Module 9: Evolution of money from trade by barter to digital currency

FINANCIAL LITERACY LEARNING RESOURCES 

Evolution Of Money

Money, in its many forms, has played a vital role in shaping economies and societies throughout history. In Nigeria, like much of the world, the evolution of money has been a fascinating journey from the early days of barter systems to the digital currencies we use today. Understanding this evolution not only helps us appreciate the value of money but also helps us comprehend its broader functions in society. Teaching kids about the history of money can help instill financial literacy from an early age, providing them with essential knowledge for the future.

The Evolution of Money: From Barter to Digital Currency

Before money as we know it existed, people used barter systems to exchange goods and services. In Nigeria, this system thrived among various ethnic groups for centuries. If someone had surplus yams, they could exchange them for palm oil or other items they needed. However, the limitations of bartering quickly became apparent—it was often difficult to find someone who needed exactly what you had to offer while also possessing what you needed in return. This “double coincidence of wants” problem made trade inefficient.

To solve this issue, various communities began using objects that had agreed-upon value, such as cowries, manilas, and copper rods, as early forms of money. Cowries, in particular, became widely accepted in Nigeria and across West Africa, due to their durability, portability, and uniformity. These early currencies made trade easier and helped lay the foundation for more complex economies.

With the advent of colonialism in the late 19th century, Nigeria, like many African nations, was introduced to coins and paper money by the British. The establishment of the British pound as the official currency simplified trade even further. By 1959, the Central Bank of Nigeria was established, and the Nigerian pound was introduced, replacing the British pound. This was followed by the introduction of the naira in 1973, which is still in use today.

In the modern era, technology has revolutionized the way we think about and use money. From the introduction of credit and debit cards to the rise of mobile banking and digital wallets, Nigerians are increasingly moving towards cashless transactions. Digital currencies, such as Bitcoin and other cryptocurrencies, are also gaining attention as a new frontier in the world of money. These changes highlight the importance of adapting to new financial tools and understanding the broader implications of digital currency.

Teaching Kids About the Evolution of Money

Helping children understand the evolution of money is crucial in today’s rapidly changing financial landscape. Explaining the transition from barter systems to coins, paper money, and now digital currencies can provide kids with a deeper appreciation of the role money plays in society.

• Barter Systems: Begin by explaining how people used to exchange goods and services directly before money existed. Kids can relate to this by imagining trading toys or snacks with friends.

• Cowries and Early Currency: Discuss how objects like cowries and other materials were once used as money in Nigeria and explain how this made trade easier. You can show them pictures or even physical replicas to make it more engaging.

• Modern Money: Introduce them to the concept of paper money, coins, and banknotes, explaining how these are standardized forms of currency that we use today. You can even take them to the bank to see how money is deposited and withdrawn.

• Digital Money: Explain how money has gone digital with the rise of credit cards, online banking, mobile money apps, and even cryptocurrencies. It’s essential to stress how technology is changing the way we manage, store, and use money.

Understanding this historical journey can help children appreciate how money serves various functions—whether it’s a medium of exchange, a store of value, or a unit of account. By connecting the past to the present, you can help kids grasp the importance of financial literacy and how it will continue to evolve in their lifetimes.

The Function of Money in Modern Society

Beyond its historical evolution, money performs several crucial functions in today’s world:

• Medium of Exchange: This is perhaps the most obvious function. Money allows people to trade goods and services efficiently without the need for bartering.

• Store of Value: Money can be saved and used later, preserving its value over time. This is especially important when teaching children about savings and the importance of financial responsibility.

• Unit of Account: Money provides a standard measure of value, making it easier to compare the worth of different goods and services. This function is key in helping children understand pricing, budgeting, and the value of different items.

• Standard of Deferred Payment: Money allows for future payments, which is the foundation for credit and loans. Helping children understand this can introduce them to concepts like borrowing and interest, which they will need to navigate in the future.

Conclusion

By teaching kids about the evolution and function of money, we equip them with the financial tools and knowledge they need to thrive in a rapidly changing world. The history of money in Nigeria, from barter to digital currency, not only tells the story of economic growth but also reflects the nation’s journey towards modernity.