Stone Bitcoins and Echoes From the Past

The best Sundays are for long reads and deep conversations. This time we're reflecting on the past and taking a deeper look at one of the most interesting blockchain allegories that doesn't involve technology at all…

AccessTimeIconDec 15, 2019 at 4:19 p.m. UTC
Updated May 2, 2022 at 4:04 p.m. UTC
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The best Sundays are for long reads and deep conversations. This time we're reflecting on the past and taking a deeper look at one of the most interesting blockchain allegories that doesn't involve technology at all…

Don't have time to listen? Partial transcript below (Stone Bitcoins segment only)

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On today's episode...

In the midst of the biggest bubble to date, deep in the "then they laugh at you" phase, and with the China narrative rising for the first time as trade volumes overtook the rest of the world, Adam B. Levine was joined by Stephanie Murphy and Andreas M. Antonopoulos in early 2014 for a conversation that is very different, yet somehow the same as they react in real time to all-time high prices of $220...

But first, In the nearly seven years since they started talking Bitcoin, Adam's favorite segment from his favorite writer is without question, "the Island of Stone Bitcoins" by then-LTB managing editor George Ettinger. Bitingly funny and still one of the easiest ways to accurately explain how blockchains and tokens work without the need for technology at all, this segment is not to be missed.

Let's Talk Bitcoin! #421 is sponsored by and, and is distributed in partnership with



I, for one, am glad to hear it.  You have my congratulations and respect; explaining Bitcoin is a noble endeavor.  Other noble endeavors include bathing a leper, manually clearing blockage from a constipated mule, and applying for anything involving the words "phase one human clinical trials." 

My point is you're doing something that is highly necessary and will ideally make the world a better place in the grand scheme.  In the immediate future, however, you will be miserable. You will be miserable, tired, and will really wonder how anything good could come of this. Bitcoin does not lend itself to casual explanation or to convenient metaphor.  

In fact, very few comparisons even suit it!  It's a currency but it works like a commodity.  It's mined in limited quantities, so... it's almost like gold!  ...except it's created at an exact, fixed rate and will end at an exact, fixed point.  So, not like gold. The work of 'mining' doesn't really 'accomplish' anything, either.  

Bitcoin is a trainwreck of anachronisms to have to dump on any unsuspecting novice, and horrible pseudo-words like 'blockchain' and 'hashcash' just make it sound more like a scam.   

Take all this insufferable jargon and add the fact that any given person you're explaining it to has used fiat currency notes their whole life and you have a recipe for... for nothing.  Probably, nothing. There is a slightest sliver of possibility they will understand and take interest, and the much greater likelihood they will become exasperated and simply hate the stuff out of frustration and I'm getting angry just thinking about it actually.  

You're more likely to create a frothing madman who calls Bitcoin a pyramid scheme (showing equally poor understanding of Bitcoin AND pyramid schemes) than an excited new adopter. What we need is a story- a story with a point, with a message, with an illustration of what we're trying to get across.  In ancient times, before the centuries-old culmination of written human language was abandoned in favor of "blogging," this was known as an "allegory." 

In my last article I made mention of a story that helped to finally introduce me to the world of Bitcoin, and the more I've learned the more apt the story has become.  There is a strong allegory for Bitcoin in a currency that has already been used before. That currency is hundreds of years old, and there isn't anything else quite like it. 


Off in the Pacific Ocean, among the Caroline Islands, is a particular trio of small islands known together as the Island of Yap.  Its native residents form several communities among the islands and number in the thousands. From its 'discovery' by Spain in the sixteenth century until the turn of the twentieth, it was a largely ignored Spanish property.  

Once the island fell under German ownership in 1899, more details of their peculiar culture were finally exposed to the western world.  More specifically, their peculiar economy. Yap was lush in vegetation and fairly sustainable but had no precious metals or minerals to be found.  

So, for function of currency they made stone coins.  The people of Yap, keen on not half-assing this 'coin' thing, decided to go big AND to go home.  They sailed up to four hundred miles to other islands with vast limestone quarries so that they could carve out enormous stone discs three to twelve feet in diameter, wheel them over to rafts, and sail them back to Yap. The men who carved the stone rolled it into a convenient place (even if it took a dozen extra hands to do so) and it was ready for trade.  

