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Before Bitcoin: If You Wanted a Bit, You Had to Hack a Coin or Visit the Virgin Islands

in bitcoin •  16 days ago

BitcoinGraphic.jpg
When Satoshi Nakamoto invented the bitcoin, he put together two terms that had fitted together much earlier in the history of money. The two-word term “bit coin” was used to describe parts of coins such as Spanish reales. After 1598, the Spanish Empire minted uniform coins that had a value of eight reales. These were known as pieces of eight or variously known as pesos or Spanish dollars.

Spanish reales were so uniform in size and value that they were widely used in a number of colonies (not just Spanish ones). It was the default currency in the United States when the country was born; the American paper currency had lost much of its value with the Revolutionary War, so Spanish-American reales filled that gap. At times, there were smaller denominations of coins also, but often the 8 reales were the only ones available. It was not until 1897 that they were discontinued.

Just about every pirate movie ever made has included some reference to "Pieces of Eight."

Pirates.jpg
From Pirates of the Caribbean: At World's End, Walt Disney Pictures (2007).

Hacking Real Coins

What if someone needed a smaller unit? They hacked the coin in half, and then half again, and then half once more. An 8 real coin divided nicely into 8 smaller pieces, each one worth 1 real (or 1/8 of the original coin’s value). These also became known as “bits” because each one represented a bit of the coin. “Two bits” meant 1/4 of a coin or two reales. The slang term “two bit” came to mean something of cheap quality, such as “two bit suit” or “two bit hustler.”

PiecesofEight.jpg

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Adapted from a college by doomsteaddiner.net.

If you’ve ever heard the term “hacksilver”, bits were a similar concept. In the past, when people wanted to divide a larger piece of silver bullion or old jewelry, they would hack or cut it into pieces. Each piece’s value would depend upon its weight. The word “Peso” comes from the Spanish word for weight, and pesos were the Spanish successor currency to reales that resulted in the peso term being used for monetary currency in many Spanish colonies. Today, the term peso is used in Argentina, Chile, Colombia, Cuba, the Dominican Republic, Mexico, the Philippines, and Uruguay, while an additional 13 former Spanish colonies also once used pesos. Mexico re-introduced reales for a period of time in the 19th Century when its silver pesos were not doing as well.

AmericanGirlBitebay.jpg
Even American Girl dolls have their own bits. Image from ebay.com.

Thalers

During the reign of reales, thalers were another silver trade coin that were widely used in Europe, Africa, the Middle East, and beyond. They began when silver from the mines in the Joachimsthal region of Bavaria (now in the Czech Republic) was stamped. They were called thalers for their place of origin. Later, thalers were stamped with Maria Teresa’s image in Vienna. A Dutch version has a lion stamp, like the original Bohemian coins, and was called a leeuwandaalder (lion thaler).

Thaler.png

Maria Theresa thalers were widely circulated for at least 400 years as a default currency in much of Europe and other major parts of the world. While there is no circulated currency with that name today, there are 23 currencies all over the world called “dollars”, which took their name from the thaler. From Hong Kong to Australia to the United States, the thalers are still being honored today. Also, in 2017, the government of Belarus created a cryptocurrency known as the thaler.

EightPD.jpg

From Bits to the Decimal System

When modern currencies such as the U.S. dollar were created, they used the decimal system for fractional divisions of the monetary unit. For example, one dollar can be divided ten times into 10-cent coins known as dimes. And each dime can be divided into ten pennies, which are worth one cent apiece. However, there is one vestige of the bit that remained from the days when reales were the de facto American currency. 12.5 cents was an awkward amount, but the popular “two bits” denomination became the quarter dollar, which is worth 25 cents.

