Economic Anthropology 2019 DOI:10.1002/sea2.12154
Banking on Stone Money: Ancient
Antecedents to Bitcoin
Scott M. Fitzpatrick1,2& Stephen McKeon3
1 Department of Anthropology, University of Oregon, Eugene, OR, USA
2 Museum of Natural and Cultural History, University of Oregon, Eugene, OR, USA
3 Lundquist College of Business, University of Oregon, Eugene, OR, USA
Corresponding author: Scott M. Fitzpatrick; e-mail: smﬁtzpa@cas.uoregon.edu
Centuries ago in western Micronesia, Yapese islanders sailed to the Palauan archipelago 250 miles away to carve their famous stone money disks
from limestone and then transported them back for use as exchange valuables in various social transactions. While
were not strictly currency, their
value is similar to other traditional and modern objects where worth is arbitrarily based on both real and perceived attributes. Recently, corollaries
have been made between
and newly established electronic cryptocurrencies that use blockchain technology— essentially, digital ledgers that
track ﬁnancial transactions in real time across a computer network to ensure that they are seamless and incorruptible. In this study, we examine
the sociophysical similarities and differences between stone money and cryptocurrencies that rely on blockchain, both of which demand a uniﬁed
and continuous chain of information to ensure that the value is known and ownership indisputable. This research suggests that stone money: (a)
is an exemplary ancient analog to blockchain that used oral ledgers solidiﬁed through social networks to create accurate and unbroken lines of
communication so that economic relationships involving
could be established, maintained, exchanged, and rectiﬁed, and (b) may have been a
progenitor that inspired the development of Bitcoin.
Keywords Exchange systems; Cryptocurrency; Finance; Archaeology; Micronesia; Paciﬁc
Peoples from the small island group of Yap in the Western Caroline Islands of Micronesia initiated one of the
most unusual and ambitious exchange systems in the ancient world when they began traveling 400 km (250 miles)
southwest to the Palauan archipelago to quarry large disks of limestone (Figure 1). Known as rai in Yapese, but
commonly referred to as “stone money” (Figure 2A –G), these disks were brought back to Yap on watercra through
challenging currents and winds that were oen unpredictable (Hazell and Fitzpatrick 2006). Upon reaching Yap
aer their arduous journey, stone money disks would then be oered to or exchanged with various individuals and
subsequently displayed in prominent locations. It is noteworthy that prior to Europeans becoming involved in this
exchange system in the late 1800s (Fitzpatrick 2003, 2016), rai were the largest portable objects in the Pacic ever
moved over open-ocean prehistorically. Rai were considered extremely valuable, but given their size, weight, and
relative fragility, they were not typically moved aer being placed in a specic location. As a result, if a rai were
gied or exchanged, the new owner(s) of a disk may not have lived in close proximity to it. To ensure that ownership
was known and indisputable, an oral ledger was used within communities to maintain transparency and security.
ough stone money in Yapese society has been studied by anthropologists for decades (Berg 1992; de Beauclair
1971; Fitzpatrick 2003; Friedman 1991; Furness 1910), it has recently piqued the interest of economists and others
in the modern nancial sector given similarities that they share with blockchain technology and cryptocurrencies.
ese innovations arose in 2008 when Satoshi Nakamoto, a pseudonym for an individual (or group) who remains
anonymous, posted a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” to a cryptography mailing
list. is paper introduced the concept of Bitcoin, using blockchain to solve the double spend problem where
© 2019 by the American Anthropological Association. All rights reserved 1
S. M. Fitzpatrick & S. McKeon
Figure 1 Map of the western Paciﬁc showing the loca-
tions of Yap and Palau (drafted by S. M. Fitzpatrick).
someone is able to spend a unit of digital currency more than once. Several months later in January 2009, Nakamoto
released soware that launched the network and the rst units of Bitcoin cryptocurrency that has been the cause
of concern and confusion by various government agencies and nancial organizations, but also excitement at the
prospect of changing the way we perceive currency and its movement through the global economy. In a span of
fewer than ten years, Bitcoin has emerged as the most widely recognized and highly valued cryptocurrency in the
world, leading to the development of many others that are now exchanged in online marketplaces (see Calvão 2018).
While the origin of blockchain technology dates back to at least the early 1990s (Haber and Stornetta 1991),
Bitcoin was a unique and seminal implementation of blockchain technology upon its release by Nakamoto and is a
payment system that is global and decentralized (i.e., the units or “coins” are not placed in a centralized depository
or managed by a single bank or administrator). e creation of new Bitcoins derives from a process called “mining,”
in which units of the digital currency are created as a reward for assembling a valid “block” of transactions that is
accepted by the network and posted to the shared ledger. Once the new block is created, the successful miner can
then claim the unit(s) of cryptocurrency and associated transaction fees, which can then be exchanged for other
currencies, products, or services.
e blockchain itself is a record-keeping service established, maintained, and secured through the use of
computing systems that together harness signicant processing power. Miners repetitively group new transactions
into blocks and transmit them across the network of nodes, which maintain consistency and completeness of a given
block in the chain, which is then rendered eectively unalterable by other users.
