(OE Oercanstan 'Precious Stone'; The element oercan- hasn't survived in modern English)
Around III 2000, soon after the colonisation of Erebor, the Dwarves of Thráin I discovered in its slopes a large jewel. They were much impressed and valued it greatly and they worked on it till it became a shining and polygonal jewel, heavy and large about as big as a fist. During the next centuries, this jewel became a heirloom of the Kings of Durin's Folk. Thorin I, Thráin's son tremoved it in the Grey Mountains colony in III 2210, but his heir, Thrór, returned it in Erebor. In III 2770 Erebor and Dale were destroyed by Smaug and Arkenstone was lost among his hoard. In III 2941 after the successful mission of Thorin II and Company, Bilbo Baggins found it by chance, and despite the great desire of Thorin to find it, Bilbo kept it in secret. Arkenstone had an important role in the upcoming events, since Bilbo offered it to Thranduil and Bard, to ransom it with a part of the treasure of Erebor, something that Thorin was denying. The Battle of 5 Armies followed and Thorin was mortally wounded. Forgetting the dispute, Bard placed it on Thorin's chest and was buried with it.
And the same narrative icon as a Silmaril; a gem that one has taken to heart, possibly beyond one's better judgement.