Until the yuan, coins had holes so they could be strung together hundreds at a time. Cuz they were so worthless.
For thousands of years, the idea of China’s money as a unit of account was divorced from money as a store of value [1,2]. Precious metals were rare, and jade was the most valuable commodity available. But jade is worthless when divided into units of account, so it could never be both.
Gold, silver, jade, were things to be hoarded; copper coins and paper money were things to be spent [3].
When the Spanish arrived and brought silver coins as money, the Chinese were so impressed that they called them yuan 圓: “round” [4]. Prior to yuan 圓, silver had only exchanged in slug form, the boat shape stereotypically associated with wealth.
These slugs were called 元寶: “primary treasure”.
圓
貝 is the word for “cowry”. Add a mouth 口 to a cowry and you have the character for “personnel”: 員. Draw a box around the person and you have yuan 圓, which means “round”. (etymology)
Spanish peso de ocho (pieces of eight): the first yuan.
Silver pesos circulated in East Asia as unofficial currency until local governments issued their own. Hong Kong, Japan, Korea, and China all named their currencies after Spanish pesos. Yen, won, and yuan all mean “round”.
Mexican silver dollar, stamped by Chinese merchants after verifying weight and silver content.A Mexican dollar used as Japanese currency, marked with 改三分定 (fixed exchange of 3 分, the Tokugawa coin).
Hong Kong issued the first yuan in 1866.
香港壹圓 (Hong Kong one yuan). Why is the word for “one” so complicated? To prevent alterations.
Japan adopted the silver yen in 1871. 明治三年 · 一 圓 · 大日本 (Meiji 3 years · one yen · Empire of Japan)China issued the first silver yuan in 1889.
光緒元寶 (Emperor Guangxu primary treasure).Korea issued the first won in 1902.
There was confusion over whether to write yuan as 圓 or 元. Both words are pronounced “yuan”. 元 comes from 元寶, the silver treasure boats. But the new silver was round!
China had low literacy, so the simpler 元 was adopted for written transactions, while 圓 became the character for printed currency.
In the 50s, traditional Chinese characters were abandoned for simplified characters as part of Chairman Mao’s plan to abolish Chinese altogether and adopt a global unified language governed by communists. That second part never happened. As a result, China ended up with a malformed instruction set that is as nonsensical to nationals as it is to foreigners.
Humans have long been fond of cowry shells. Cowries have turned up in archaeological sites from Australia to Egypt to Germany, Russia, Scandinavia, and even North America. Some anthropologists attribute this global fancy to a cowry’s resemblance to the female reproductive orifice, and if that’s how they manage to convince themselves they’ve gotten to third base then okay sure.
Ancient Chinese believed that giving cowries to a woman improved fertility. The character for infant, 嬰, is a pictograph of two cowries above a woman. 貝 is cowry, 女 is woman.
貝 written on oracle bones, 1766 BC to 1122 BC
貝 in bronze inscriptions, 1122 BC – 221 BC
貝 as written in Song Dynasty dictionaries, 221 BC – 200 AD
The cowry 貝 forms the root component of many Chinese words associated with wealth and exchange:
則
rule, regulation, law. a cowry next to a knife. (etymology)
greedy. a talking mouth and a cowry. 今 means “now”. (etymology)
賊
thief. a cowry and a weapon and armor. (etymology)
By 6th or 7th century BC, the number of cowries in circulation could no longer keep up with economic expansion. Near the Yangtze River in the south, states started minting imitation cowries.
cowry carved out of clam shell
cowry carved from bone
bronze cowry
In the northeast and Shandong peninsula, states issued coins shaped like knives. Early knife coins looked much like real knives. They were called 化, a word meaning “conversion”: It’s a pictograph of a person 人 next to an upside-down person 匕. The knife coins were intended to convert into some other commodity. (The character for “commodity” is 貨, a conversion above a cowry).
Knife coin from Shandong, 5th century BC.齊佱化: “Qí standard conversion”. 400 to 220 BC
In the Yellow River valley, states issued coins shaped like gardening tools. Maybe they were even used as gardening tools. Some had hollow sockets to attach the tool to a handle.
