Money is mysterious. Despite their efforts, economists find it even more confounding than civilians do. Is it a debt or a contract? Is it a mutual fantasy or a token of desire? Does it represent work or goods, or something else altogether? Nobody knows. Almost anything can act as a currency, and different cultures have used meteorites, live cows, salt, iron ingots and bat hair with success. When, in 1986, the economist Hyman Minsky said “everyone can create money; the problem is to get it accepted”, it was an insight that had already been proven true for millennia.

Perhaps the most cumbersome form of money ever used comes from the tiny islands of Yap in Micronesia. For hundreds of years, the Yapese have used huge round stones called rai as a currency, and they are still used for some transactions today. The limestone used came from the neighbouring island of Palau and the journey back, with a stone-laden canoe, was treacherous and sometimes fatal. Rai were too big to move easily once on land, so instead, their ownership was recorded through an oral record of transactions. This unique tradition has become a favourite predigital analogy for how bitcoin works.

This “original bitcoin” label has its limits – rai are part of a complex system of ritual exchanges, and were never Yap’s sole currency – but it is still illuminating. Rai were very difficult to mine, which ensured they had a scarcity value. After a certain point, no more were made, and their use and exchange was recorded by a mutually understood, distributed ledger. Substitute computers for canoes, and a string of alphanumeric characters for both the stone and the ledger, and we have a working model of what bitcoin is, and what it is supposed to do.