It has taken a while for this one to sink in with me and an even longer while for me to form any kind of opinion on this ever more baffling phenomenon.
I’ve recently read this Guardian article; terribly negative about the whole cryptocurrency thing. The gist of it was; ‘don’t do it’ by calling it collective insanity and a modern day tulip mania or whatever disparaging remarks must have come to their mind, which I found a little lazy – If you asked me, it seems to be a perfectly rational(ised) response to the underlying conditions that gave rise to this ‘mania’. Low interest rates. Low wage rises. Overvalued and saturated traditional asset prices. Crisis of faith in the traditional economic/monetary system. Growing inequality. Cheap money from loose monetary policies. ‘Shrinkflation’. Etc. Certainly more rational than waiting in the hope that the next lottery draw would hit our lucky numbers, or blaming Mexicans and Romanians for all our social ills yet again)
In any case, the other day, I also came across a podcast where Pippa Malmgren (author of Signals: the Breakdown of the Social Contract and the Rise of Geopolitics), started talking about bitcoins and cryptocurrencies in general, and how they could, overnight make conventional fiat currencies obsolete. A little far-fetched I thought, but it made me wonder how many bitcoins she might have bought before that lecture.
What was more interesting, mentioned in the same talk was the 1782 Act of Parliament, which basically stipulated that all accounting should be on paper ledgers, and abolished the widely circulated ‘tally sticks’ as a part of accounting procedures.
Now, you might be wondering, what on earth are tally sticks? Simply put, tallies were a tamper-proof way of recording lending/borrowing transactions back in the days. The stick containing a record of a debt, would be split in half, down its length. The debtor would retain one half, called the ‘foil’ while the creditor would retain the other half, called the ‘stock’, and because of the way the wood split, every split tally record would be unique and virtually tamper-proof. Does that remind you of anything?
Normally, these transaction records would be kept in a ledger somewhere. However, something cool happened; tally stocks (the creditor’s half) began being traded. For example, a stock showing, say ‘John Smith owed £11,563’, would actually be traded for £11,563 more or less, assuming John Smith was creditworthy. Basically a ‘stock’ market was born, where it was possible to use stocks to pay for goods and services as a convenient form of payment, not relying on officially minted coins or gold. Does that remind you of anything?
Well, to find out how it all ended, google ‘16 October 1834’
Have a good Friday