Inscriptions in ceremonial bronze vessels refer to these coins as 布. 布 is the character for “cloth”, but these things are obviously not cloth. It’s possible that a spade coin represented a value equal to a bolt of cloth.
Early spade with hollow handle. In the lower half of the second column, you can barely see the character 貝. c. 650-400 BC.
Around 350 BC, states began to use standard weights to measure denominations. Coins were stamped with the character 釿, the word for hand-axe. It is an ideogram of metal 金 and axe 斤.
Hand axe 釿. The ring is for tying the blade to the handle.
The word for metal 金 is a pictographic bell. Other metal objects like weapons and jewelry existed before bells, but could be fashioned from other materials. Bells were recognizably metallic.
金. The character for “metal” in a bronze inscription.
metal bell
金 is the root component of many Chinese words for metal objects.
China was a big country with many different states minting their own currencies. Not everyone understood what a hand-axe 釿 was supposed to weigh. To keep things straight, some states cast coins with printed exchange rates.
梁重釿五十當爰. “Liang heavy hand-axe 50 equals Yuan,” where Yuan is some currency in another state – not to be confused with RMB 元. This coin is twice the weight of standard 釿 coins, so “heavy 釿” is equivalent to two 釿. c. 400 BC殊布當釿. “Special cloth equals hand-axe.” This coin represents the value of a bolt of cloth, and hand-axe is the 釿 denomination. The back says 十化, “ten conversion,” where “conversion” is the 化 denomination that refers to knife coins or bronze cowries. c. 475-221 BC
Even back then, state officials didn’t believe in free-market exchange rates.
Once the hand-axe 釿 became a widespread unit of account, texts and inscriptions stopped referring to coins as “cloth” 布, but instead called them “spades” 錢.
Screw you Uber. You assholes raised 15 billion dollars, invest in some decent security already.
Apparently Uber got “hacked” in early 2014, and it took them over two years to figure out what all got stolen. As a result, they’re only sending this letter to me now.
I apply the term “hack” quite loosely: Uber employees left a login key in a public file on GitHub, and someone found the key and used it to access Uber’s database. “Hack” is a blame-deflecting way of saying Our engineers are morons and someone took advantage of that. If I leave my iPhone on the sidewalk and it gets swiped, is that a “hack” too?
In response to this data breach, the NY Attorney General already fined Uber $20,000. Okay that’s not a fine, that’s a line item in the petty cash daybook. Eric Schneiderman just set a price cap on negligence.
Corporations have little incentive to invest in data security. Really, there are 20 million companies in this country. What’s the likelihood of any single one being targeted for attack? On a risk-adjusted basis, it makes sense to neglect security concerns. When weighing the cost-benefits of hiring a team of CISM-certified sysadmins against the small chance of a $20,000 fine, it’s plain to see why Sony Pictures chose to raise a middle finger to infosec and store sensitive information in a cleartext file directory labeled “Password”.
In the US, we prioritize liberty, or the right to be left alone. Companies like Uber and Google should be allowed to figure out their own privacy policies without government meddling. In theory, consumers will vote with their dollars. In practice, consumers have no idea how careless their service providers really are.
US companies don’t care much when customers’ personal information gets stolen, but they care a lot when intellectual property is stolen. Chinese hackers are constantly testing US corporate resistance to IP theft [2]. The organizations with the best security practices will be ones with valuable IP, like Google, IBM, and DuPont. Of course, just because Google takes steps to protect your information from unauthorized access doesn’t mean they won’t abuse that data themselves.
I’m thinking I should delete all my accounts and move to Europe, or maybe a planet in Urbit.
The right to be sued is the power to accept a commitment. -–Thomas Schelling [1]
No one’s gonna do business with you without knowing they have recourse for when you try to weasel out. Even 5000 years ago, people created contracts on clay tablets so that they had something to take to the king if the counterparty welched.
Humans are opportunistic. Over time, people learned to be weasels. Some people learned to be exceptionally good weasels. Beginning in ancient Athens, these people were called lawyers (actually they were called orators, but served the same purpose).
Orators were paid well. Athenians knew that having a good lawyer could be a huge competitive advantage. If your counterparty hires Demosthenes to plead his case, then you’d better put Cicero on retainer.
