system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How is physical money converted to digital money ?
gpt
You give the bank some money, say, a 50 US dollar bill.

The bank then, in return, writes down that they owe you 50 dollars. You can ask the bank for your 50 dollars back (At say, an ATM).

You can also tell the bank that you transferred your debt, or part of it, to someone else.

Let's say you want to buy something at an online store for 25 of the 50 dollars. You tell the bank that the store now owns 25 dollars of the debt the bank had to you, they will write down that they now owe 25 dollars to the store, and 25 to you.

The store can then go to the bank, and ask them for the 25 dollars in physical money.

You might also notice that this way, there are actually 100 dollars in the economy after you deposited the money, the bank owns 50 physical dollars, and you own 50 dollars worth of debt from the bank, there are 50 physical dollars, and 50 digital dollars.
The money was never 'converted' to digital money, the bank simply keeps track of to whom they owe money (And who owes money to them). This debt is much easier to transfer since the bank only has to write down who they owe money to, instead of having to go to everyone and hand them the money, this also means it's much faster for transactions over a large distance, and safer for large transactions, since there is no chance the money gets stolen during travel.