Reales and bits remained legal currency in the United States until 1857, but even after that the influence of bits lived on. When the author Robert Louis Stevenson traveled through the American frontier in 1892, he noted that people kept using them long after there was any coin for the bit:

In the Pacific States they…settle their affairs by a coin that no longer exists – the BIT, or old Mexican real. The supposed value of the bit is twelve and a half cents, eight to the dollar. When it comes to two bits, the quarter-dollar stands for the required amount. But how about an odd bit? The nearest coin to it is a dime, which is, short by a fifth. That, then, is called a SHORT bit. If you have one, you lay it triumphantly down, and save two and a half cents. But if you have not, and lay down a quarter, the bar-keeper or shopman calmly tenders you a dime by way of change; and thus you have paid what is called a LONG BIT, and lost two and a half cents, or even, by comparison with a short bit, five cents.
--Robert Louis Stevenson, Across the Plains (1892)

Stevenson.jpg

1905 Physical Bit Coins

In 1916, the United States purchased the Virgin Islands in the Danish West Indies from Denmark for a sum of $25 million, which was paid in gold. In 1934, the U.S. Virgin Islands switched to the U.S. dollar. But beginning in 1904 and for 30 years thereafter, these islands used a currency known as the daler. Its fractional denominations were called francs (5 francs to a daler), cents (100 cents to a daler), and the bit (5 bits to a cent; 500 bits to a daler).

Bit Coin 1.jpg
Bit Coin.jpg
Bit.jpg
Real 'bit coins' from 1905.

In 1905, the Danish West Indies minted coins that were denominated in both cents and bits. Ladies and gentlemen, here is the BIT COIN. These old coins existed on earth for just over 100 years before Satoshi Nakamoto published his first paper on bitcoin. And in creating that term, he probably was thinking mostly of “bit” as a unit of information, as it has been used frequently in the information age. Perhaps he also was aware of the bit’s past history as a monetary unit.

Bitsbinary.jpg

So if you’d like to own some bit coins (two words), you can purchase the 1905 Danish West Indies versions at online auctions for much less than a bitcoin. And then, the next time a member of your family asks you, “Hey, are you still doing that bit coin thing?” You can grin and pull out a 1905 physical bit coin. “Look Grandma, I have one right here! From 1905, back when Theodore Roosevelt was in the White House and the Trans-Siberian Railway first opened. Who needs that Inter Net thing, anyway?”

BitcoinGma.jpeg

References:
https://coinweek.com/world-coins/history-of-coins-two-bits-four-bits-six-bits-eight/
https://en.wikipedia.org/wiki/Peso#Countries_that_use_pesos
https://en.wikipedia.org/wiki/Thaler
https://coinweek.com/featured-news/maria-teresa-taler-coin-centuries-part-ii/
https://en.wikipedia.org/wiki/Bit_(money)

Danish West Indies coin images courtesy of heritageauctions.com. Other images credited in the text or believed to belong to the public domain. Top image includes a public domain image and other images that are credited separately within the text.

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It is amazing how it has changed the way of doing business from years ago to now, just thinking about chopping a coin in 8 pieces sounds so crazy and now basically that is a thing of the past to have virtual money that can be worth more than the physical money , it is interesting to know all these things is not others! Thanks for the information

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Now we just chop cryptocurrencies into more decimal places. :)

Wow, But sadly i don't have grandma :( She is no more, but i can show bit coin to my mom and my dad who don't know much about it :P hahaha :P
In the past there were only coins, and trade was made on the coins, and that time is coming back and now we have too many coins, which has different values. I really appreciate your efforts in writing this much information. Thank you.

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It was a reference to generations who may not understand or trust the age of modern crypto. No disrespect intended to grandmas; mine are long gone as well but lovingly remembered.

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My grandma was died before i born, But still, she is lovingly remembered <3 I wish i could see her.
I just Remember My grandfathers.

@donkeypong, I am impressed with the way in which Bitcoin broadcasts. I did not know a lot of information about Bitcoin history. Not surprisingly, the combination of word-and-phrase words was noteworthy. I saw in Spain initially and then spread to other countries. In fact, your letter points out the currency of broadcasts.
The colonial days used silver coins in Europe, Africa and the Middle East, and beyond. Their various images had been printed. Although they are not valid at the moment, they can add value through adding them. I really like to collecting like that.

