The shikon no tama goes back hundreds of years ago. There was this 18yr old priestess named Midoriku, who was said to be have the power to purify the soul of any youkai and had never been defeated. A group of demons decided to form together and attack her. The battle went on for 7 days and 7 nights. Finally a demon tried to absorb her soul. She combined her soul with all of theirs and trapped them inside of herself. With the last bit of energy she had she forced out the jewel of the Four Souls: the soul of family/friends, love, courage, and wisdom; before they all turned to stone. It is said that the battle between her and the demons still goes on inside the very jewel.   

 

Power-the jewel give an emense amount of power to whoever holds it. It can be used for good or evil, though it's been used for more evil than good. The shards of the jewel are even more powerful than the whole jewel was when it it was whole.