Back into the future: bitcoins, blockchains and stone-money

“The future of money – the great sweep of historical change – we intend to instigate, but we haven’t seen the revolution yet” (David Birch). This beautiful video by the quartz news outlet reflects the connection of money, identity, oral history, blockchains and communal memory. Pointing out the challenge of automated intelligence vs. human virtues the video compares bitcoins with the ancient stone money of Yap (an island of the western Pacific Ocean). Yet, the neat analogy which they draw made me think about the difference of valuing truth vs. valuing stories.


In essence, here is what some of the newest and some of the most ancient currencies in the world may have in common (now quoting from the video):

“Money is a communal story about who owns what [..]. Yap’s ancient system and the digital dollars in your bank work because what you have is connected to who you are […] but there is a big difference – one that could make Yap’s money a model for the future: Yap Islanders remembered who owned the stones without any intermediary like a bank or a government or a company to keep track of things. […] The more people who know, the more secure it is […]. In some sense bitcoin is a return to this earlier concept of communal record keeping … of communal memory”

It’s certainly worth thinking about such a connection yet we might also learn from thinking about the differences…


The blockchains of communal memory: valuing truth or valuing stories?

The (long) move from stone money to bitcoins is a move from oral tradition through script to technological (or automated) memory. And herein lies the crucial difference: Contrary to oral tradition, the blockchain as such does not provide us with human virtues, with morals and ethics. Rather it is witnessing without judgement! – so far at least.

Some (additional) background: the stone money of Yap

The island of Yap is famous for its ancient monetary system which is based on giant circular stone disks carved out of limestone (called “Rai”). Yap Islanders used to import these discs with their canoes from other islands far away – a long and dangerous journey. Up to the present day each stone disk has its own story, telling how it was produced, obtained and transacted, and who ever possessed it. Importantly, this story is what makes up the value of each single piece. It is story-telling which keeps the currency valid and in circulation even though the objects themselves need not be moved. Stone discs are displayed in rows in front of houses, near sacred places and along footpaths, roads and territorial boarders. Some are also lost in the ocean or deeply hidden in the forest. But none is ever forgotten. All are family keepsakes and inalienable in some sense. Once stone discs have been put up in one place, they are hardly ever moved again. Nevertheless, no matter where they are located, they can be transacted like money, mostly as compensation for land, death or in marital alliance.  In order to transact it is enough to make transactions public. Henceforth communal memory keeps track with every change of ownership. In principle every member of the community knows to whom each stone belongs, to whom it belonged before, how many times it had been exchanged, and where it came from. Stone disks are still a valid currency on Yap while each stone has its own story and each stone describes a part of the connections between all the members of the community. It seems indeed a bit like a blockchain. However, when it comes to the following comparisons of stone-money and bitcoins, this may be of outright importance: The ancient money of Yap is what may be called a “social currency” [1] – a money whose main idea is neither equality nor the exchange of commodities but to create, recreate and remember social relations.

Bitcoin: A system where “trust” is replaced by the “truth” which money represents

What the bitcoin-whitepaper of 2008 pointed out and what enthusiasts are not getting tired to repeat is that blockchains have the revolutionary potential to replace social institutions which establish “trust” with a decentralized and automated mechanism of establishing consensus about “truth.” That’s great because it reduces transaction costs and makes the financial intermediators obsolete. It is achieved – in principle at least – by open access, complete decentralization and a very particular form of communal memory.

In this system truth is established by consensus. Yet, in the peculiar form that bitcoins lend to communal memory, consensus is immediately represented in the creation of money. Each new block of bitcoin transactions is confirmed in a competition of miners who try to solve a mathematical problem in which all transactions of the block are encoded. The first who solves the problem submits the so-called “proof of work” and therefore she is rewarded with “value” in the form of a number of brand-new bitcoins. Before that, however, a majority of all other miners need to agree that the proof of work has been correct – meaning that they need to come up with the same solution. This works not because miners trust each other, but because all take part in the same competition; because all have access to the same data; and because they interact within the same infrastructure of value which they collectively sustain through agreement (this however still includes rules and adjustments to which members agree in more conventional forms of conversation). Not trust, but truth is what generates value which is subsequently represented in the winner’s reward (i.e. in the output of new coins). This mechanism however, makes trust obsolete for any single transaction in bitcoins, too – a bitcoin is a bitcoin is a bitcoin…. Staying within this system one might eventually say that money itself has come to represent truth.

Stone-money: A system where value rests on the trusted stories which money represents

As I indicated in the beginning Yap’s ancient stone-money is a social currency. Moreover, it is crucial to understand that while stone-discs are a valid means of exchange (particular exchanges, however), they are incommensurate to each other since value rests on each stone-disc’s individual tale.

The story may specify, for example, how dangerous the journey of a particular stone disc was until it reached the island; who the people were who brought the stone disc; whom or what they encountered on their way, and how they reacted; how the stone disc changed ownership in the course of centuries; who theses owners were; what kinds of motivations they had; what kind of relations each transaction reflected; and how there was each time something of the previous owner’s personality preserved in what contributed to the unique value of each particular object. [2] Needless to say that any new owner and any witness or commentator may have an interest in manipulating and modifying the story – how it was and how it continues.

