Sources: *Darwin Among the Machines* by George B. Dyson
(Addison-Wesley, 1997) pages 162-163
*Quantulumcunque Concerning Money* by Sir William Petty
(London: A. and J. Churchill, 1695), page 165.
"Exchequer Tallies," by Hilary C. Jenkinson
*Archaeologia,* second series, vol. 12 (1911) page 368.
*Instinct and Reason: Deduced from Electro-biology* by
Alfred Smee (London: Reeve, Benham and Reeve, 1850), pp.
(((George Dyson remarks: Some media are dead, as in dead- end, while others represent extinct ancestors of species thriving as vigorously as ever today. Exchequer tallies fall into the latter category; the recent proliferation of digital currency and public-key cryptography having brought the principle of the tally-stick back to life. The disappearance of the Exchequer tally is also of interest == rarely has the decision to put an end to an archaic medium back-fired as spectacularly as when the bonfire intended to extinguish the remaining Exchequer tallies engulfed the British Parliament buildings instead. What follows is a brief description, drawn from the sources as cited, and excerpted from pp. 162-163 of *Darwin Among the Machines* (Addison-Wesley, 1997).)))
In 1682, in the brief but precise *Quantulumcunque Concerning Money,* Sir William Petty posed the question: "What remedy is there if we have too little Money?" His answer, amplified by the founding of the Bank of England in 1694, would resonate throughout the world: "We must erect a Bank, which well computed; doth almost double the Effect of our coined Money: And we have in England Materials for a Bank which shall furnish Stock enough to drive the Trade of the whole Commercial World." 
Petty showed that wealth is a function not only of how much money is accumulated, but of the velocity with which the money is moved around. This led to the realization that money, like information but unlike material objects, can, by assuming different forms, be made to exist in more than one place at a single time.
An early embodiment of this principle, preceding the Bank of England by more than five hundred years, was the ancient institution known as 'tallies' == notched wooden sticks issued as receipts for money deposited with the Exchequer for the use of the king.
"As a financial instrument and evidence it was at once adaptable, light in weight and small in size, easy to understand and practically incapable of fraud," wrote Hilary Jenkinson in 1911. "By the middle of the twelfth century, there was a well-organized and well-understood system of tally cutting at the Exchequer. . . and the conventions remained unaltered and in continuous use from that time down to the nineteenth century." 
A precise description was given in 1850 by Alfred Smee [a remarkable, and remarkably-neglected, artificial intelligence and neural network pioneer]. As resident surgeon to the Bank of England and the son of the accountant general, Smee was able to state with authority concerning some tallies preserved as relics that "curiously enough, I have ascertained that no gentleman in the Bank of England recollects the mode of reading them."
"The tally-sticks were made of hazel, willow, or alder wood, differing in length according to the sum required to be expressed upon them," reported Smee. "They were roughly squared, and one end was pointed; and on two sides of that extremity, the proper notches, showing the sum for which the tally was a receipt, were cut across the wood. All these operations were performed by the officer called 'the maker of the tallies.'
"On the other two sides of the instrument were written, also in duplicate, the name of the party paying the money, the account for which it was paid, the part of the United Kingdom to which it referred, and the date of payment; recorded with ink upon the wood, by an officer called 'the writer of the tallies.'
"When the tally was complete, the stick was cleft lengthwise by the maker of the tallies, nearly throughout the whole extent, in such a manner that both pieces retained a copy of the inscription, and one half of every notch cut at the pointed end.
"One piece was then given to the party who had paid the money, for which it was a sufficient discharge; and the other was preserved in the Exchequer. Rude and simple as was this very ancient method of keeping accounts, it appears to have been completely effectual in preventing both fraud and forgery for a space of seven hundred years. No two sticks could be found so exactly similar, as to admit of being identically matched with each other, when split in the coarse manner of cutting tallies; and certainly no alteration of the particulars expressed by the notches and inscription could remain undiscovered when the two parts were again brought together.
"And, as if it had been further to prove the superiority of these instruments over writing, two attempts at forgery were reported to have been made on the Exchequer, soon after the disuse of the ancient wooden tallies in 1834." 
Exchequer tallies were ordered replaced in 1782 by an "indented cheque receipt," but the Act of Parliament (23 Geo. 3, c. 82) thereby abolishing "several useless, expensive and unnecessary offices" was to take effect only on the death of the incumbent who, being "vigorous," continued to cut tallies until 1826.
"After the further statute of 4 and 5 William IV the destruction of the official collection of old tallies was ordered," noted Hilary Jenkinson. "The imprudent zeal with which this order was carried out caused the fire which destroyed the Houses of Parliament in 1834." 
The notches were of various sizes and shapes corresponding to the tallied amount: a 1.5-inch notch for 1000 pounds, a 1-inch notch for 100 pounds, a half-inch notch for 20 pounds, with smaller notches indicating pounds, shillings, and pence, down to a halfpenny, indicated by a pierced dot.
The code was similar to the notches still used to identify the emulsion speed of sheets of photographic film in the dark. The self-authentication achieved by distributing the message across two halves of a uniquely- split piece of wood is analogous to the way large numbers, uniquely split into two prime factors, are used to authenticate digital financial instruments today.
 Sir William Petty, 1682, *Quantulumcunque Concerning Money* (London: A. and J. Churchill, 1695), p. 165.
 Hilary C. Jenkinson, "Exchequer Tallies," *Archaeologia,* second series, vol. 12 (1911) p. 368.
 Alfred Smee, *Instinct and Reason: Deduced from Electro-biology* (London: Reeve, Benham and Reeve, 1850), pp. xxix-xxxii.
 Hilary C. Jenkinson, "Exchequer Tallies," p. 369.
George B. Dyson (email@example.com)