pin and other information that only you
should know and not even your bank.
Some banks try to win over customers with extra security
features like a special handheld card reader that you place your card into,
type in your pin and receive an 8 digit combination of numbers that you need to
log into your bank account.
Online Currency
The newest addition to online money banking is the addition
of an online based currency called bitcoin that does not have a physical form
and is entirely made up of numbers and letters. With bitcoin, you were actually
able to earn bitcoins by a process called “mining” which means that you turn
your computer into a small server and have your computer perform complex algorithms
of code for other companies, by doing this you were given a small amount of
money in the form of bitcoin.
The newest addition to online money banking is the addition
of an online based currency called bitcoin that does not have a physical form
and is entirely made up of numbers and letters. With bitcoin, you were actually
able to earn bitcoins by a process called “mining” which means that you turn
your computer into a small server and have your computer perform complex algorithms
of code for other companies, by doing this you were given a small amount of
money in the form of bitcoin.
It is much cheaper for banks nowadays to work online as well
as much more convenient for customers to work online instead of physically
having to go to a bank.
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