Old English han "a stone, rock, (boundary) stone," from Proto-Germanic *haino (source also of Old Norse hein "hone"), from PIE *ko- "to sharpen, whet." The specific sense "whetstone, stone used for sharpening tools that require a delicate edge" emerged in Middle English (early 14c.). "A hone differs from a whetstone in being of finer grit and more compact texture" [Century Dictionary].
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