Bitcoin Forum

According to wikip.



http://en.wikipedia.org/wiki/Tally_stick

Thoughts please?

Not a bad comparison.

Bitcoin is really one big score table, keeping records of how many "points" each individual participant has. That the users have chosen to interpret these points as having value for trade with goods or money, is just that: a choice.

When you think about it, ALL currencies are just systems of keeping score like this, in a way that doesn't require you to know every single participant in order to figure out who is owed what.

But tally sticks are not backed by anything. And they are not valuable, anyone can go out in the woods and pick up a stick. In fact, as you have to chip some of the wood off the stick to make one, it loses some of its value! I would use it for firewood before trying to pay my taxes with them.

I don't see how they're the same at all, and if they are then so are fiat currencies and bank accounts.

Doesn't have to be backed by anything, or valuable. People can use whatever currency they want, as long as that's what everyone else is using too.

And I think tally stick currencies were used like fiat, the issuer would keep one half of the stick and the bearer would keep the other. If anyone was ever thought to be using a stick without a counterpart, it could be checked back at the issuer's store.

The tally stick was typically broken in half and the splintered ends proved the pair were mates.  So one person was creditor and one was debtor (or it could prove a contract between them).  The rest of the stick showed how much (or details about the contract).  The creditor could then sell the "debt side" to someone else, and the debtor would then owe it to the new owner.  One could collect a bunch of them and say "most of these people will pay me the debt" and then go into debt himself with a second layer of tally sticks on the collateral of the batch of 1st sticks he holds (a derivative).   Even without this a bubble of loans could build up on tally sticks, and with too many of them floating around, but it would temporarily stimulate the economy by people buying things.  Merchants could raise their prices if they thought people were issuing each other too many tally sticks.  Holders of lots of tally sticks could sell them out of anticipation they would become worth less from too many of them.  So same thing as money.  ((  BTW   The Fed is buying toxic waste derivatives from banks and using them as collateral against the issuance of newly-created dollars, so QE is a derivative on top of derivatives.  The Fed buying worthless U.S. treasuries is also a derivative because the treasuries were initially issued in order to get money from someone but that money also had to be printed some time in the past, so they're printing money using the original printing as the collateral for the 2nd printing.  ))

Since bitcoin is not used for anything else, it's not a commodity.  It's an asset.  Assets that are not used to generate income like machines and are not a commodity being stored have prices that are determined by public perception.  Artwork is a good example that is like bitcoin.  House prices are halfway between perception and reality.  The creditor side of the tally stick is an asset and the debtor side is a liability.

Bitcoin is an asset that can function like a currency and a contract (using its other features).  The splintered ends of the tally are a key pair.  The debtor end would have be the public key and the creditor key the private key. The ledger of bitcoin is like the public debtor side and the private key is the creditor who paid something "into the system" to obtain the "debt instrument" private key.  

If you don't like to read:
So the bitcoin ledger is a debt "the public bitcoin system" owes to each "creditor" (bitcoin holders).  It's a pretty good analogy except the tally sticks were not limited in supply.

Maybe we should also get back to abacus?

No, that's not a very good analogy. For the concept of debtor and creditor to make sense, the bitcoin system would have to be an entity that is capable of making a decision to withold the credit or re-sell the debt. It also implies a contract between the system and the users to allow access to them and only them, which is not the case.

Fiat currencies were originally receipts that you kept and could redeem at the bank at any time for gold and silver this is why there are more and more people who claim it doesn't have value, people have actually correctly described Bitcoin as a public ledger in the way it works. The reason Bitcoin is working though as opposed to these other methods is that because it has no central authority messing with the numbers and records all the time ( Like how Central Banks do all the time and are applauded for it ) because it is programmed in an open source environment there is no way to change it without people knowing and the code simply does as it's commanded and keeps the records without any bias against any of the humans that interact with it.

Tally sticks were used for a time but as you might be able to guess they'd be far too easy to counterfeit and commit fraud with, whereas with Bitcoin you have a bunch of numbers communicating each other using computers and nothing is more solid really than that.

Het Mr tallyman, tally me some Bitcoin.

You have 3 objections which I refute:

1) When a new buyer is deciding not to buy more coin, he's withholding credit.
2) When an owner sells the coin, he's re-selling the debt.  
3) The coin pieces are unique to each holder of their half of the bitcoin tally-debt.  The ledger is the other half.

Granted the ledger is not the recipient of the credit, but other previous bitcoin holders are.  By "bitcoin system" being the debtor I am being liberal in including the entire "ecosystem".  We can make definitions so strict that nothing in the world is like a tally system, but the point is to try to place various concepts in an hierarchy of understanding so that we can process things more efficiently.  

A well splintered stick's matching half would be possibly impossible to counterfeit.

I think we are all missing the bigger picture here. We are talking about using sticks as money. Come on! We need to use the wood to stay warm in winter! Wood doesn't grow on trees!

The other interesting thing about comparing Bitcoin to the tally stick is that:


So surely if tally stick not wound up in the start of the Bank of England and they weren't backed by anything but the promise of the Monarch.

• Bitcoin is currency or commodity. Does it really matter?
• I tried to ask on another thread about whether Bitcoin would be more manipulated by derivative markets markets if it gets classified as a commodity?
• Or does it really matter if people create derivative markets on Bitcoin as a currency anyway?

And there different tax liabilities? etc

But I got shot down/abused by some strange Swiss person on the forum for having the audacity not to be able to read German!

Cheers Mark

But the King was the issuer in Britain - so he limited the supply.