It might seem peculiar, but the idea behind Bitcoins was around for longer than the last decade.
In fact, it was around for centuries. You can trace the concept of symbolic money back to the Yap Islands. Where Rai Stones were used as a means of barter.
So, am I saying that a different version of Bitcoin existed before its time? Pretty much, yes!
What are Rai stones? And how were centuries-old pieces of rocks similar to the cutting edge technology that enables us to use virtual currency today?
Let’s take a walk along the shores of the Micronesian island group called Yap, located in the Caroline Islands of the western Pacific Ocean, according to Wikipedia.
Yap is a popular tourist destination, known for its schools of dolphins and beautiful coral reefs. Dive a little deeper, and you might come across huge, flat, irregularly circular stones with round holes cut into the middle, embedded in the ocean floor. These are the Rai stones, Yap is famous for, dispersed across various locations on the islands and submerged on its ocean beds. They form an essential part of the island’s history.
Now that you know what the Rai stones of Yap are, you also need to have a sense of what Bitcoins are before you can draw comparisons between the two.
Bitcoins, invented by ingenious programmers back in 2009, is the first-ever type of cryptocurrency. And since new virtual currency can be created at any given time, tens of hundreds of novel cryptocurrencies followed bitcoins.
Four Main Similarities Between Bitcoin & Rai Stones
Here are four of the main similarities that connect the modern Bitcoins to the ancient Rai stones, through links transcending time.
Money That Is Not Physically Possessed
That’s right. We’re talking about money you don’t carry around in your wallet.
Most Rai stones were simply too big to keep on one person. While Bitcoins are virtual files stored in computers.
Ranging anywhere from 3.5 centimeters to 3.6 meters in diameter, Rai stone discs were carved out of limestone and were used as a symbolic form of money. These mammoth stones formed the backbone of trade for the Yapese. And that makes the bigger Rai stones, sometimes even weighing up to 4000 kgs.
Understandably, it was not practical to cart them around due to their weight and susceptibility to damage; hence they were not moved after the transfer of ownership.
In an instance where a rai stone accidentally fell from a canoe while being transported and sank to the seafloor. The islanders would agree that the stone must still be there, even though it was no longer visible to them; hence regarding it as a valid unit of currency.
Similarly, no one can say they have ever seen or held a Bitcoin, yet view it as a valid form of digital currency that can be used to make purchases. We don’t know what Bitcoins really look like since they do not have a physical form. But we know that they exist, and we make transactions accordingly.
Extremely Transparent Financial Systems
So, the Yapese trade basically operated on a system of oral agreements. The new owners knew the names of the previous owners.
And although these stones were rarely moved after they were first placed in prominent locations around the island, everyone was aware of the ownership details of each stone. Their barter system was a unique one based on trust and transparency.
Transparency is an essential aspect of Bitcoins, as well. The Bitcoin’s transactional system invokes a sense of security because it works on an unprecedented level of openness.
Bitcoins are virtual currency. Although they are neither visible to the naked eye nor tangible like the Rai stones, their ownership is transferred through transactions in much the same way. While the small group of Yapese operated on oral agreements, Bitcoin operates on a much larger scale using blockchain technology.
This is a commonly shared public ledger that forms the framework for Bitcoin transactions. Everyone can access and view every transaction ever made, and there is no way of tampering with the recorded data. This eliminates any chance of fraudulence, helping cryptocurrencies build one of the most secure financial ecosystems.
Both Bitcoins & Rai Stones Are “Mined”
The Rai stones were literally mined from limestone quarries from the Palau islands and transported to Yap to be used as currency.
Islanders undertook long and sometimes perilous journeys to quarry Rai stones, and the effort that went into the mining, transportation, and erection of each large Rai stone determined its worth.
Bitcoins are also “mined’. But they are not mined literally from the earth.
Here, mining is an advanced decentralized process that enables high-powered computers to generate bitcoins on the Bitcoin network.
When Bitcoin miners solve complex mathematical problems, it produces new bitcoins. Much like the traditional mining that involves pickaxes, sweat, and grit, Bitcoin mining is also a tedious process that is rarely rewarding, which is what makes Bitcoins so valuable.
Rai stones were, and still are, rare and unique.
The perceived value of a Rai stone is conditional the size and the skilled craftsmanship that went into creating it. Another factor that played a significant part in adding to the value of the stone was its history, which was passed down from generation to generation by word of mouth.
If the stone was part of a historical event, or if a famous voyager brought it in, the overall value of the stone increased and was promptly acknowledged.
And like the Rai stones of Yap, bitcoins of the 21st century are also rare commodities.
This rarity of Bitcoins stems from the fact that you cannot mine Bitcoins infinitely. The Bitcoin network is designed in such a way that there are only 21 Million Bitcoins that can be mined after which, the supply runs out. And, out of this 21 Million, a total of 17 Million Bitcoins have already been mined.
So, bitcoins are exhaustible resources, which add to their total value.
Value of Bitcoin
Bitcoin halving also plays a vital role in increasing the value of Bitcoin.
It is the process of reducing the reward Bitcoin miners get for processing transactions.
Which involved not only the documentation of Bitcoin ownerships but also the verification checks necessary to ensure that there is no discrepancy or duplication in the Bitcoin network.
Through halving, this transactional reward for miners diminishes by half once every four years. Halving makes bitcoins desirable to hedge against inflation. Also, it ensures that all the aforementioned 21 Million Bitcoins are generated by the year 2140, which no new coins coming forth.
Pretty incredible, isn’t it, how currency used centuries apart seems to work on such similar principles?
But, then again, Rai stones and bitcoins are both rare and unique forms of currency, which helped build a decentralized financial system that values transparency and security. So in the end, their similarities are not so unexpected, are they?
[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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