We are able to capture great chances by studying history. Your article is very important to learn about cryptocurrency history. Coins have been used in ancient times but have become more advanced in the present. However, the value of the coins in ancient times was determined by the amount of silver.

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It's just the history of the name, not the cryptocurrency itself.

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Bitcoin price is decreasing day by day, so sad for cryptocurrencies holder but i hope it increase so quickly,we are also know that history of bitcoin

thanks my dear bro @donkeypong for sharing this blog.always with you bro.

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Wow this is quite some history (I really did not know). All I see are the progressiveness of our monetary system from Gold, Peso, Thaler, Daler, Dollar. I find it logical that bitcoin becomes a worthy successor

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Bitcoin was the first generation prototype. Steem will be the true successor. :)

Nowadays people usually don't Believe in Crypto Currency and called them fake or fraud, But I think they need to study the history and they will find, in the past Anything were trading on the coins, and the specific coin had specific value, I really like the idea to turn the coin into pieces :P In my country we are also dealing with coins, but on a very small level like ,we have coins worth, 1 pkr, 2 pkr, 5 pkr, Btw I am from Pakistan.

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And now we simply add another decimal place to divide cryptocurrency.

Very informative and interesting
Not long ago Indian rupee had 100 paisa.
And when i was a child we we were buying sweets for 5 paise.
Now it is very hard to see even one rupee coin as all the coins under one rupee have disappeared in inflation which is terrible.
People should realise that btc is resistant in some ways to masive inflation.
Only time can tell

This is wonderful, I give you perfect historian because of the good and useful information you have embedded on me, I never knew of this with my research, but today you have become my google search

If you’ve ever heard the term “hacksilver”, bits were a similar concept. In the past, when people wanted to divide a larger piece of silver bullion or old jewelry, they would hack or cut it into pieces. Each piece’s value would depend upon its weight. The word “Peso” comes from the Spanish word for weight, and pesos were the Spanish successor currency to reales that resulted in the peso term being used for monetary currency in many Spanish colonies. Today, the term peso is used in Argentina, Chile, Colombia, Cuba, the Dominican Republic, Mexico, the Philippines, and Uruguay, while an additional 13 former Spanish colonies also once used pesos. Mexico re-introduced reales for a period of time in the 19th Century when its silver pesos >were not doing as well.

To be frank with you I heard of this but never understand today you have make me to become big fool, cose I never search well boss.

The below words you break down was so funny then, with the thought of human about coins.

Hacking Real Coins
What if someone needed a smaller unit? They hacked the coin in half, and then half again, and then half once more. An 8 real coin divided nicely into 8 smaller pieces, each one worth 1 real (or 1/8 of the original coin’s value). These also became known as “bits” because each one represented a bit of the coin. “Two bits” meant 1/4 of a coin or two reales. The slang term “two bit” came to mean something of cheap quality, such as “two >bit suit” or “two bit hustler.”

Thanks a lot for the information and I want to tell u how much you have blessed most of us with this global information.

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Now THIS is what I call a post !

Fascinating... has anyone tried to start a trend where bitcoin owners NEED to own a bit coin ? 😆

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Don't worry; I cornered the market before writing this post. :)

For bitcoin its price will depend on the trust of the users and holders, we need to accept the real acceptance that is the payment method then the price of it will be improved on a daily basis. I hope that the sharks do not use bitcoin that they hold to manipulate the price, it will lose the confidence of those who hold a few bitcoin that will push it into the situation considered deceptive.

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Other cryptos like Steem provide better (faster and cheaper) payment methods than Bitcoin does, but it's still the major crypto that most people know about.

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Well! We need to respect the history into bitcoin is the first part of digital money history. Although it is not as perfect as the later releases, it is the basis for the birth of digital money.

Very interesting observation. Everything new is well forgotten old.

Mehn, this is a depth analysis of bit, which i have never heard before... But am still curious why some country refuse to legalize cryptocurrency into their system...

i think its should move from #bitcoin to #bigcoin... Since it has succeeded in taken cyptosystem beyond bit to big.

