This is an excerpt from Brett Scott: The Heretic's Guide to Global Finance, pp. 225-226:
"The financial system is embedded in our use of money, but we seldom recognise that. Maybe one step to altering its structure is to first deeply reflect on our own relationship to money.
For example, have you ever considered why money seems to have exchange value, but not actual use value?
I can exchange a £5 note for useful goods and services, but I seem to have no intrinsic use for the note outside of the exchange process.
What exactly gives it exchange value without use value? One possible starting point is to realise that if money had intrinsic use value, it might be a poor medium of exchange. For example, coffee would be a poor commodity to use as money, because as soon as someone felt like drinking some, they'd just consume it and remove it from circulation.
It seems, counter-intuitively, that money almost needs to have limited intrinsic value in order to work. It's interesting to note the fetishisation of gold as a currency throughout much of history. Gold is not a particularly useful commodity. It's mostly an aspirational good, something that you might find valuable only once you've satisfied basic needs. It has status elements, and in a pre-money society it would most likely be religious or military figures in positions of power who would waste energy on obtaining an over-the-top luxury item like a shiny rock.
Monetary history is a lot more varied and complex than this, but the basic point stands that money needs to appear symbolically valuable enough for us to trick ourselves into believing it has value, but not valuable enough that we'd actually consume it directly.
People can convince themselves that someone out there finds gold useful for mystical or vanity reasons, but in the interim, they themselves have no immediate practical use for it, allowing it to become a great medium of exchange.
Once that process locks itself in, cultures develop around it, and people begin to collectively validate the value by trusting that others will accept it. The soul of money thus becomes underwritten by human relationships of reciprocity- even if we know that the note has no intrinsic value, we trust that others will accept it, and they trust it by trusting that others will accept it back in the future. The note thereby gets imbued with a type
of intrinsic value drawn from the collective reciprocity of the society, with the added backing that the government will accept it for taxes. Through such processes, currencies come to appear in the abstract as representations of all other goods."