Indeed Yap islanders, too, reach consensus about ownership by means of making transactions publicly known. But in their case it also means to make transactions and memory subject to a continued social practice of narration. Collective memory may share a certain mainline of a story which could be referred to as truth established by consensus. Crucially, however, valuing stone-money means trusting in tales that not only narrate in much richer detail but are likely to be told and re-told with many variations and interpretations. Here, value is not a question of truth stored in a cold chain of encrypted blocks. Rather it is about fame in a hot tale. Stone-discs represent value not because they are known to be there, but because they have a social life. What matters is not the mere fact of being remembered but rather how something is remembered and appreciated by those who share the intelligence. The value of stone money does not rest upon truth but human creativity. Good stories, however, may make good stones and good relations.

[Besides that it may be remarked that the image which the video conveys of a local currency without any central intermediary institution and where everybody has the same kind of access seems somewhat overdrawn. I guess one would have to take a deeper look, for example, at social structures, prestige, local political hierarchy and rivalry, the central role of men’s houses and initiation rites etc. As far as I know, Yap stone currency is transacted between men only – and knowledge about the history of transactions may be the capital of elders and initiated men in particular.]

Much contrary to the Yap Islanders’ way of reaching consensus, blockchains are not telling and spreading the same kind of stories. Blockchains do not use words, figurative narration and rhetoric skills. They may quickly boil down a happening to its essential core; but in retrospect they do neither add nor forget certain elements. They utilize cryptography (mathematical operations) and electric energy “to maintain consensus about the existence and stages of shared facts” [3]. Oral stories, however, continue to bear the potential of reinventing a history that leads into the future; and they are true only insofar as they convince and insofar people (still) like to believe. If I got it right, blockchains need not convince, they are self-referentially true and from any point of time there is only one history.

The future of money?

Much of the present hype around bitcoin and blockchains may be overdrawn. From an anthropological perspective it is perhaps not so important whether a currency rests on central authority or not. So far, all currency can be and is appropriated and re-created in more specific ways by local communities while it is a fairly general feature that local knowledge records transactions and how they link to social relations, local values and history. Violence set aside, communal memory is simply part and parcel of how it works.  After all, the blockchain’s promise of decentralization and the proclaimed shift from trust to truth hinges significantly on energy consumption, storage technology, processing capacity and of course on politics and other questions of social and economic inclusion as well as differentiation. Appropriation is likely to stay as crucial as it always was; while it remains to be seen who ends up with control over the means to make most efficient use of data however public and decentralized it may be (compare what happened to the internet with the rise of companies such as google or facebook).

Nevertheless ideas are the powerful means that lead into the future and what blockchains offer is the idea of linking people (and machines) in way more organic modes of interaction.  Most crucially: blockchains need not be about money as such; and contrary to the most prominent model of the bitcoin they need not be anonymous. In fact, as highlighted in the video, blockchain may revolutionize much more than money when personal identity becomes like entries entangled and irrevocably proven in a giant decentralized ledger. Most similar to language, money is an intermediary between exchange and identity. But it seems thinkable that blockchains bear the capacity of moving towards either of the extreme ends. Depending on scale, each case would be a true revolution. One would stick with (anonymous) exchange and make money the reward for the discovery of truth (i.e. as pioneered by bitcoins). The other would perhaps straightly put proof of identity and eligibility in the place of money. It would value what people are, but in its most extreme form it would generate just one singular public tale.

However, what the makers of the video seek to point out and to which I agree – employing the reference to Yap’s ancient stone money – is that the future of money does not only depend on technology. It relies on what humans are willing to make out of it. It’s all about applications!

Monetary innovations, financialization and the surge of new currencies and payment systems have already significantly transformed how we think of money, how we use it and how we assess its potentials. It seems we are moving towards an understanding that money is not a singular phenomenon at all but an eclectic and designable process shifting back and forth between exchange and identity. With it comes the idea that money should be more conciously embraced as an intermediary to serve many different purposes in human life and many kinds of sociability.

Here of course we can still learn a lot from so-called “primitive” currencies and more generally from subaltern variations of money and from monetary cultures and traditions other than our own. And because of that we might also do better if we remain careful with drawing all too neat analogies.

Yet, when we start perhaps from Yap’s ancient currency and when it comes to the question how we are going to make use of new technologies such as the blockchain we might keep asking ourselves, quite carefully indeed, where in our interactions we’d prefer truth, where we might better go with trust and tales, and – still most promising – what kind of applications we can create from shifting minds in between?

[1] Graeber, David. 2012. “On social currencies and human economies: some notes on the violence of equivalence.” Social Anthropology 20 (4):411-428.

[2] i.e. what Marcel Mauss sought to capture as the “spirit of the gift” (Mauss, Marcel. (1925) 2016. The gift: Expanded edition.. Translated by Jane I. Guyer. Chicago: Hau Books.)

[3] Gorbunov, Roman. 2017. Blockchain fundamental. (Video), Technics Publications.

By | 2017-12-29T18:26:16+00:00 December 11th, 2017|moneyness|

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