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Beads from the Sea Shore

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The most likely process that initiated the making of beads from shell is beach combing. We know prehistoric people were curious and collected fossils, crystals and such things without having any apparent function.
They no doubt collected things from the beach as well.

It has been suggested that when early humans started eating fish they were on their way
to developing into modern people.
Food aside, there are a lot of interesting things to find on a beach.

Souvenirs of beach combing at Kuta Beach,
Bali, Indonesia.
Clockwise from upper left: blue cowry (this is not its exterior color; the outer layer has been removed), a limpet, a piece of red organ coral, an operculum a snail used to close its shell, a piece of black glass that dropped out of someone's ring and a delicate bubble shell (Bulla ampulla).

Some shells would have suggested themselves being turned into beads.
A small group of shells is naturally perforated.

Dentalium shells are tubes. They are sometimes called "tusk shells," because they are curved like little elephant tusks. They have holes at both ends and can be strung up as beads immediately, though the small end sometimes needs to be broken to open it a little more

They have been used for beads for tens of thousands of years.

Two species.
The large one is 3 inches (8 cm) long.

This small abalone shell (less than 2 inches
or 5 cm long) can strung through the holes seen at the lower right.
Most people will say that an abalone is a bivalve if asked; it is actually a univalve.

Other shells are perforated by sea action after the death of the animal, sometimes resulting in "beads" just the way humans make them: cowries with backs broken off;
conus shell tops with holes in the center; and small snails with a hole on one side. Still others have a neatly drilled circular hole made by a predator (such as conus) that uses its hard tongue to drill into a shell of another animal to eat it.

There are beaches where many naturally perforated shells are found. In an old Native American village in Arizona an archaeologist found the tops of conus and olive shells strung together so the two halves made a round bead. She was puzzled why they were
not ground down very neatly. Years later, she found the same "beads" on a beach in California, and realized that they were once gathered on the beach and traded hundreds
of miles to be worn as beads.

The next stage would be for a human collector to purposely put a hole into a shell. It seems likely that very thin shells, like the umbonium of the Pacific Ocean were early candidates. They can be made into a bead by poking a hole in the side with a thorn or pointed stone tool. There are other ways of perforating shells, too.

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