While cryptocurrencies and blockchain technology may seem to be more recent innovations, the premise
behind them is rooted in the ancient past, which involved the production, movement, and use of traditional forms
of “currency,” the most visible and prominent of which were the famous stone money of Yap. e manufacturing
and value of both Bitcoin and rai were predicated on many of the same principles, and we argue that the latter may
have been an inspiration for the former.
It is interesting to note that a shared ledger was used to track ownership of rai centuries before computers were
invented. However, as oral ledgers have scaling constraints, we have come to rely on separate, centrally managed
ledgers to track asset ownership in society today. e rise of Bitcoin represents an advancement in technology that
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Figure 2 (A)
nently in front of a men’s house
) in Gagil, Yap; (B)
lining a stone platform and newly
constructed replica of a men’s
house at the Mangyol site in
Gagil, Yap; (C) A large
in front of a stone platform in
Gagil, Yap; (D) A stone money
disk from Gagil in Yap with
a rare variation of two holes
instead of one; (E) A stone money
disk from Gagil with stepped
gradations (photos A–E by S. M.
Fitzpatrick); (F) Stone money
found submerged off the coast
of Yap (photo courtesy of Brad
Holland); (G) Yapese Islanders
carrying a stone money disk
during a ceremony at the Mangyol
dancing grounds in Gagil (photo
by Matthew F. Napolitano).
makes it feasible to track ownership once again on a trusted distributedledger,notjustwithinanarrowgeographic
community but instead linking the entire globe to a single economic system of record.
In this article we synthesize oral traditions, ethnohistorical accounts, archaeological data, and the existing
literature to describe the history behind the origin of stone money, the means by which they were assigned value
by Yapese islanders, how ownership was secured and maintained, and how value was assigned and kept within a
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S. M. Fitzpatrick & S. McKeon
community ledger that was passed down through oral traditions. We then examine why the manufacturing and
use of stone money is an analog for cryptocurrencies and blockchains that ensure transparency, integrity, eciency,
and security. As we demonstrate, the processes by which both rai and Bitcoin were developed, transported, and
maintained require sophisticated negotiations between partners to obtain access, mining of the resource, movement
of the “coin” between nodes, and placement of ownership within a “block” that is known among all relevant parties.
Essentially, the foundation on which digital currencies like Bitcoin are formed and traded vis-à-vis blockchains is
a dierent version of what was occurring on Yap centuries ago, but with several similar procedures and outcomes.
e nal section of our article highlights key dierences between Bitcoin and rai,someofwhichledtothedownfall
of the rai monetary system and serve as a cautionary tale for cryptocurrencies.
The Foundations of Bitcoin and Blockchain Technology
Blockchain is a digital record-keeping system where the ledger is established, maintained, and secured using
computer processing power (see Calvão 2018; Crosby et al. 2016; Lemieux 2016; Pilkington 2016). Bitcoins are
produced by miners who validate new transactions by solving a dicult mathematical “puzzle,” repetitively group
them into blocks, and transmit them across a network of nodes, which receive and verify the information. Aer the
process is completed, the ownership of the Bitcoin is cemented into the system digitally and ensured because the
data are unalterable by other users, who would have to modify data across each of the existing nodes simultaneously.
In contrast, a centralized design, such as the banking system, records transactions (deposits, withdrawals) on an
internal ledger, documents them digitally into a primary server (which may or may not be connected to other
servers via electronic pipelines), and uses a backup system as a failsafe measure.
One of the drawbacks of the centralized system is that since data are maintained in multiple separate ledgers, the
ledgers are not in sync in real time. e true state of ownership balances is revealed with a delay aer reconciliation.
For example, when a check deposit is made at a bank, but the check is drawn from an account at a dierent bank,
clearing can take several days. During this period, the banks are essentially reconciling each of their respective
ledgers to post the transfer of funds. In cases where the check was drawn on an account with insucient funds, the
transaction at the depositor’s bank needs to be reversed. is can occur on a number of levels and with dierent
kinds of transactions for a variety of assets. Furthermore, centralized systems require a degree of trust between the
account holder and the entity maintaining the centralized records of ownership, which is oen taken for granted in
the United States, but represents a real friction to economic activity in other parts of the world (Bossone 1999).
e ways in which distributed computing systems (networks) are susceptible to failure is oen craed in terms
Shostak, and Pease (1982), it is the notion that various components within a computerized system, such as a server,
dierent observers, such as a user, seeing an entirely dierent problem than someone else connected to the network
that ultimately leads to failure. Overall, the advantages of blockchain are that (a) transactions maintain consistency
and completeness within each block in the chain, allowing market participants to trust the ledger of ownership even
if they do not trust other participants; (b) blockchain removes third-party interference, centralization, and backup
issues; and (c) blockchain can potentially be done for a nominal fee compared to other nancial transactions. With
these benets in mind, how did the concept of money emerge, and whyare Yapese stone money and cryptocurrencies
fundamentally dierent from other monetary vehicles known historically?