Since then, litigation has been an arms race. 40% of Oracle’s headcount is employed on the legal team, and only because its friends Google and Microsoft invest just as much. Google spends $17 million a year on federal lobbying. The top issue? Patent protection.
As Karl Marx astutely observed, Competition is wasteful.
But competition does have one redeeming quality: It enables evolution. Without competitive exclusion, there would be no reason for natural selection and we’d all still be protozoa swimming in a primordial soup.
Instead, we’re complex organisms who know how to be weasels.
And it’s because counterparties spent 5000 years being weasels that contracts, and the laws governing contracts, have become so complex.
You don’t know the rule until you know its exceptions. In practice, the exceptions to the rule are the rule.
Contractual complexity is good. Complexity allocates responsibility and risk for the possible complications that might arise. This increases predictability, which allows counterparties to put more at stake.
While complex, the contracts and legal codes we have today provide better risk management than clay tablets and the Code of Hammurabi.
As the stakes increase, so does the cost of litigation. At some point humans began to think, Securing a commitment through legal coercion is expensive! Can we can have predictable risk allocation without using the threat of litigation? Maybe we don’t need the right to be sued in order to accept a commitment. Maybe a commitment can be self-governing.
A smart contract enforces a commitment without resorting to the threat of external litigation [2].
Early smart contracts won’t be robust against weasels, just like early clay tablets weren’t robust against Demosthenes. That’s why people didn’t put a lot at stake on a clay tablet. It was certainly no reason to throw out clay tablets!
It took 1600 years to go from the publican business partnerships in Rome to the Honor del Bazacle [3], the first modern joint-stock corporation. Romans had the technology to draft a corporate charter on papyrus; what they lacked was centuries of cumulative knowledge on how to structure a corporation.
Complexity has to be earned. Otherwise, it’s obfuscation. The Honor del Bazacle charter was complex because it had evolved the ability to protect its beneficiaries [4]:
Most early financial documents were fairly succinct records. Why would it take eight feet of tiny script to create a corporation?
…
The corporation is an organization that is designed to operate autonomously, perhaps for several centuries. The Honor del Bazacle charter is like a complete set of rules for playing a game: These rules needed to ensure that no single player, either unintentionally or willfully, could ruin the game or cheat the other players.
As a result, the Bazacle is an enterprise that still stands today.
I have DAO tokens. I prefer that the “hacker” keep whatever ether I lost. The great thing about smart contracts is the predictable risk allocation. I signed up for the risk of losing my ether. I did not sign up for third-party adjudication.
The transaction-erasing fork will ultimately be decided by Ethereum miners, who can choose whether to adopt it in a software update. In a way, they serve as a decentralized parliament. But as someone who operates a mining node, I don’t want to be a parliamentarian. I didn’t sign up for that and I’m not qualified.
Blockchain contracts are not about adjudication by vote; we already have a very good solution for that in the modern court system. They’re about giving two parties the ability to trust a commitment. I want the rights and responsibilities that I signed up for.
