Perhaps the closest resemblance to the decentralized ledger system of a blockchain was found on the Micronesian island of Yap. The local communities used large discs made of limestone, called Rai stones, as a valuable form of exchange. Limestone was hard to find on Yap and hence was perceived as a scarce resource that held high value. However, using the Rai stones presented two problems. Firstly, they were so large and fragile that they were seldom moved after being placed in a location. Secondly, if they were exchanged or presented as a gift, it was often the case that the person receiving the stone lived quite a distance from the stone.
This is where it gets really interesting. Each time Rai stones were exchanged between parties an oral account of the exchange was announced to the entire community. In a way, the entire community held a ledger in their minds. If a dispute took place between members on the matter of ownership, the whole community would gather to collectively settle the issue by tallying their mental ledgers. While this may not be the most reliable of storage mechanisms, it is truly a system where the element of trust – essential for any functional financial system – was held not by a single source, but by an entire community.
A mark in history
While their forms have varied over time, it is interesting to note that from the earliest known civilizations and across disconnected geographies, the underlying idea emerged independently and served a prominent, if not silent, role in moving the wheels of commerce forward. One ledger entry at a time.
Alpian has submitted an application for a full banking license to Switzerland’s Financial Market Supervisory Authority (FINMA). Content of this publication is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.