Claudio Koller ยท 3/8/2023

What do Rai Stones have to do with Bitcoin?

Rai, also called stone money, was a used medium of exchange or commodity money in the Yap Islands. The Yap Islands are an atoll located in the West Caroline archipelago in the Pacific Ocean. They are 1300 km from New Guinea and 870 km from Guam and are politically part of the Federated States of Micronesia. Production ceased in 1931.

Rai Stones as Currency

The use of rai stones as currency dates back at least to the 13th century and continued until the late 19th century, when they were replaced by more modern forms of money. Today, rai stones are considered a cultural asset and are protected by the Yap government. Some of the largest and most valuable stones are displayed in a museum on Yap Island.

>Learn more about the Medium of Exchange and what it is exactly.

Making the Rai Stones

The rai is made of stone discs that are placed all over the islands by the side of the road or around the houses. When the ownership changes, the acquirer usually leaves the stone where it is because of the weight and the difficulties of transporting it. Who owns which stone is kept in memory by the villagers.

The stones can be up to 4 meters in diameter and weigh over 5 tons. They are preferably made of the minerals aragonite and calcite, which, however, did not occur on the island. Thus, the stones had to be procured from Palau, which is located about 400 kilometers southwest of Yap. This distance was covered by ships in a five-day journey. journey.

The laborious production and long transport from Palau to Yap limited the number or size of the stones and increased their value.

Transportation of the Rai Stones

A hole was cut through the stones so that they could be transported to the sea with the help of sticks. Especially large stones were placed in and near the sea. A Japanese census in 1929 documented 13,281 pieces of the stone money, of which about half of the stones are still there today.

Inflation of the Rai Stones

In the last centuries there was an inflation of the stone money, when the transportation of the stones became easier and cheaper. The turning point was the foundation of the company in 1875 by David Dean O'Keefe.

The transportation of stone discs also attracted the attention of international captains. For example, Captain David O'Keefe, an American ship captain, who became rich by transporting the stones. In return for transporting the rai from Palau to Yap, he demanded copra, which he resold for profit in Hong Kong.

By the time of his death, Captain O'Keefe is said to have earned half a million dollars from his dealings in Yap.

Similarities Rai Stones and Bitcoin

Rai stones and bitcoin are both examples of forms of currency that use a decentralized system to enable transactions.

The transfer of ownership of Rai stones was based on verbal agreement and public consensus of residents from the Yap Islands, while Bitcoin uses a decentralized digital ledger, the blockchain, to track and verify transactions.

The big difference is that Rai stones were physical objects, while bitcoin is a digital asset that exists only as data on a computer network.

Rai stones could only be used in a specific geographic location (the island of Yap), while bitcoin can be used and transferred anywhere in the world where there is an internet connection.

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