Ines AissaniThe world has seen the emergence of many forms of currency over the centuries, from shells and beads to paper money and coins. However, there is one type of currency that is certainly one of the most “eccentric”: Yap stones, also called “rai” or “fei” depending on the region where they were used.
These are massive stone discs used as currency on the Pacific island of Yap in present-day Micronesia. These primitive stones are particularly interesting today because they appear to share a number of characteristics with a modern form of currency: Bitcoin.
The Stones of Yap: A Historical Overview
In the past, people from Yap mainly traveled to Palau, a neighboring island more than 450 kilometers away, to extract limestone stones which they worked into stone discs. The stones are round and flat with a hole in the center, similar to millstones.
These discs – which could reach several meters in diameter and weigh several tonnes – were then transported to Yap on rafts and canoes that would be considered very rudimentary today. Transportation was particularly dangerous for locals who often lost their lives during journeys to transport the Rai stones.
On Yap, they were used as currency within the island. According to historians Glumac and Fitzpatrick, radiocarbon dating and other methods suggest that the earliest stones date back to the year 1400.
Due to their size and weight, these stone disks were often left in their original locations, even when they changed owners. However, an oral record was used to track ownership of the stones. It is also important to note that transaction history partly determined its value. Thus, a stone with a history of respected owners had a higher value. The notion of trust is therefore essential here. Indeed, for any established currency, it is necessary to have the trust and recognition of the community for it to be used as a currency of exchange. If the community lost confidence in the stone or if a new stone was artificially created, its value could be drastically affected.
The system of registering owners has allowed to maintain confidence in the "monetary" value of the stones. Moreover, this system of tracking on a register of ownership is one of the characteristics that has made a first similarity with Bitcoin. In his work "The Bitcoin Standard", Saifedean Ammous writes “Of all the historical forms of money I have encountered, the one that most closely resembles how Bitcoin works is the ancient system based on Rai stones on the island of Yap.”
The registers used by the Yap stones and Bitcoin
There are several striking similarities between Yap stones and Bitcoin. First, as we mentioned above, both currency systems use a ledger to track ownership. In the case of Yap stones, this was an oral ledger, while Bitcoin uses a digital ledger.
Bitcoin, introduced in 2009 by an anonymous person (or group) known as Satoshi Nakamoto, is a form of digital currency that uses blockchain technology to record all transactions. Like the Yap Stones, the properties of all bitcoins are immutably recorded on a decentralized ledger commonly called a "blockchain". It is possible to track the ownership of each bitcoin issued on the blockchain.
Limited monetary emission
Finally, both currency systems were designed on limited supply models. In the case of the Yap stones, the quantity of stone available on the island of Palau limited the possible supply of currency. Yapstone was difficult to create and there was a finite amount of rock in terms of resources. Moreover, during transport, some stones were lost at sea. This may recall to a lesser extent the mining process which also requires a certain amount of energy and resources. Finally, just like the Yap Stones, the Bitcoin protocol has a limited supply with the total number of bitcoins that can be created at 21 million, thus creating a fixed supply.
The differences between Yap stones and Bitcoin
Despite these similarities, there are also important differences between Yap stones and Bitcoin. For example, while Bitcoin can be divided into smaller units for easier transactions, Yap stones cannot be divided.
Additionally, while Bitcoin is entirely digital and has no physical presence, Yap stones are massive physical objects.
Finally, Bitcoin is also tradable internationally, while Yap Stone was limited to a small local community. Outside of Yap, Yap stone became at best a decorative object, at worst, a stone with holes in it.
Reflections and criticisms
While the comparison between Bitcoin and Yap stones is appealing to many bitcoiners, caution is still needed regarding the veracity of the conclusions. Some researchers have looked into the "reliability" of the comparison between Bitcoin and Yap stones. This is particularly the case of Jo Lindsay Walton of the University of Sussex who warns in his works on the possible misinterpretations and misreadings that many economists have made of the Yapese stones. These may have led to a misunderstanding of the use of the Yapese stones, which may fatally lead to an equally misleading correlation with Bitcoin. Thus, the author states that "while the analogy is intriguing, it nevertheless depends on opportunistic misrepresentations of Yapese economic culture. None of the main specific points of the analogy stand up to scrutiny. Each is either ill-defined, unconvincing, and/or trivial."
The Impact of Yap Stones on Modern Understanding of Money
The history of Yap's stones offers a fascinating insight into how currency systems evolved over time. We tend to trace the evolution through the use of shells but the Yap stone is even more subtle to understand, especially when we want to analyze Bitcoin.
Ultimately, although Yap Stones and Bitcoin are separated by centuries and radically different technologies, they share many fundamental principles. Both currency systems illustrate the importance of decentralization, transparency and limited monetary issuance.
As the world continues to explore the use of cryptocurrencies, it is useful to remember that many of the ideas behind these technologies are not new, but are rooted in ancient practices. This is where the study of history and commercial exchanges between men takes on its full importance. This is all the more important if we want to better understand Bitcoin and its contribution to the current global economy.
