Bitcoin is a 1000 year-old Idea

And it was just a secure back then as Bitcoin is now

Ever have a great idea for a smartphone app? I have probably thought up around 5 or more great app ideas only to find out they already exist in the app store. An app to find your lost earbuds? Bummer, it already exists. An app that tells you the names of mountain peaks just by pointing your phone’s camera at them? Already been done. Bitcoin is kinda like that. A tiny island in the Western Pacific has been using the precursor of Bitcoin for well over 1000 years. Just like Bitcoin, the island of Yap was able to cut out the middlemen of banks and develop a peer-to-peer monetary system that relies on consensus, trust and a public record of monetary ownership. Starting to sound familiar?

If you have read any of my Dad Guides, you know that I don’t profess to be an expert in finance or computer code, I am just a regular stay-at-home dad who’s interested in making the intimidating world of Bitcoin and cryptocurrencies a little easier to understand. But I am pretty sure that things like electricity and the internet didn’t exist 1000 years ago. So how did something that so closely resembles our digital, high tech cryptocurrencies happen in such a remote location, far from the financial centers of the world?

Yap was able to develop a system of money that anyone on the island could see and touch, just like today, when anyone can go online and view a bitcoin and learn its transaction history through the blockchain. Yap’s currency wasn’t under lock and key with armed guards at the ready. It was open and available to everyone to go view it, touch it and sit under its shade….

Wait, what? Shade? Money doesn’t usually cast a shadow, and Bitcoin certainly doesn’t. Yap’s currency are called Rai stones and they are huge. They are massive stone discs, the largest weighing in at roughly the same as an Asian Elephant.

And to this day, they are still scattered all over the island. Just like no one can transact in Bitcoin without a private key, no one can easily move a Rai stone, let alone steal one. But just like Bitcoin, the islanders used them for financial transactions by collectively remembering who owns each specific stone and everyone kept a mental log of past transactions. Sounds a lot like nodes, blockchain, and public ledger to me.

It didn’t matter if the stone was all the way on the other side of the island, if someone wanted to purchase something, say a house or land, all they had to do was announce to the wider community that they were transferring their stone’s ownership to the property owner for the sale of that house/land. Everyone spread the word and the island’s public mental database was updated. When that person wanted to “spend” their new stone, everyone agreed to the transaction, because everyone remembered they were the new rightful owner. You may have an outlier or two that didn’t remember correctly, but the Yapese system of the public mental database, consensus, and majority validation works just as well in today’s high tech world of cryptocurrencies as it did back then.

Bitcoin and cryptocurrencies can be intimidating and confusing. How to keep your Bitcoin safe and secure, even more so. That is why I wrote this short 30 min read. It will help you understand and feel confident securing your crypto assets.

If I can do it, the so can you!

B.J.

Originally published at https://www.thedadguides.com on January 17, 2021.