The Emergence of “Money”
How and why money emerged in the past and issues related to concepts of nancialization have been the focus
of vigorous study by scholars for centuries (e.g., Davies 2002; Pitluck, Mattioli, and Souleles 2018; Weatherford
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Banking on Stone Money
1997). While there is some disagreement as to the underlying reasons behind why money emerges within dierent
societies, many have suggested that currencies developed as a more ecient means for individuals to repay debts to
landholders or others who controlled resources (Graeber 2012).
Economic theory holds that money fullls three basic criteria: It is a (a) medium of exchange, (b) store of value,
and (c) measure of value. As a medium of exchange, money provides the function of allowing users to exchange an
intermediary unit that has a set value (e.g., coin, paper) to pay for objects or services that are dissimilar in nature. A
medium of exchange cures the “double coincidence of wants” problem where trade occurs only if both participants
desire the good or service that the other possesses (Szabo 2002). Store of value refers to the ability of money to retain
purchasing power through time so that it can reliably be used to pay for goods or services at a later date. Finally, the
measure of value (orunitofaccount)ofmoneymeansthataunitofcurrencyservesasacommondenomination
that is a relative measure of worth. Units of account are used to price goods, services, assets, and liabilities. So how
do stone money and Bitcoin t within these economic parameters for how currency emerges and is dened?
In the Pacic Islands, as in many other societies, “money” developed from locally available, but comparatively
rare resources that were assigned value and exchanged, primarily for foodstus and other goods. Some common
examples of money in the Pacic include thorny oysters (Spondylus sp.) and pearl shells (Pinctada sp.) (see Trubitt
2003). Bronislaw Malinowski’s (1922) famous anthropological treatise on the Kula ring in the Trobriand Islands
represents what is probably the most well-known case of shell exchange in Oceania. It is important to note that
in none of these or other cases in the Pacic did the exchange of shells or other resources evolve into what would
strictly be dened as a currency. As we discuss later, however, only in the case of Yapese stone money did an exchange
valuable have its ownership recorded orally in a social ledger that allowed possession of an object to be tracked and
henceforth “titled” to an individual or group.
is begs the question, Why did two very disparate types of “money” —Yapese rai and Bitcoin—emerge using
a similar means for tracking ownership? Distributed ledgers are oen used to solve problems associated with trust
(e.g., Mainelli and Smith 2015). Given that the actual possession of rai was oen infeasible, an owner would deem it
to be valuable only if they could trust that all participants in the economic system agreed on the record of ownership.
Eectively, it was not a bearer asset; ownership was established solely through the ledger. Similarly, Bitcoin is oen
referred to as “trustless.” It is notable that it emerged during one of the worst economic recessions in recent history,
a time during which trust in the nancial system was at a historic low.
As we describe herein, there are some distinct similarities between the two, though there are also important
dierences that prevent a seamless comparison. is likely relates to the ability of a smaller island society to
eectively manage the dissemination of information (rai ownership)andtheuseofmoderntechnology(blockchain)
to do the same, but at a much broader scale.
Stone Money Manufacturing and Exchange
For centuries, Yapese islanders traveled to the Palauan archipelago (Figure 1) to quarry limestone from caves and
rock shelters in the Rock Islands, where it was abundant and, in some cases, relatively accessible (Berg 1992; Cheyne
1852; de Beauclair 1963, 1971; Fitzpatrick 2003, 2008, 2016; Fitzpatrick, Caruso, and Peterson 2006; Gillilland 1975).
While the antiquity of when stone money production began is not entirely known given a paucity of archaeological
investigation at various sites in both Palau and Yap (Fitzpatrick 2002), it was certainly occurring before European
contact in 1783 when the British packet ship the Antelope wrecked on the shores of Ulong Island, and stone money
production was observed to be occurring in Yap prior to the late 1700s (Fitzpatrick 2003).
A rich collection of oral tradition discusses how a Yapese navigator named Anagumang was the rst to discover
limestone in Palau. Aer his discovery, he tasked his men with cutting the stone into the shape of a sh. e form
was apparently awkward, and aer looking up into the night sky at the full moon, he ordered his men to instead
carve the stone into a circular shape. Nero’s (n.d.) ethnographic research on Palauan-Yapese linkages suggests that
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S. M. Fitzpatrick & S. McKeon
Anagumang and Fatha’an, also a navigator, were in competition to bring money back to Yap and continued to do so
with help from Yapese Outer Islanders. Nero (n.d., 11–13) described a Yapese account of the story:
e Yapese were industrious and started to look elsewhere for a new form of currency. ere were two men
Anguman [Anagumang], and were trips for Rull and Tomil, for Fatha’an was from Ngelog [Rull] and Anguman
from Tomil. During this expedition they found the limestone islands and a place called Ramith; that’s where they
started to make some kind of medium of exchange. ere they made the stone pieces into a number of dierent
shapes, including the shape of a sh, then nally it was a full moon. ey looked at the full moon, and then made
something in that shape. But they had a problem carrying the stone, so they put a hole in the middle to make it
easier to carry.