Adab, Mesopotamia. ca. 2900 BC LUM-ma: Hey, can I borrow some barley to feed my kids? Harvest didn’t turn out so good this year. MUG-si: You’ll pay me back next season? LUM-ma: Yeah, totally. MUG-si: Can I get that in writing? LUM-ma: Sure, here you go:
Source: Early Dynastic and Early Sargonic Tablets from Adab in the Cornell University Collections [1]. Names are made up.Akkad, Mesopotamia. ca. 2750 BC Farmer #1: Dammit, I’ve been drafted to go fight in Sumer. I don’t have time for this, I have farm stuff to do. Farmer #2: I’ll take care of your farm while you’re gone. When you come back, we’ll split the harvest. Farmer #1: Hell no, last time we tried this you let my fields get overrun with weeds and crocodiles. Farmer #2: My buddy will guarantee that I follow through this time. If I screw up, he’ll compensate you for damages. He’s a merchant right here in Akkad so you know you can trust him. Farmer #1: Fine. Can I get this in writing? Farmer #2: Yup! Here:
This represents the first known surety bond involving a third-party guarantor [2].Babylon, Mesopotamia. 1820 BC Ilshu-bani: Can you spot me a couple shekels of silver? I need to buy some seeds. Sin-tajjar: Ugh, I’m so sick of you always borrowing money from me. Get a job, man. Ilshu-bani: I’ll pay you back at harvest time! Sin-tajjar: That’s seven months from now. Don’t you understand the time value of money? I’ll loan you the shekels at 20% interest. Ilshu-bani: 20%?! Good grief! What if I can’t pay that back? Sin-tajjar: I’m not too worried. If you can’t pay me back, I get to make you my slave. Apparently that’s a law now. Ilshu-bani: Freaking Hammurabi. Sin-tajjar: Do you want the silver or not? Ilshu-bani: Fine. Sin-tajjar: Cool. Just print your name here:
Contract terms on the front, names of participants and witnesses on the back [3]. The Code of Hammurabi put the first legal code in place to turn tribal customs into common law. The Code included standard interest rates.Arsinoites nome, Egypt. 172 BC. Aristokles: Can I borrow 3 talents and 780 drachma for 13 months? Theokles: Sure, I charge 24% interest. Aristokles: No problem. Theokles: What happens if you don’t pay me back? Aristokles: You get to have my wife! Theokles: I’d… really rather have the money. Aristokles: Nah, take my wife. Here, I’ll even put it writing for you:
A note in the right margin seems to indicate that (after some time?) both participants were dead, the affair had devolved to the sons of the contracting parties, and only the wife was still alive. Source: Advanced Papyrological Information System [4]Rome, Roman Republic. 100 AD. Pontius: May I borrow 500 denarii? I’m gonna go invest in a company. Titus: Sure. How do I know you’ll repay me? Pontius: I’m a Jew! We’re the most honest businessmen in the world! Titus: ಠ_ಠ Pontius: It’s 100 AD, I’m allowed to say things like that. Titus: Look, I just need you to make an oral promise that you’ll pay me back. Pontius: That’s it? Titus: Yeah, that’s how Roman law works. If I ask you to promise something, and you agree, that’s legally enforceable. Pontius: What happens if I later deny making that promise? Titus: Then the gods will smite you. Pontius: Oh. It’s olden times so I take that super seriously. Titus: Ready to promise? I’m gonna ask you to promise now. Pontius: Yes ready! Titus:Spondere tu dabis mihi? Pontius:Spondeo.
This was called a stipulatio. Verbal agreement was essential to having a valid contract under Roman law. Written documents could provide evidence for the agreement, but the contract itself had to be oral [5].
Turfan, Silk Road, China. 661 AD. 龍: May I borrow 30 bolts of silk? I wanna buy some camels and apparently silk is the standard form of money around here. 陳: Yeah, but I better get this in writing. 龍: Ok. 陳: Hold up. What if you get killed by bandits on the way home? 龍: Well my wife better not remarry. If she does, I’ll come back and haunt her, that wench. 陳: No, what happens to your debt if you get killed by bandits? 龍: Oh, take it up with my wife. Go ahead, put that in the contract. Mrs. 龍 has to make good on my debts. God, she was probably the one who sent the bandits. She totally would. 陳: How will I even find your wife? I’m from Iran, all you people look the same to me. 龍: That’s kinda racist. But if you can’t find either of us, take it to 唐 court. We have a good legal system here. 陳: Pleasure doing business with you, sir.
Tang (唐) courts along the Silk Road were accustomed to hearing disputes from participants all over the land. They were friendly to creditors and would receive cases even after contracts had been lost [3]. This contract requires interest payments of 4 bolts of silk per month until the principal is due.Oxford, England. 1250 AD. Nigel #1: Say, chap, can I borrow fifty quid? Nigel #2: Sure thing mate. You’ll pay me back? Nigel #1: Of course! I’ll even make you a contract! Nigel #2: Bloody hell! I can’t read or write! Nigel #1: Blimey! Nor can I! Nigel #2: No worries, I’ve got this pointed stick. We’ll mark off 50 tallies to show what you owe me. Nigel #1: Brilliant! Nigel #2: Here, let’s split it down the middle so we each have a piece. I’ll keep the stock, and you take the short end of the stick. Each time you pay back a quid, we’ll connect them together and cut off a tally. Nigel #1: And if I should skive off? Nigel #2: Well I’ve got this pointed stick! Nigel #1: Cheers!
