Many investors compare Bitcoin to gold as a store of value, even referring to Bitcoin as “digital gold,” a comparison believed to be one of the drivers of Bitcoin’s meteoric rise over the past several months.
But according to a paper by researchers at the University of Oregon, Bitcoin may be less like gold and more similar to ancient stone money.
In “Banking on Stone Money: Ancient Antecedents to Bitcoin,” published in January 2020 in the journal Economic Anthropology, Scott M. Fitzpatrick of the University of Oregon Department of Anthropology teamed with Inman Research Scholar and finance professor Stephen McKeon of the Lundquist College of Business to explore Bitcoin’s precedents as “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.”
In the paper, the authors discuss Bitcoin’s origins and its consequences for global commerce, highlighting what might be learned by studying ancient stone currency. In particular, they note that the underlying technology powering Bitcoin, known as the blockchain, has much in common with the ledgers Yapese islanders used to document ownership of their enormous stone coins.
Satoshi Nakamoto, a pseudonym adopted by an anonymous individual or group, introduced the concept of Bitcoin in a white paper distributed to members of an internet mailing list devoted to cryptography. In the paper, Nakamoto outlined a peer-to-peer virtual currency network where highly secured distributed ledgers, known as the blockchain, would be used to document transactions and currency ownership.
Further, new Bitcoins could be created or “mined” by computers validating those cryptographic ledgers when Bitcoins changed ownership. The rate of creation of new Bitcoins was built into the protocol, so that inflation is capped and known in advance.
Similarly, for centuries Yapese islanders in what is now known as Micronesia, sailed hundreds of kilometers to mine limestone they fashioned into enormous stone sculptures known as rai and used as currency. Those stone coins were so heavy that islanders drilled holes through the center so they could be carried on long poles. The tradition predates European contact with the Yapese in 1783 and formed the basis of their monetary system.
While it might seem like a giant stone coin would have little in common with Bitcoin, which has no physical presence, the sheer weight and difficulty of moving the rai from one holder to another creates a startling similarity.