After they 'mined' and moved the coin, its journey really was done.  When time came for a large trade, something on par with livestock or a dowry, the coin changed hands.  By 'changed hands' I mean the two involved parties loudly and publicly declared that this particular coin here was now property of so-and-so, and proceeded to leave it right where it was. Nobody could be arsed to move the bloody things.  They were massive, and the community was tight-knit; so why bother?  

So generations passed and the stones never moved.  Tallies were never marked or recorded on the stones- it wasn't necessary.  Business was conducted and announced publicly, and the rightful owner of any given stone was common knowledge to anyone living near it. 

So these stone coins weren't traditional "coins."  You could not fit them in the pockets of anything but the most clownly of pants.  You did not even put them in a vault for safekeeping. They simply existed, and the community kept the knowledge of who owned which at any given time.  

Anyone who has arrived at through conscious effort and not via any elaborate cat-on-keyboard incidents should be able to see some of the parallels at work here. To those of you who see it, I say shut up, it gets even better. 


For at least three generations, there was a particular family in a particular home whose wealth was well-known across the islands.  The family had long been owners of what might have been one of the biggest stone coins in circulation. ... and not one person on those islands had ever seen it. 

Those aforementioned generations earlier, this enormous coin was carved out and loaded up for transport by an expedition of incredibly ambitious Yap residents.  Their prodigious haul slipped from import manifests and into mytho-history when a harsh storm battered their rafts just a little ways from home shores.  

The raft carrying King Coin (or Coin Kong?  I didn't really think this one through, sorry) was cut loose, and their newfound wealth plummeted to the seafloor. In a boring, physicality-obsessed, fiat economy, this would be the tragic end of an otherwise uplifting tale of heroic (and Homeric) avarice.  The story would be embellished, talk of sirens and wizards would be peppered throughout the narrative, and, at the end of the day, these men would still be broke. 

The people of Yap, however, didn't see what the fuss was about. The men of the expedition all vouched for the proportions of the coin and its general location.  Adding to this the fact that it was 'lost' only in the tangible sense and not in the fiscal one, there was no reason not to go on using it.  

After all, they lost their millions to a storm, not to the craps table.  Just like "that coin between those two trees," or "that coin next to Jim's house," and "that coin of Bob's that looks conspicuously like a phallus but he gets angry when you point it out," this coin entered circulation based on reputation.  It was "that coin at the bottom of the ocean," and this family had clutched it for years before spending it on God-knows-what.  

The stone coins already existed in a decentralized, community-enforced 'ledger.'  By this precedent, they no longer needed even to be tactile objects. Stone coins were simply a unit on the Stonecoin Blockchain, tracked by group-verified transactions.  With only so many coins in circulation, the community kept fairly consistent tabs on who owned what.  

Whether or not Yap investors lived in fear of a 51% attack is beyond the scope of this allegory; the point itself should be abundantly clear by now.  


...the point is that the stone coins are an allegory for Bitcoin.  I hope I didn't make that too subtle. In this interpretation of the Stone Money of Yap as an allegory for Bitcoins (see previous sentences,) the story becomes a functional teaching tool. The story of Yap and its coins is a place to start when introducing newcomers to the blockchain.  

I cannot emphasize "teaching the blockchain" nearly enough; you don't teach a person what a "Bit-Coin" is, just as much as you don't explain the texture, shape, and flavor of Yap's limestone coins.  You tell them how they are recorded and how they're used. Just as each of us keeps record of the blockchain, the people of Yap all had to keep aware of who owned what. Ownership was a matter of public declaration.  By spreading the word to others, it became verification. You didn't own currency unless you got the majority of the community to agree you did. You did this by conducting your business transparently, and announcing all transactions to the world at large.  A deal made in secret or made dishonestly was impossible; transparency was part of the protocol. Bitcoin and stone coin changed hands almost identically.  

Whether limestone or crypto, these aren't the typical 'coins' one rustles from sofa cushions or the pockets of your playground extortion victims.  We don't lay eyes on these coins- we just all agree on where they are and who they belong to. All our Bitcoins are on the metaphorical ocean floor, safely away from prying eyes and sticky fingers, and every member of the community is sitting on a hard copy of the ledger.  We don't simply 'trust,' however- our ledger is produced, updated, and thoroughly encrypted by the same software protocol that makes it possible.  