It also becomes apparent that aer these rst pieces of stone money were quarried in Palau and brought back
to Yap, they became quickly integrated into existing intra-island exchange behaviors and extremely desirable. Oral
tradition also discusses how, over time, there were increasing levels of competition to obtain rai from Palau and even
eorts to sabotage other voyages. One well-known case involves two navigators known as Fatha’an and Anguman
(Nero n.d., 11– 13; see also Fitzpatrick 2003, 73-78):
ey worked in the quarries they found in the rock islands, working during the quar rying and shaping of the pieces
of stone money. And Fatha’an nished rst, so Anguman told him, “why don’t you take the ones over rst?” So
Fatha’an set out from Ngermdiu, and started for Yap. Fatha’an being Yapese, and knowing Yapese ways, knew that
it was more than likely that Anguman would use magic to make a typhoon and kill him while he was traveling
to some islands he went into them and hid. And the place where he hid is called Ramith, Yapese for “the place
of hiding”. And several days later the typhoon came. And seven days later, aer the typhoon, Anguman sailed
for Yap, and there were heavy seas. But Fatha’an didn’t move, as he knew that Anguman would sail, so Anguman
came and passed Fatha’an. en Fatha’an created a typhoon for Anguman, so that the gales and waves were high,
and split the canoes into pieces, and some of the ras carrying the stones sank, and other ras were separated
from the canoes. But Anguman was able to bring some pieces on his ras trailing aer his canoes. …en a little
later Fatha’an came behind, and he collected some of the stone money still attached to ras oating on the water,
le behind by Anguman. So he added some of Anguman’s money to his own, and proceeded to Yap. And he came
very slowly, for he was towing a lot of rocks on ras.
Beauclair 1971, 185). Gillilland (1975, 188) described another story regarding the acquisition of stone money, which
was originally published in Müller (1917).
Long ago, a crew of shermen from Tamil oered their catch to the chief who was not satised with the size of
the shes. “For these I cannot give you any ganea’,” he said, “this is still in Rajangall” [ganea’isthehabitual
return gi for a present of shes] So the men set out for the Palauan Island. ey had only a thoab canoe, built for
use within the lagoon, and their Pelu (pilot) was of the lowest rank, not familiar with the magic of the high seas,
having mastered only tarur, the lagoon magic. He used it on a buttery which ew ahead of the canoe, shining at
night, leading the way. On Palau the men cut a number of stones, but the canoe was unt for carrying the heavy
load. ey attached them to a ra, and with the help of the magic buttery, found their way back to Yap. ese
were the rst stones that reached the island by ra and became known as rai no burage, the stones of the buttery.
Aer reaching home, the Yapese chief (or chiefs) who sponsored the expedition would greet the men who
transported the rai from Palau and then they would distribute them to individuals or kin groups based on a number
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Banking on Stone Money
of criteria, such as status. e value of rai was dependent on several factors, including shape, size, quality, eort
expended, method of transport, and individuals associated with its manufacture and/or ownership. In essence, each
rai had a pedigree, and smaller pieces could have greater value if the process surrounding their production and
movement had a certain level of signicance (e.g., if people had died during the carving, a well-known carver had
produced the stone, or it derived from a quarry that was exceptionally dicult to access).
Anthropological and ethnohistorical research (see Berg 1992; de Beauclair 1971; Gillilland 1975; Hage and
Harary 1991, 1996; Hezel 2008; Müller 1917; Nero n.d.) demonstrates that Yapese stone money was an important
exchange valuable that could be used in a variety of dierent social transactions (e.g., gis in marriage, ransom of
a corpse; see Fitzpatrick 2003, 2016), but one that mirrored others that were already previously being used, such as
shells (Petersen 2009, 24– 25). Stone money was also integrated into an existing interaction sphere between Yap and
many of the eastern Outer Islands (atolls) as part of the sawei exchange system. is involved tribute and interaction
withatolldwellerswhowouldbringitemssuchasloinclothsandpandanus mats to Yap in exchange for materials and
goods they did not have, like pottery and timber for making canoes (Berg 1992; Hunter-Anderson and Zan 1996;
Lingenfelter 1975). Archaeological evidence suggests that the sawei was active for centuries prior to the beginning of
stone money production and that the Yapese may have acquired the knowledge and/or assistance of Outer Islanders’
navigational and sailing knowledge for trips to Palau (Descantes 1998; Fitzpatrick 2008).
