Bitcoin and the Ancient Rai Stone

While cryptocurrencies like Bitcoin and the blockchain may seem like futuristic innovations, the concept behind these new payment systems has been around for far longer than you might imagine.

At least a few hundred years ago, locals of Yap, a small island in western Micronesia, operated a system similar to modern cryptocurrency.

The islands of Palau provided the limestone for its production, and they are located about 250 miles (400 km) from Yap. They are the heaviest objects ever transported across the Pacific Ocean before European contact.

These massive stone discs were known as rai.

While other nations used cowries, tobacco, and other items as currency, YAP created a coin that resembled a sic and weighed approximately 9000 pounds so that they could trade.

Because this currency was too heavy to transport, it was placed in a public location where the entire town could see it. Occasionally, they migrated it over the vast Pacific Ocean

If Mr. Tunde possesses a Rai coin and wishes to use it to purchase something from Mrs. Bee, the community must convene a meeting at which at least half of the members must be present to approve the transaction. No one loses track of who the current owner is, etc.

And even if someone does decide to cheat, they will have to eliminate half the community with violence or bribery.

Similar to Bitcoin, the transactions are not controlled by any one individual but rather by the community as a whole.

Similarities between Bitcoin and Rai stones
Let’s examine the text utilized in the preceding paragraph. We shall list several words and activities and connect them to those used in the case of the Rai stone.

Node – Mr. Tunde
Peer-to-peer network of nodes - Community
Bitcoin - Stone money
Broadcast transaction – Announce transaction
Nodes reach consensus - Community members to reach consensus
Update local ledger copy - Make a mental note
Track Bitcoin ownership - Track Rai stone ownership

Conclusion

The rai stones fundamentally illustrate how transitory and mysterious the concept of money is. Currency is anything that serves as a medium of exchange for goods and services. In the twenty-first century, nations use fiat money, which has no intrinsic value (you cannot eat or wear a banknote) and is not tied to the price of any precious commodity, such as gold. Everything is merely abstract.

The only reason our money has value is that we collectively decide it does, similar to Yap’s enormous stone.

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