Pieces of eight are historical Spanish dollar coins minted in the Americas from the late 15th century through the 19th century. Made of silver, they were in nearly worldwide circulation by the late 19th century and were legal currency in the United States until 1857. The Spanish dollar coin was worth eight reales and could be physically cut into eight pieces, or "bits," to make change — hence the colloquial name "pieces of eight." The dollar coin could also be cut into quarters, and "two bits" became American slang for a quarter dollar, or 25 cents. The American dollar used today was based on the Spanish dollar.
These coins have long been associated with pirates, because they were a common target for the outlaws, as large amounts were regularly shipped from the American colonies to Spain. In addition, Spanish traders carried them to Manila in the Philippines once or twice a year to trade for Chinese goods. Many pirates became rich intercepting ships carrying pieces of eight. The buried pirate treasure of legend is often said to include the coin.
Pieces of eight were popular in America's British colonies because British currency was limited. After the United States gained independence, the coins remained a widely used currency. Though the United States began minting its own coins in 1792, the better-quality Spanish dollar remained the most popular currency in the country until Congress ended its use in 1857.
Though they have been out of use for over one hundred years, pieces of eight have a lasting legacy. Terminology related to them was used to refer to certain portions of a dollar in the United States into the 20th century; in addition to the quarter being called "two bits," the dime was a "short bit," 15 cents a "long bit," and 50 and 75 cents were "four bits" and "six bits" respectively. The New York Stock Exchange listed stock prices in one-eighths of a dollar until 1997.
In addition to being the basis for currency systems in such widespread countries as the United States and China, the Spanish dollar was responsible for slang terms that persist to the present day. "Two-bit" is still is use as a description of something cheap or worthless, and many countries, including England and Spain, refer to various small denomination coins as "bits."