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Don’t Understand Bitcoin? It's Just Tally Sticks!
How the Principles of Blockchain Technology have been influenced by Medieval Sticks! And the Lessons they Teach.
Today, I'm swapping my solo hat for a dynamic duo cape because two heads are better than one – especially when they're as nerdily nifty as ours. I'm teaming up with the one and only Andrew Smith, the maestro behind the mind-tingling substack 'Goatfury Writes' – a name that makes you think of an epic battle between goats and the gods of mythology, right?
Andrew's the kind of guy who can find the fun in fungible tokens and the pun in public ledgers. He approached me with an idea so enthralling it could make a sloth sprint: the tale of tally sticks. And I thought, why should I have all the fun? So, I'm bringing him into our fold to add an extra sprinkle of wit to the wisdom we serve here.
Before we dive headfirst into the financial frolics of yesteryear, do me a solid: scuttle over to 'Goatfury Writes.' Give it a follow, and treat your neurons to the feast of knowledge and nuggets of hilarity that Andrew cooks up. It's the kind of substack that makes you smarter, laugh harder, and wonder how you ever scrolled without it. Plus, unlike my turtle-ian pace, Andrew publishes great stuff almost everyday so you will never be out of interesting stuff to read!
Alright, Now Onto Tally Sticks!
Ever heard of a technology so hot, it set the Palace of Westminster on fire? No, I'm not talking about a medieval mixtape or even an overcharged smartphone from yesteryear. I'm talking about tally sticks, the financial ledger tech of the Middle Ages that literally went up in flames, taking a slice of British history with it. And trust me, in the world of fiscal record-keeping, these bad boys were the equivalent of a rock star trashing a hotel room—except the hotel was the Houses of Parliament and the rock star was a pile of antiquated wooden sticks.
Imagine a world where your bank transactions were carved on wood and splitting a stick was akin to setting up a shared Google Doc. Sounds crazy? Well, that happened. And it was the norm for a very very long time.
As we slice through history (pun absolutely intended), we'll see how our ancestors weren't just whittling wood; they were crafting the very essence of trust in a physical form. And these very principles of trust that were crafted on wooden sticks transcended over centuries into technologies like blockchain. Want to find out how? Keep reading.
The Tally Stick Era
Long before the flash of cryptocurrencies and the allure of digital wallets, there was a time when 'cutting-edge technology' meant exactly that: slicing notches into wooden sticks. Welcome to the Tally Stick era, where financial records were literally woodworked masterpieces.
Let's set the scene. It's medieval Europe, and there's no Bitcoin, no blockchain, no even remotely digitized anything. Your word and a piece of artfully notched timber are all you've got. Tally sticks were the ledger lines of the day, a means for folks to keep track of debts and credits without a single drop of ink.
Here’s Andrew explaining the concept of Tally Sticks as simply as possible:
For 700 years, the Royal Exchequer in England used an incredibly effective technology to keep track of financial transactions: sticks.
That’s right: they used sticks.
These were called “tally sticks”, and the basic idea went like this: I borrow some money from you, and we notch up a stick, which we then break in half. Each of us gets to keep a piece, and when I pay you back, I get the whole stick back, clearing my debt.
Because each stick used had its own personality, this was really tough to counterfeit, and because they were adopted by the English Exchequer, they gained credibility all throughout Europe. People trusted them.
Your end of the stick was called the stock, and mine was called the foil. Ever hear the term “stockholder”? This is where it comes from.
The earliest known use of this type of tally sticks date back to the 11th century in England, and it seems as though these sticks were constantly in use all the way up until the Great Tally Stick Fire of 1834 (yes, this is a real thing).
Now, if this sounds like a financial pinky promise, you're not far off. The beauty was in the matching halves. No two sticks split the same way, which meant that when it came time to settle up, only those two unique pieces could fit together perfectly, proving the debt and its payment. It was a foolproof system unless you were a fool who lost your stick.
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Why Tally Sticks Didn’t Quite Tally Into The Future
Although we made Tally Sticks sound super cool in the previous section, being a 21st century reader, I am sure you are already starting to see the problems with this technology. Yes, Tally Sticks, though innovative for their time, didn’t quite transition into the record keeping mechanism of the future. The downfall of tally sticks was not just a single event but a cascade of inefficiencies that finally culminated in the dramatic flame-out at the Palace of Westminster.
