What is money?
Money is anything people generally accept in exchange for goods and services. In Bangladesh today that is the taka: the notes in your pocket, the balance in your bank account, the money in your mobile wallet, all of it is money.
The paper in a Tk 100 note is worth very little. Its value comes from trust: the shopkeeper takes the note because they know they can spend it somewhere else too. And the law makes the taka legal tender for settling debts. Money like this is called fiat money.
Say you are a farmer with rice, and you need a haircut. If the barber doesn’t want rice but needs shoes, you first have to find someone who will swap shoes for rice. Swapping goods for goods is called barter. Money removes the hassle: sell the rice for taka, then pay for the haircut with the taka.
Why it matters to an investor
- Money is only a yardstick: what you really want is food, a home, education, security. The real question is how much of those your money can buy.
- Money’s value changes: with inflation, the same taka buys less. So “keeping money” and “keeping value” are not the same thing.
- Investing means putting money to work: depositing it, lending it or buying a share of a business can earn interest, profit or dividends, and it comes with risk.
- Money and wealth are different: a salary is income; land, shares, savings and skills are wealth. Over the long run, wealth is what produces income.
The three jobs of money
- A medium of exchange: it makes buying and selling easy, with no need to find a matching swap as in barter.
- A unit of account: everything can be priced on one scale. You can compare a kilo of rice with a month’s rent in taka.
- A store of value: today’s income can be spent later. Money does this job imperfectly, though, because inflation erodes its buying power.
From cowries to the taka
In Bengal, money was once a sea-snail shell, the cowrie, which came mostly from the Maldives. According to Banglapedia, cowries were widely used as currency in Bengal until the end of the eighteenth century. Four cowries made a ganda, and units like the pan and kahan are where everyday Bangla phrases about “counting cowries” come from.
After independence, the taka became Bangladesh’s currency on 4 March 1972. Notes of Tk 10 and above are issued by the central bank, Bangladesh Bank; some small notes and coins are issued in the government’s name.
Where money lives today
Most of a country’s money is not notes at all but numbers in ledgers: bank account balances and mobile financial service (MFS) balances. Salaries land in banks, money home goes by mobile, remittances from abroad arrive straight in accounts. All of it is money, though no note changes hands.
- Cash: instantly spendable, but it can be lost or stolen, and it earns nothing.
- Bank deposits: safer to hold and easy to transact with; a savings account may earn some interest or profit.
- Mobile money: very handy for small payments, but sharing your PIN or OTP with anyone puts the money at risk.
Common mistakes
- Treating money as the goal. Money is the means; the goal is what it buys or the security it gives.
- Assuming money’s value is fixed. Tk 1,000 ten years ago is not the same as Tk 1,000 today.
- Thinking a high income means being wealthy. If all of it is spent, no wealth is built.
- Being careless with digital money as if it weren’t “real”. A mobile or bank balance is worth as much as cash, so keeping PINs and passwords secret matters.
Money is an agreement built on trust and a yardstick; the real question is always how much it can buy, and whether that is shrinking or growing over time.