Blockchain’s predecessor: Rai Stones.
Rai stones are one of the most unique currencies that has ever existed and can be viewed as an ancient predecessor to blockchain and cryptocurrencies.
Rai, or eventually Fei, are money made from stone, in a shape of a disc with a hole in the middle (so, donuts?) which were (and still are) used on a small Micronesian island called Yap. They are known as the world’s physically largest currency because some of the donut-shaped stones can be up to 4 meters in diameter. Not all of them are this large though, the size varies a lot:, there are the ones bigger than small cars, but also small Rai stones with diameter of only few centimetres. This means that their weight varied a lot as well, some of them had only a few kilograms but others a few tons.
It’s not exactly clear when the Yapese came up with this peculiar currency alongside the very interesting monetary system, but the most intense production of Rai stones is said to be in 1000–1400AD. On rare occasions, Yapese use them to this day.
One thing absolutely worth mentioning is that the stones themselves were not mined on the island of Yap. Yapese people had to sail to neighbouring island Palau, mine and cut the stone discs there, and then bring them back to Yap more than 400 kilometres across the sea.
In this article, we will take a closer look on Rai stones as a currency — what gave them their value, how the monetary system of Yap worked, how it can also be viewed as predecessor of blockchain based currencies and brief history and evolution of Rai throughout the years.
People of Yap started using this extraordinary stone currency some centuries ago, but nobody is quite certain, when the idea first appeared and why exactly they decided to use money made from limestone.
One possible theory is that because on the island of Yap, there are no valuable metals or similar resources (diamonds, jewels) or even said limestone, when Yapese first discovered this whitish stone on the neighbouring Palau island, it seemed very valuable to them so they deemed it worth to mine and bring back to their villages.
As to who came with this concept, it is said that it was the legendary Yapese navigator Anagumang. He and his crew sailed to Palau for an expedition and there they discovered the white limestone, which Anagumang ordered to cut into shape of fish and whales and bring back home. The shape of disc with a hole in the middle was chosen sometime later, probably for easier transport of bigger stones.
That is how people of Yap probably discovered Rai stones but before that the tribe used an old currency system of pearl shell money, called yar in Yapese. It is important, because even after accepting the stone doughnuts as their new currency, Yapese have still used the old currency system to value newly mined and cut Rai.
The Rai were initially used by rich and influential people, to show their status to the whole village. This was because each expedition to Palau could bring only a few stones, meaning they were very rare and valuable for Yapese.
First Rai were also not that large, only a few were bigger than 1 meter in diameter. That was, until the island of Yap was discovered by Europeans in late 19th century.
Europeans not only introduced iron tools to Yapese but they themselves sailed to Palau and brought back stones much larger than the old ones. Yapese also started using European ships and therefore more people then ever before started mining and cutting Rai stones. Significant influence was left by Captain O’Keefe, an Irishman who lived on Yap for almost 30 years and who helped Yapese with mining and transporting new stone discs almost 2 meters large.
As you can imagine, this caused massive inflation of Rai in late 19th and early 20th century and formerly scarce stones became quite common.
A little of former balance was restored in 1902 when Yapese declared that only the senior citizens of Yap had the privilege to go and produce Rai.
The largest Rai stones were brought and traded by German traders and are now located on the island of Rumung. Some of these stones have almost 4 meters in diameter, are over 30 centimeters thick and weight several tons.
Unfortunately, a lot of Rai stones (almost 50%) were destroyed during the World War 2 by Japanese who used them usually as a building material or as anchors.
Value of Rai
As mentioned before, limestone is basically non-existent on the Yap island, which makes it a scarce resource, therefore it was viewed as valuable by Yapese inhabitants.
But the material itself isn’t the only thing that gives Rai its value. Of course, because the stones vary in sizes, the bigger ones have higher value, but that still isn’t the most important thing.
Since the stones had to be mined on Palau, which is more than 400 kilometers away from Yap, and then transported back across the sea, all that with use of basic tools and fragile raft or canoes (at least at first), Yapese valued the history and journey of each stone disc tremendously.
Ultimately, more difficult the journey, more value the stone has. This is tied to the size of the stone, no doubt about that, but if some Yapese died (or the exact opposite) during the production or transport of Rai, it increased the stone’s value greatly.
And not only that, the journey for obtaining Rai stones wasn’t dangerous only because of the difficult and long transport across the sea, but the Palau island was viewed as a hostile territory by Yapese and just being on Palau island involved risks.
To conclude, the final value of a stone disc can be viewed as a summary of all those factors: scarce material, difficult production and long transport, risk of breaking the stone, of being in dangerous land and dying during the whole process.
After a successful expedition, the new stone discs were presented to high chiefs of Yap, who would gather from different villages. The chiefs would keep the large stones and two fifths of the smaller ones and they would confirm legitimacy of all the stones and give them value based on the aformentioned pearl money system.
Similarities to Bitcoin
Because of the extreme size and weight of the Rai stones, it is illogical to transport the discs with each transaction. Even though they weren’t used for day to day purchases, but rather for important occasions like weddings, funerals, big trades or serious apologies, it still wouldn’t make much sense. Not to mention the limestones of this size are quite fragile therefore it is quite the risk to try and move them, because they could easily break. So how did the Yapese deal with this?
They used a sort of a public ledger — they recorder every transaction or exchange in their oral history, in form of stories. Everybody knew the history at least of their own village and so this prevented any sort of disputes.
The stone discs, the big and important ones, never changed their place, once they were put somewhere. Only the owners changed.
There is even a story, about sailors who some 150 years ago sailed back from Palau with one big Rai stone and just before they reached Yap, they were caught by a storm and the stone fell to the bottom of the sea. But the sailors made it back and told everybody what happened, and everyone simply agreed to count this disc as legitimate, because by logic: it still has to be there. And to this day, somebody owns this stone and it still can be exchanged, just as any other. We can see that the physical placement of the stone really isn’t that important to Yapese.
We can already see one big similarity between Rai stones and Bitcoin and that is the public, transparent, shared ledger. The information about the value and ownership of both currencies are managed publicly.
But it isn’t the only similarity. Archeologist Scott Fitzpatrick from Oregon University with finance professor Stephen McKeon worked together on a study that compares Bitcoin to Rai and the key parallels they identified are that both currencies allow people to use money without physical transfer and both work without the help of any centralized bank and still ensure security.
They also speculate whether the Yapese monetary system influenced the creator of Bitcoin or whether it is just a coincidence or a case of something called cultural convergent evolution, where two distinct cultures develop very similar systems.
Last but not least, both Rai and Bitcoin are mined. Although in different fashions, the core mechanic stays the same: you expend power and energy to mine the currency and your expenditure is one of the key factors which give value to it. Proof-of-Work, Yapese did it first.