Antwerp, Netherlands. 1611 AD. Hans: I would like to borrow 500 Flemish pounds. Jan: And what do you have to offer as collateral? Hans: I have two shares of the Dutch East India Company. Jan: How do I know you aren’t already using those shares to collateralize another loan? Hans: My notary here can guarantee that. Jan: Are you going to use this loan to buy more Company shares? Hans: Maybe. Jan: We’re almost in the Early Modern Age. How bout we leave the private lending to poor people and create sophisticated financial instruments for the rest of us? What you really want here is a forward contract.
According to GAD Capital, this is a handwritten contract for future delivery of two shares of Dutch East India Company [3]. An edict issued the States of Holland in 1623 to regulate forward trading in shares of the Dutch East and West India Companies mentioned not only the borrowing of money against company shares but also specified the procedure for foreclosure of shares in case borrowers defaulted [6].California, USA. 1990 AD. Alice: Can I borrow $100? American Express: Of course. We’ll be charging 24% interest. Alice: Aren’t there laws against usury? American Express: Those are state laws. Your credit card is issued by a Federal bank. We can charge whatever we want. Here’s your cardholder agreement. Alice: Why is it 50 pages? What the hell is in this thing? American Express: Basically you agree to have your information sold to third parties. Also you consent to having our marketing associates call whenever they like, and they can record the call without telling you about it. Also we can change the rules whenever we want. Alice: Why are you guys such assholes? American Express: If you’re not happy with us, feel free to take your business to a payday loan shark.
California, USA. 2016 AD. Alice: Bob, can I borrow 20 ether? I’ll put up 50 Alice tokens as collateral. Bob: Okay sure. Can I get that on the blockchain? Alice: Here’s a smart contract!
Bob: Wait a minute. The market price of Alice tokens fluctuates like crazy. I need to be able to issue a capital call in the event that your collateral falls below the value of the loan. Alice: Oh good point. Let’s add a function to the contract that queries a Price Oracle. Then my collateral can always be marked to market. Bob: Who operates the Price Oracle? Alice: This new exchange, it’s called Mt. Sox. Bob: Sounds legit. How do I know I’ll be able to claim your collateral? What if you secretly drain it? Alice: I can’t do that, it’s on the blockchain. Bob:That happened to the DAO. Alice: If the contract is exploited, then Vitalik will tell miners to adopt a fork that restores the ether to its rightful owner. Bob: What if we disagree about the rightful owner? What if I claim that you exploited a vulnerability in the code, while you claim that that was the intended functionality of the contract? Alice: Then we’ll turn to the decentralized Supreme Court. Bob: Are you serious? Alice: … Bob: This is dumb. How bout I just give you a hundred bucks and you send me a nude selfie as collateral?
![Source: Early Dynastic and Early Sargonic Tablets from Adab in the Cornell University Collections [1]. Names are made up.](https://i0.wp.com/elaineou.com/wp-content/uploads/2016/06/adab.jpg?resize=285%2C300&ssl=1)
![This represents the first known surety bond [2].](https://i0.wp.com/elaineou.com/wp-content/uploads/2016/06/schools_mesopotamia_304x304.jpg?resize=247%2C247&ssl=1)
![A note in the right margin seems to indicate that (after some time?) both participants were dead, the affair had devolved to the sons of the contracting parties, and only the wife was still alive [4]](https://i0.wp.com/elaineou.com/wp-content/uploads/2016/06/apis_1717r_1618_1638_full_0.jpg?resize=262%2C300&ssl=1)
![Handwritten contract for future delivery of two shares of Dutch East India Company [3]. An edict issued the States of Holland in 1623 to regulate forward trading in shares of the Dutch East and West India Companies mentioned not only the borrowing of money against company shares but also specified the procedure for foreclosure of shares in case borrowers defaulted.](https://i0.wp.com/elaineou.com/wp-content/uploads/2016/06/IMG_2703.jpg?resize=1024%2C697&ssl=1)