Interestingly, the quarrying and moving of rai continued, but changed with European involvement in the mid-
to late 1800s, particularly with the arrival of Captain David Dean O’Keefe, who settled on Yap during the German
administration and befriended Alfred Tetens (see accounts described in Tetens 1958; Tetens and Kubary 1887), who
had established a trading outpost on the island (Fitzpatrick 2003; Klingman and Green 1950). Tetens had tried in
vaintopersuadetheYapesetoproducecopra (dried coconut meat) for trade, which was a valuable commodity in
East Asian markets, but the Yapese resisted his eorts. O’Keefe apparently came up with the idea of obtaining larger
ships, metal tools, and other incentives to bring Yapese workers to Palau and rai back to Yap in return for copra,
larger and more common through time, leading to ination.
Research that has examined watercra capabilities, the presence and availability of local resources, and
oceanographic conditions suggests that the largest rai brought to Yap pre-European contact probably did not exceed
2 m in diameter and approximately 2.75 T (Hazell and Fitzpatrick 2006). In general, stone money on Yap that are
this size or smaller are more roughly hewn and less symmetrical, suggesting that they were carved with traditional
tools (shell, stone) versus metal tools aer Europeans became involved. It should also be noted that all completed
timber through the center to carry by villagers on their shoulders (Figure 2G). However, this would have only been
possible with smaller stones given the sheer weight of calcitic limestone from which they were made. Larger rai (e.g.,
those exceeding perhaps 1 T or more) would have had to have been transported dierently on land by pulling in an
armature,forexample.isindicatesthatholesmadeinlargerrai were simply a matter of convention and not for
any practical use (Fitzpatrick 2003; Hazell and Fitzpatrick 2006).
While there are other ethnohistoric and ethnographic descriptions of Yapese stone money quarries that are not
discussed in detail here (see Fitzpatrick 2003, 2008, 2016), what is extraordinary is that once a rai was brought to
Yap and ownership established, it would then be placed in a specic location, such as the front of a house or domicile
or along dancing grounds, and remain there in perpetuity (Figure 2A–E). Because the limestone from which rai
were produced was exceptionally heavy, but also extremely fragile, the stone money would remain in situ even if
ownership changed. is meant that when rai were exchanged for any reason, the community would by necessity
need to keep a ledger through oral means to ensure that the new owner was reported and that ownership could not
be disputed by others. Essentially, the process of traveling to Palau, negotiating with Palauan chiefs or clan groups
to access limestone deposits, carving rai,bringingthembacktoYap,havingtheminspectedandveriedbyalocal
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chief, placing them in a “repository,” and maintaining proof of ownership over long periods of time through oral
tradition is analogous to how Bitcoin is created and maintained through a digital ledger system using a blockchain.
We examine this process in more detail in the following sections.
Blockchain: Ancient and Modern Corollaries
When examining how Yapese stone money is produced, recorded, and exchanged, there are a number of corollaries
to Bitcoin and blockchain. In this section, we review similarities along several dimensions, specically (a) scarcity;
(b) new units generated solely through the contribution of work; (c) resource intensity; (d) transfer via public
announcement; (e) distributed, transparent ledger of ownership; (f) physical possession not required for ownership;
and (g) scaling challenges.
New Bitcoins cannot be generated at will as the supply schedule is set in advance by code and cannot be altered
unilaterally. As of this writing, there are roughly 17 million units of Bitcoin in existence,and the maximum number
that will ever exist is 21 million. e cap on total supply creates scarcity. e Bitcoin protocol limits ination,
and these limits are visible to all market participants. Analogously, supply of new rai was also constrained. e
constraints were not imposed by a digital protocol but rather by physical means since limestone was not present
on Yap. Creating new supply required a trip over open ocean to neighboring Palau and the exertion of manual
labor. Additionally, Palauans controlled access to suitable limestone deposits, and a discussion or negotiation was
required for new production, further limiting new supply. In a sense, this process is similar to other monetary stores
of value throughout history in which there was a constrained stream of supply. Notable examples include cowrie
shells (Cypraea) used in both the African slave trade (Hogendorn and Johnson 2003) and by peoples in the highlands
of western New Guinea (Irian Jaya) (Breton 1999), as well as many other species of shell that were highly valued and
used either to make new products, such as beads or other decorative elements, or to trade widely in many dierent
parts of the world (see Trubitt 2003 for a review).
Generation of new units
Mankiw (2014, 220) denes at money as “money without intrinsic value that is used as money because of
government decree.” Within at monetary systems, central banks manage expansion and contraction of the money
supply. In contrast, expansion of the money supply in both rai and Bitcoin is generated solely through contribution
of work. In the case of rai, manual labor was required to sail to Palau, carve new disks with tools, and return to Yap
with the new units of exchange. Similarly, new units of Bitcoin are minted only through the mining process, which
requires the contribution of work of a dierent variety. Bitcoin miners contribute computational resources (known
as hashpower) to validate and post transactions between market participants.