First up, let's talk about duplication. Tally sticks were bespoke, hand-carved artifacts, which was charming until you needed to scale up. Imagine a world where every transaction required whittling a new stick—Etsy would be thrilled, but efficiency would take a serious hit. There's a reason we don't use carrier pigeons in the age of WhatsApp.
Secondly, while fraud was tricky with tally sticks, it wasn't impossible. A skilled enough scoundrel could fabricate a convincing fake, potentially undermining the whole system. It was akin to pulling the wool over someone's eyes, except with wood shavings.
Then there's the issue of storage. These sticks weren't exactly pocket-sized. As commerce grew, so did the bundles of sticks, which eventually demanded their own version of a storage unit.
And what about liquidation? Tally sticks were great until you needed to turn them into something more spendable. Unfortunately, there wasn't a tally stick ATM. Converting these wooden wonders into cold, hard cash was a bureaucratic nightmare, one that could make even the most patient monk contemplate a career change.
These pitfalls paint a clear picture: Tally sticks were innovative but not invincible. They were a stepping stone in the river of financial progress, a reminder that all systems have their expiry date.
In 1834, the decision was made to dispose of the remaining sticks by burning them in a stove of the Houses of Parliament. The fire got out of control, leading to the catastrophic burning of the medieval Palace of Westminster, an event that ultimately led to the construction of the iconic building we know today.
From Wood Chips to Blockchains
Okay, now let's take a leap from 1834 to the modern day where technologies like Bitcoin are disrupting the world of finance, and even driving economies of countries like El Salvador.
I want you to Imagine each blockchain as a digital tally stick, split into countless virtual pieces, each held by a node in the vast internet forest. But instead of a wooden twig, you've got a sophisticated ledger that's as public as your social media profile and as secure as your granny's secret cookie recipe.
Blockchain is a chain of blocks (shocking, I know), but these aren't your kiddie play blocks. No, these are packed with information, linked using cryptography, and each block contains a cryptographic hash of the previous one, a timestamp, and transaction data. It's like a high-tech game of Jenga that's built on math instead of shaky hand-eye coordination.
Now, what makes blockchain the financial heir to the tally stick? It's all about trust and verification, folks. With tally sticks, you trusted the unique match of wood grains. With blockchain, it's the unchangeable nature of previous blocks and the consensus of the network that make it tamper-proof. You can't cheat the system unless you can out-compute the collective power of thousands of nodes, which is as likely as your pet goldfish winning the lottery.
But here's the kicker: unlike tally sticks, which could burn down a building (and did), the only thing blockchain is set to ignite is the world of finance, technology, and, well, everything. Smart contracts, supply chains, identity verification—you name it, blockchain's on it like white on rice.
In this digital era, our transactions are transparent but anonymous, our deals are secure but swift. The blockchain doesn't just record transactions; it enforces them
The Ledger of Tomorrow
Picking up where our burnt sticks left off, blockchain technology has emerged as the tally stick 2.0, without the risk of pyrotechnic accidents. In this digital era, blockchain is redefining the essence of transactions with its incorruptible ledger, and here’s how it’s correcting the historical homework mistakes of its wooden predecessor.
The Final Tally
Alright, in the final analysis, let us consider two things:
No technology is perfect. The Tally Sticks had issues. And for all its innovative charm, Blockchain has its issues as well.
Building technologies (be it any type of technology) is always driven by an urge to solve problems that are innately human. And by that I mean problems such as establishing trust, building safety, integrating security, making things scalable, creating transparency, and establishing authenticity. We have come far from the analog tally sticks in the pursuit of solving these problems. And while blockchain may not be the ultimate answer, they do address the same questions in a much more profound way.
Finally, if you enjoyed reading this article, and like to receive unique wisdom from peculiar and non conventional concepts such as Tally Sticks, I highly recommend subscribing to Andrew’s substack where he shares unique and inspiring insights on a wide array of topics daily, making sure you never run out of interesting topics for dinner conversations.