Prying eyes aren't left totally in the dark, either; the same blockchain that tracks this ledger is protected from being altered, but is visible to any who want to see what coins have moved where. What Yap enforced by culture we enforce by encryption.  What they cut from stone we carve from graphics cards. It's these traits that made their stones and our bitcoins commodities instead of reserve notes; false value could not be simply printed off a press. Bitcoins and stone coins weren't empty promises generated on a whim.  They are the product of investment, whether its time spent sailing or time spent mining a processor. 

The story of Yap, the stone coins, and the system they used is a great teaching tool, certainly- but it's not just for the outsiders.  See, the story of stone money doesn't simply end there; all of us within the community can learn from what happened to Yap's stone coins when the Tax Man came calling. 


After Germany got over the novelty of having their own tiny preindustrial island, it decided to move in and get unpacking.  They mercifully weren't insistent on displacing or bothering the native culture too much, but they wanted room for military stations around the islands and needed the infrastructure to connect them. The simple gravel walking trails connecting all of Yap's villages were awesome for bare feet and batcave-sized novelty coins, but were less than ideal for German road vehicles.  The German government sent word out to all the village leaders that wider, modern stone roads needed to be implemented across the islands.  

 It isn't in doubt whether or not the elders got the message- it just seems unlikely that any of them gave a damn what their absentee foreign overlords wanted.  There was very little incentive to appease these strangers, and months upon months went by without any sign of the tropical expressway the military was looking for. German officials, recognizing that no progress was being made, resorted to other means of motivating the locals. The callous Germans slaughtered the island inhabitants swiftly and brutally is what you expected me to say, because you, sir, are a racist, and shame on you.  

These were turn-of-the-century bureaucrats, not Nazis, first off.  Second, social disagreements didn't actually escalate into graphic violence at the rate modern flame-wars would have you believe.  The Germans' solution was so simple and nonviolent it made Ghandi look like Manson. A few officials went around the Island, spray-painting sizable black X's on the biggest stone coins they could find.  They then proclaimed, for all to hear, that these stones were now confiscated funds of the German government. 

The people of Yap had been fined. Durable, modern-sized roads appeared in very, very short order.  Upon completion, friendly German officials were dispatched once again- this time with solvents to clean the marks off the stones.  The levied fines had been refunded. The people of Yap were manipulated, of course- but was their money manipulated, or was their belief? The Germans never took a thing away from the residents of the Island; they simply preyed on the peoples' willingness to play by their rules.  

In their graciousness to be part of the larger world their European 'masters' presented, the people of Yap mistakenly believed that those paint-wielding officials' rules held real power over them.  Forgetting that they themselves -the community- held power over their money, they let the ILLUSION of authority give a few bureaucrats REAL authority. 

There's an altogether-different, and much-less-funny allegory at work there. In the world of Bitcoin we're beset on seemingly all sides by the spectre of government intervention.  We have men and women of our own community crying out for recognition, permission, and regulation from various political masters- all out of fear. Bitcoin isn't being threatened by the government. We are. 

Bitcoin is a protocol.  It is not a place or a thing, and to call it international is still understating its virility.  Bitcoin is apolitical. It transcends boundaries as if no boundaries existed. Law can claim about as much jurisdiction over Bitcoin as it can over wind and rain.  It simply isn't all that vulnerable to governance. But WE are- and we're projecting our weakness onto Bitcoin by begging for political legitimacy. In threatening businesses and individuals over Bitcoin, bureaucrats are again painting marks on values that they don't respect. They CAN harm us as individuals, it's true; but we can't give them more power than they are due.  

So long as we go back and forth between cryptocurrency and fiat currency, we are pinned under their thumbs.  The more we trade in Bitcoin as a currency, and not a speculative medium for Dollar gains, the more freedom we secure.  

Business and value are human creations, not political entities, and by seeking their approval and placating their whims we give them political authority over us. If we keep volunteering to play the Bitcoin game by their rules, we may eventually start to believe them. ...and then, Bitcoin won't be Bitcoin anymore.  It'll be theirs.    

The story of Yap and the eponymous "Island of Stone Money" was originally told in 1910 by anthropologist William Henry Furniss III.  The subsequent 1991 revisiting of the subject by the Hoover Institution was researched and written by Milton Friedman. This interpretation and commentary of their works is entirely the product of this article's author.


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