For readers that are unfamiliar with the mining process (see Calvão 2018), a colloquial analogy can be
constructed using the example of a jigsaw puzzle. As Bitcoin transactions are announced by market participants, t hey
enter a holding tank known as the mempool. Each transaction can be thought of as a single piece of a jigsaw puzzle.
e miner’s task is to assemble a subset of pieces from the mempool into a completed puzzle. In aggregate, trillions
and the process starts anew.
All Bitcoins in existence have been created through the mining process. In the case of both rai and Bitcoin,
there exist incentives to contribute work. For rai, a Yapese miner’s fee or reward could be either tangible (a rai,
dierent commodities) and/or intangible (e.g., elevated status within the community). For Bitcoin, the primary
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economic incentive is the block reward— a small amount of new Bitcoin that is minted and awarded to the miner
who completes the block.
Based on the framework outlined above, it becomes clear that both ancient and modern forms of consensus-based
ledgers require immense power to operate. e Yapese version relied on human power to construct boats; sail
to Palau; negotiate with Palauan clans or chiefs for access to limestone; carve the rai; construct stone docks,
platforms, and other architectural features to facilitate manufacture and movement of stone within and outside
of the quarries; and then return home with their cargo using some type of watercra (Fitzpatrick 2003). is would
have required months of planning, extensive labor, and signicant energy to complete the process (Fitzpatrick and
Diveley 2004). e same could be said of today’s digital blockchains, which necessitate tremendous computing
power to create and verify new cryptocurrency units along with other ancillary considerations (mathematical and
computer programming expertise). As Nakamoto (2008, 4) wrote, “the steady addition of a constantof [sic]amount
of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time
and electricity that is expended” (see also Calvão 2018 for a review of these processes).
Method of value transfer
Ownership transfers for most assets, whether dollars in a checking account, title to a home, or shares of stock, are
executed through a message to a single intermediary. For example, writing a check is a payment message to your
bank, the owner of the ledger that controls your bank balance. In contrast, value transfer within both rai and Bitcoin
requires a message to a networkof participants rather than a central coordinator. In both rai and Bitcoin, third parties
are removed during peer-to-peer transactions; value is transferred without intermediation.
Transferring units of Bitcoin requires the owner to transmit a message identifying the sending wallet, the
receiving wallet, and information authenticating that they possess the right to transfer Bitcoin from the sending
wallet (i.e., a private key). e network of Bitcoin nodes and miners validates this information and completes
the transfer. In Yap, transferring ownership of a rai stone also occurred through an announcement to the
community, whereby individuals (chiey elites, primarily) announced ownership expressed through oral means
to the community, with ritual gatherings and social events serving as the verication of ownership and ensuring a
secure transaction that could not be altered.
Perhaps the most striking similarity between Bitcoin and rai is the use of a distributed ledger for records of
ownership. is is the blockchain ledger in the Bitcoin network, and an oral ledger shared among all villagers in
Yap. Multiple copies of the ledger prevent tampering and allow all participants to reach consensus about ownership.
Within the Bitcoin network, “nodes” keep a copy of the ledger, validating and relaying new transactions. An ancient
corollary to nodes in the Bitcoin network are the villagers of Yap. ey conrmed and repeated information about
thetransactionsofrai stones through an oral ledger, preventing double-spending.
Transparency is a key feature in both systems. For the Yapese, the visible placement and prominent display of
rai in front of residential structures and along dancing grounds provided an opportunity for villagers and other
participants to verify the quality and other characteristics of the specimen. e histories behind each individual rai
well established and the life story of a given piece is known and can be passed down from generation to generation.
Both oral and digital blockchains represent an “unequivocal source of truth” where anyone within the system (island
society or electronic realm) can know and observe the entire transaction history, enabling auditability.
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Physical possession not required
When people are rst introduced to Bitcoin, a common reaction is to question whether something without physical
form can have value. It is worth noting that society assigns value to all kinds of intangible goods, for example,
Coca-Cola’s secret recipe or Google’s search algorithm. But these are cash ow generating assets. Commodities
and monetary instruments typically allow physical possession if the owner chooses, so Bitcoin appears novel in this
regard at rst glance. However, rai stones oer an ancient example of assigning value to a monetary instrument
without requiring physical possession.
e trip from Palau to Yap with the newly carved stones would have been treacherous given the distance over
open ocean and challenging winds and currents known in the area (Callaghan and Fitzpatrick 2007; Hazell and
Fitzpatrick 2006). ere is physical evidence of several pieces of stone money found underwater by divers in Yap
(Figure 2F). Oral traditions report one large and signicant rai that had inadvertently fallen o a ra or boat to the
bottom of the sea during transport as it was being brought to shore, and it is interesting to note that the Yapese
allowed this disk to enter the money supply anyway. It did not matter whether a stone sat on a pathway, near a
residence, or at the bottom of the ocean. Physical possession was not required for ownership, and in the case of
the stone that had fallen overboard, physical possession was not even possible. Ownership was maintained through
the distributed oral ledger regardless of the location of the stone. is is not as unusual as it might rst appear. As
Milton Friedman (1991, 4) noted, “how many of us have literal personal direct assurance of the existence of most
of the items we regard as constituting our wealth?”
