Yap: The Island That Used Decentralized Banking Before It Was Cool
The island Yap is a small Micronesian island in the Pacific Ocean, located a bit to the east of the Philippines. It is relatively unassuming and insulated - it doesn’t make waves politically or socially on an international level and there is very little tourism. It is, however, extraordinarily interesting on many levels. One could spend hours discussing Yap social structure, which is based on a caste system, or their buildings’ structures, but the truly fascinating aspect of Yap culture is their currency.
Yap uses many different objects for currency, but the most interesting objects they use are large limestone discs. In this case, “large” equates to “about the size of a car.” Yes, these people use immovable stones as forms of payment. So how does it work? These stone discs carry high value in their society; they might be used for a dowry, or a similarly large, important purchase. In the process of the transaction, the stone doesn’t move an inch - rather, it is verbally agreed between two parties that the stone’s rights have changed hands, and that is all. In fact, it is said that a work crew was bringing one of the stone discs back from sea, and during a storm, the disk fell overboard, sinking to the bottom of the ocean. Whoever owned the stone was granted an enormous gift when the group collectively agreed that the stone still had just as much value at the bottom of the ocean as it would lying on their island somewhere. Thus, to this day, someone on the island of Yap lays claim to a valuable stone that is located on the Pacific Ocean’s floor.
If the limestone discs aren’t strange enough, Yap has other forms of untraditional currency. “Mmbul” is a bit of lava-lava, which is the cloth used for loincloths, usually three or four feet long, wrapped in a betel nut sheath. “Gau” is a necklace of shells two to four feet long. These shells come from a nearby island, and since the material has to travel further to get to the island, naturally Gau is more valuable than Mmbul. Then there is “Yar” which is a coconut rope with shells tied on. In her book Safari By Jet Through Africa and Asia, Sister Maria Del Rey nicely summarizes the Yap natives’ view of currency: “[money] is measured by the care taken to make it or the trouble someone went to obtain it.” This is an interesting way to think about currency, compared to its fiat status found across the world in the form of paper bills or metal coins of some sort. Yet Yap currency still makes a lot of sense as naturally occurring objects that are difficult to procure are, by definition, rarer and thus more valuable. The fact that Yap was able to utilize this form of currency within their society, as well as stuck with it while the rest of civilization has changed, says a lot about their island’s culture.
If you think about it, Yap’s forms of currency, specifically the stone discs, are a form of decentralized currency. Decentralized currency, which has become prominent today through the rise in popularity of cryptocurrencies such as Bitcoin, is, in layman’s terms, a form of currency in which there is no one administrative central that stores all the knowledge of the currency’s whereabouts. In other words, there is a public transaction database that functions as the currency’s ledger. Yap’s system parallels this concept, since the ownership of their stones passes by word of mouth and verbal agreements, and once a deal has been completed, everyone on the island knows that a stone has changed hands. It turns out, Yap’s system of currency, which has been in operation in some capacity since the late 1800’s, may in fact have been well ahead of its time.