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From Wikipedia:
Split tally The split tally was a technique which became common in medieval Europe, which was constantly short of money (coins) and predominantly illiterate, in order to record bilateral exchange and debts. A stick (squared hazelwood sticks were most common) was marked with a system of notches and then split lengthwise. This way the two halves both record the same notches and each party to the transaction received one half of the marked stick as proof. Later this technique was refined in various ways and became virtually tamper proof. One of the refinements was to make the two halves of the stick of different lengths. The longer part was called stock and was given to the party which had advanced money (or other items) to the receiver. The shorter portion of the stick was called foil and was given to the party which had received the funds or goods. Using this technique each of the parties had an identifiable record of the transaction. The natural irregularities in the surfaces of the tallies where they were split would mean that only the original two halves would fit back together perfectly, and so would verify that they were matching halves of the same transaction. If one party tried to unilaterally change the value of his half of the tally stick by adding more notches, those notches would not be on the other tally stick and would be revealed as an attempted forgery. The split tally was accepted as legal proof in medieval courts and the Napoleonic Code (1804) still makes reference to the tally stick in Article 1333. [4] Along the Danube and in Switzerland the tally was still used in the 20th century in rural economies.
Split tally in England The most prominent and best recorded use of the split tally stick being used as a form of currency was when King Henry I initiated the tally stick system in or around 1100 in medieval England. He would only accept the tally stick for taxes, and it was a tool of the Exchequer for the collection of taxes by local sheriffs (tax farmers "farming the shire") for seven centuries. The split tally of the Exchequer was in continuous use until 1826. In 1834, the tallies themselves were ordered to be burned in a stove in the Houses of Parliament, but the fire went out of control setting the building afire.
The system of tally marks of the Exchequer is described in The Dialogue Concerning the Exchequer (see external links below) as follows:
The manner of cutting is as follows. At the top of the tally a cut is made, the thickness of the palm of the hand, to represent a thousand pounds; then a hundred pounds by a cut the breadth of a thumb; twenty pounds, the breadth of the little finger; a single pound, the width of a swollen barleycorn; a shilling rather narrower; then a penny is marked by a single cut without removing any wood.
Royal tallies (debt of the Crown) also played an infamous role in the formation of the Bank of England at the end of the 17th century when these royal tallies, trading at a hefty discount of up to 60 percent, were engrafted into the Bank's capital stock.
Bitcoins would seem to be an updated version. I first read about tallys in an article (which was actually an after dinner speech by some luminary, I don't remember who - I don't think it was Randal Wray - at Jerome Levy Institute), at least ten years ago. I could not find the article I read at the time. I did find an article by Wray which was kind of dull but got interesting about p24. (!)
Note tallys issued by the Crown eventually traded at huge discount.
One can use Paypal to purchase bitcoins on one of the exchanges, like Mt Gox, at the going dollar conversion rate, or at, say, bitcoinATM.com. There are other ways to acquire bitcoins that don't involve a currency transaction.
I'm working with some people to remove currency conversion of the bitcoin, but instead have it convertible only into instantaneous credit. You'll never have a fully trusted currency as long as its intrinsic value isn't fixed. The fix could be fixed to zero except instantaneously a la Dirac delta function. You can imagine I'm getting a lot of resistance since it seems as though I'm getting rid of the need for the infrastructure so highly prized by the programmers who created bitcoin.
Question. Why can't bitcoin in its current incarnation work?
Answer. $/bitcoin went from 10 to 100 over the last 12 months. Such is the nature of supply and demand, but you don't want the designations of value to also change at a similar rate. What's the problem here? Holding designations of value causes the designations to accrue their own value, and this causes the bitcoin system to bestow the store of value function on the bitcoin when the programming infrastructure is independent of any such notion. What does the infrastructure provide? Integrity that comes by speed of execution(zero value over the range of temporal execution except at a recognition instant). The infrastructure can complete a transaction before any factors change their relative values, and that's how the bitcoin concept could be very powerful. So how is it any different than, say, VISA? Open source software. Cheaper since it rides virtually rather than through the ripoff stream of a corporation. Way more secure and therefore, decidedly anonymous. Private, i.e., outside of government control.
If I receive a bitcoin credit, how can I convert it in order to spend the value in a world of metal coin biters? Conversion necessarily subjects the value to decay, the decay inherent in a market driven by supply and demand, but if one "spends" the value immediately, the market would not have had a chance to apply decay. All credit transactions are instantaneous in that sense.
Give me credits, give me quatloos, give me bitcoins, but don't give me dollars. |
