According to www.wordorigins.org, originally it labeled any small
thing, but it eventually came to denote 1/8th of a peso. What word is
it?
Etymology, Etymology, and more Etymology
as well as grammar, usage, euphemism, slang, jargon, semantics (meaning), linguistics, neologism, idiom, word origin, syntax, dialect, lexicon (vocabulary), diction, pidgin, synonym, antonym, homonym, cant, argot, lingo, and redundancy.

The critically-acclaimed board game
MooT
consists of tough questions about the nuances of the English language.
Answer:
bit
According to www.wordorigins.org, the word bit "ultimately comes from the Old English
bita, [which] originally meant a morsel of
food. From there it went on to denote any small thing, particularly a fraction
of a larger whole.
By 1683 in the English-speaking
American colonies bit had come to denote a Spanish/Mexican real, or one eighth
of a peso. The peso was a common form of currency in the colonies. And in the
early days of the United States, pesos were commonly used as dollar coins and
real coins represented twelve and half cents, hence two bits equaled 25
cents."
source: http://www.wordorigins.org
Please note that these are draft questions for the board game MooT.
If you spot an error or disagree with anything I've said here,
please let me know and I'll fix it.
(the Mootguy)
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