This expression intrigued me as a youngster; it turned up in all the yarns about the Spanish Main, but was so obscure.
Eight what? Actually, there was nothing mysterious about it, the term was merely the plural of the Spanish dollar which, having the value of eight reals, was stamped with a large figure 8.
Until as late as our War Between the States the Spanish dollar was in general circulation in the United States, its value being almost the same as the United States dollar. It was from the Spanish dollar, or piece of eight, that we have our fictitious unit, the “bit,” valued artificially at twelve and a half cents.
The bit is, of course, the real, or one eighth of the dollar; “two bits” is twenty-five cents; “four bits” is fifty cents.