Challenges to scale
An oen-cited challenge for the Bitcoin network is that it does not scale well (Croman et al. 2016). ere is
a limit on the size of each block, constraining the volume of transactions that can be processed. Solutions to
the scaling problem are being developed, but they require either alterations to the block size specied in the
original protocol, or additional layers to process more transactions. A detailed technical explanation is beyond
the scope of this article, but interested readers can nd a synopsis of the context of the problem and proposed
solutions in Glazer (2018). e same could be said about rai. If the population of Yap grew to hundreds of
there exists a cognitive constraint on the number of rai stone transactions that could be processed through
word of mouth, limiting its ability to scale. As discussed in the “Ination and Seizure” section of this article,
the decline of rai coincided with a rapid expansion of supply and market participants brought about by foreign
One feature that separates Bitcoin from stone money is that it can be divided into eight subunits (i.e., a single
Bitcoin can be fractionalized down to 0.00000001 BTC, known as 1 satoshi, just as US$0.01 is known as 1 cent),
whereas rai cannot, despite past eorts by dierent colonial powers, such as the Germans, to do so. is is one
of the major reasons why stone money is not a currency in the strict sense but an exchange valuable that must
remain complete to retain its worth. It is this unique feature of rai that explains why nearly all of the completed
pieces found in Palau are broken (Fitzpatrick 2003). During the production sequence, if a rai cracked during the
nishing stages or in transport across the rugged karst terrain of Palau’s Rock Islands, it was le in place. ere is no
evidence that the Yapese tried to winnow rai down to a smaller size if this occurred, as the object had lost its value
completely. Attempts by the German administration to subdivide rai into smaller units were notably unsuccessful
(see Fitzpatrick 2003).
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Banking on Stone Money
Distribution of new currency
Although generation of new units was accomplished solely through the contribution of work in both systems,
the distribution of the new units worked dierently. In Yap, new units were given to elders or other signicant
individuals when the carvers returned from Palau. As previously mentioned, the carvers were rewarded for their
work, but not with the entirety of the new currency that had been generated. Bitcoin miners, on the other, hand reap
the full block reward of new currency upon solving a block. However, it should be noted that miners contribute work
toward many blocks that they do not solve, thereby enhancing the security of the network.
A stark dierence between the two systems is anonymity, or more accurately, pseudonymity. e oine identity
rather than names. Market participants need not reveal real-life identities to hold and transact with Bitcoins. In Yap,
acting under pseudonyms was infeasible. e identity of rai stoneownerswasvisibletoallvillagersandwasrequired
to maintain transparency and security, and as such, the distributed ledger in Yap only worked through visibility.
All Bitcoins are fungible and mutually interchangeable. In other words, they are identical and have uniform
characteristics. Rai, on the other hand, dier along several dimensions. For example, while larger rai were generally
valuable given their sheer size, smaller ones carved traditionally (i.e., pre-European contact) with stone and shell
versus metal tools were oen consid ered more valuable given t he additional chal lenges and labor involved, regardless
elements), or pedigree, also would have been inuential in establishing their value.
Inﬂation and seizure: The fall of
and lessons for Bitcoin
When Europeans formally took administrative control of Yap in the late nineteenth century, beginning with Spain
in 1885 and later Germany in 1899, two major changes took place that eventually led to the downfall of rai as a
monetary system. First, European and American traders brought with them modern technology that relaxed many
of the constraints on the creation of new monetary units. Larger and more advanced ships made transport between
Palau and Yap much easier. Modern carving and other tools streamlined and sped up the creation process for new
stones. e combined result was a spike in ination, particularly when the American captain David Dean O’Keefe
became involved (Hezel 2008). High rates of ination, characterized by a psychological loss of faith in expectations
of future value, have impaired numerous currencies through history, and rai is an ancient example (Bomberger and
Second, and perhaps more importantly, the Germans began seizing rai stones from the Yapese by marking them
with a black cross (Furness 1910), while the Japanese—who took control of Yap in 1915 up until 1945, at the end of
World War II —imposed their own currency and sometimes used rai as ballast, as anchors, or in construction (de
Beauclair 1971). rough conscation and defacement, the Yapese eventually lost faith in the value of rai,andfaith
is paramount in well-functioning monetary systems (Rajan 2016).