But i so much respect your research and analysis... I enjoyed reading this post

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I hadn't thought of that name, but I'm sure someone registered that name and site long ago. :)

Before I got to know Steem, to be honest I was very ignorant of bitcoin business and I considered things like bitcoin not a business for people like me. But ever since I got to know Steem, everything changed.

Thank you for the information @donkeypong

Grandma's question in the end made a buzz in my ear

Interesting about the pieces of eight. In the age of the internet, digital currency is the natural progression.

you r right, but what do you mean by hacking real coins? @donkeypong

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Yes, take an axe and hack off a bit of the coin. :)

That's some pretty cool info! Coin Splitters.. I suck at fractions.. But life in Satoshi's is helping me through it lol

This might just be history repeating itself but I prefer thinking it's actually history correcting itself. Thanks for the very rich history, I'm sure soon enough I'll be showing off with this knowledge.

“Hey, are you still doing that bit coin thing?”

Also, glad to learn that question has now reached mass adoption. lol

Since it's been a long time i am on the platform but I never read that much detailed and historic background of the BTC. I think this article should be publish in some magazine to educate the various students of the economics all around the world. I am pretty sure this article highlights those ambiguous points that older generations do not believe. one can easily convince the non-believers of the digital currency this way.

Thanks a lot for this research based article, Highly appreciated Bro @donkeypong

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Thanks. It's just history of the name, not the actual BTC.

Bitcoin = bit-coin? I had never heard about this Spanish colony history before. I wonder how they broke into 8 pieces or it the coin soft enough? The way they get the name Peso is funny, I didnt realise that.

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Been the genius Satoshi was, I wouldn't be surprised if he named the coin based on this history.

Your history content is always top notch. I find numismatics especially interesting and sort of related to crypto. As a fun fact the Romanian currency : Leu is named after the leeuwendaalder and it's simply means "lion" after the lion on the coins

Bitcoin price is decreasing day by day, so sad for cryptocurrencies holder but i hope it increase so quickly, we are also know that from your blog history of bitcoin.

thanks my dear bro @donkeypong for sharing this blog.always with you bro.

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Very useful info about history of currencies

Very informative post
Please also upvote and comment in my post
https://steemit.com/mgsc/@balik/review-of-too-yum

Peace,they could do better on makeing the coin some what gold where it don't tarnish in your hand what is wrong with the people who sending them out,it is 2018,people do better people do better,now we order bitcoins not to tarnish ,why why it's like pig on pizza or every one say pepperoni,people do better ,people do better,the coin is not suppose to tarnish at lease in a year,1 hour tarnish in hand.

excelente publicación!!!

What then is all the fuss about Bitcoin? History has shown that currencies are meant to be flexible to suit our needs, and we have always treated them like that. Nothing will stop the rise of crypto because it is a natural progression along the currency lines

bitcoin is very good now,

Very nice and good post my friend@donkeypong. I really enjoyed your all post very much....
Thanks a lot....And stay good my friend.

I'm the new follower in your account. Very historic post wrote. it was very good post .
Thank you so much. Nice post for gifts.

Wao sir very wonderful history,Very great writting,Really such a very helpful and useful post,history of bitcoin is so great,Very impressive history,Now a days bitcoin price to much low,Everyone worry about it,One question for you sir why bitcoin rate going day by day down,????Everyone hopes market going up soon,Really very interesting information,thanks for sharing this valuable post,

Good morning @donkeypong, how are you and hope you slept well.

It's really nice the way enlighten me here about pieces of eight and so on. I've really learnt from you here. Tnx so much

I just saw this article and want to share it with you. Did you know that bitcoin is expanding? https://ambcrypto.com/kucoin-invests-3-million-in-australias-local-exchange-bitcoin-australia/

Just amazing post with informative article. We have many things to do to learn form it. Thanks for your great work.

Hi @donkeypong, you remembered some old and valuable coin,thank you

Nice history, well articulated there.

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Thanks for the interesting story about the origin of the names of the coins. I never thought about it!

Oh, I've been knowing about bits as an information unit only. I didn't even thought that it was the main role in the history of monetary units.