I am wondering more along the lines of how a wire transfer actually works. What happens if there is a discrepency? Can the data be hacked? What is there that you can point at and say, “Yes, here is the money”?
One of the strengths of bitcoin is supposed to be in Blockchain, except that can be used to transfer money as well.
It works similarly to a wire transfer.
The sender and receiver agree on a transaction. (The value of that transaction is not relevant for this example.)
So you have Key # 1 nd Key #2. Then you have the transaction code. The transaction is sent to the blockchain. “Miners” review the transaction against the balances of the Key # accounts. If they can confirm that both accounts have enough “coin” to fund the transaction, the transaction is approved and written to the global public ledger and the amounts are exchanged. When the miners confirm the ledgers, they are rewarded with fees and more bitcoin.
Once there are enough confirmations, the transaction is confirmed and irreversible. So, there are no chargebacks and, if you entered your amounts correctly, there are no transmission errors.
The wire transfer mistakes and legs make the traditional process expensive and slow. Bitcoin, even on its slow days, is faster than a large commerical wire. Most “wires” these days are ACH transactions that occur overnight.
This is a very simple explanation for people who don’t get it. They key is that the process is fast, friction less, requires no “trust” and most importantly, no third and fourth parties.
Once you receive the bitcoin you can immediately convert it to fiat at a price significantly less than a stock transaction or a currency exchange.