It is challenging to disentangle whether it was ination or seizure that served as the predominant factor in the
decline of rai, but it is instructive to review how Bitcoin addresses each of them. Bitcoin is characterized by limited
ination by design. New Bitcoins are generated as an economic incentive to miners to contribute work, but the
rate at which they are generated halves approximately every four years, terminating in a maximum supply of 21
million in the year 2140. As block rewards decline, the cost of validating transactions will increasingly be borne by
the transacting parties through fees. ese hard-coded limits in supply stand in stark contrast to rai because new
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S. M. Fitzpatrick & S. McKeon
technology cannot relax the limits. e limits can only be altered by consensus, which as of this writing appears
Bitcoin is also resistant to seizure by third parties. is resistance is rooted in the immutability of the Bitcoin
ledger—it cannot be changed without controlling 51% of the network, which is economically infeasible for anyone
other than a large nation-state, as of this writing. us, the party that controls the private keys controls the asset.
ownership, such as when a bank account is “frozen” or the Germans marked rai with a black cross. at said, an
owner could be compelled by a court to relinquish their private keys, if for example, they were acquired through
illegal activity; but since Bitcoin is a global network and the assets do not reside within any specic jurisdiction, it
e lessons from Yap regarding ination and seizure suggest that Bitcoin has mitigated these two important
factorsassociatedwiththedeclineofrai. ese points of dierence stand as lessons learned from history.
Discussion and Conclusion
Yap’s famous stone money is inimitable in world prehistory. Not only are these megaliths extravagant and unique
examples of portable artifacts, but they were exchange valuables that required signicant labor and energy
to produce and transport (Fitzpatrick 2003, 2008; Hazell and Fitzpatrick 2006). In addition, while they were only one
of many other types of exchange valuables used in the Pacic and elsewhere, they are distinctive because ownership
was transmitted through an oral ledger to ensure transparency, create security, enhance eciency, and establish
integrity of the exchange system. As we have discussed, these are all tenets of blockchain technology that underpin
the use of rai and cryptocurrencies.
AscanbeseeninFigure3,bothunitsarecreatedthroughmining a scarce resource that then demonstrates
proof-of-work. e storage (or custody) of these newly mined units ensures that the units are secure. As the new
Figure 3 The sociophysical processes by which
stones and cryptocurrencies are generated and trans-
ferred. Blocks or nodes in the system represent general-
ized stages of production and exchange, with the process
repeating to mine additional units. Conceptual similari-
ties between the two are shown in the center as dis-
cussed in the text (drafted by S. M. Fitzpatrick).
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Banking on Stone Money
unitsarecreated,ownershipisestablishedthroughpeer-to-peer negotiation, and each participant in the node is made
aware of the value transfer. Any future exchange ofaunitthattakesplaceisautomaticallyregisteredandknownby
all participants, which that ensures transparency and maintains security. e new owner is then recorded through
the process of auditability in a distributed ledger (oral for rai or electronic for cryptocurrencies).
In this article, we have outlined the principles by which blockchains—in oral and digital forms—operate and
how Yapese stone money (rai) can be considered analogous to modern cryptocurrencies along several dimensions.
In many ways, the process through which these monetary units are created, transacted, and recorded is similar,
demonstrating that the concept behind Bitcoin and the underlying blockchain technology have their roots in the
ideas proered in Satoshi Nakamoto’s white paper were based in part on what he/she/they had observed in or read
about traditional societies, with Yap being perhaps the most visible, well-known, and likely example. While this is
conjectural, the fact remains that Yap rai areverynoticeableremnantsof“currency,”foundinmanywell-established
museums worldwide, and are known to numismatists and other scholars whose interests lie in the history of money.
It seems perfectly feasible that Yapese stone money was a candidate for inspiring Nakamoto.
Historically, it is clear that the production of stone money waned through time, particularly as dierent
colonial administrations implemented their own rules and policies, introduced modern currencies, and translocated
villagers to other locations during wartime that le a void in knowledge to retain and transmit ownership.
While stone money is no longer used in everyday transactions— and with previous ownership of individual rai
now largely unknown and many stones le unrecorded in Yap —rai serve as meaningful reminders of how a
smaller island society craed an unusual but eective means for monitoring the ownership and exchange of
ough the sociophysical processes surrounding rai are not entirely analogous with those surrounding modern
cryptocurrencies, they remain the closest —and certainly most visible —ancient analog of which we are aware.
Given these unique correlations, stone money was a conceptual precursor to Nakamoto’s Bitcoin white paper, which
introduced a modern invention to solve similar societal problems. In this regard, the ancient and complex exchange
system involving stone money, founded by the inhabitants of a small and remote island society in the northwestern
Pacic, may very well have inuenced the development of one of the world’s most revolutionary technologies and
its rst cryptocurrency.
We thank the Palau Bureau of Cultural and Historical Preservation and the Yap Historic Preservation Oce for their support of this
research over the last twenty years. anks go to the three reviewers and the editor, Brandon D. Lundy, who provided helpful comments
that improved the article. We hereby state that we have no conicts of interest to declare.
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