> All money is fake by definition.
That's partially incorrect.
* Hard currencies have an intrinsic value. i.e. Especially the metals.
* Soft currencies -- you are correct -- they are completely artificial.
However, this isn't telling the entire picture.
There are 4 Levels of money. That is, money can represent 4 different things:
If you have physical good I desire, and vice versa, we can trade. The *thing itself* is money -- ANYTHING can have value -- depending on who wants it. Now this becomes impractical when you only want 1/2 a cow -- thus a solution was needed for this problem. Which leads me to my next point:
Instead of trading the physical things themselves, we can trade tokens which represent them. The nice thing is that we can sub-divide tokens into any division we want.
3. Time, Effort, and Skill
I don't have the skills to build a house, nor the time, but if I have enough tokens, I can hire people who do. As a result we've started to ditch using physical tokens and moved to digital tokens, aka bits to represent money. For the time being banks will honor this Bits <--> Paper money equivalency.
At the end of the day, currency is really about energy. Hell, Bitcoin mining shows _exactly_ this. We can currently, very primitively, convert matter into energy and vice versa. This will play an ever increasing role as our technology moves beyond the primitive level we have.
ZPE (Zero Point Energy) will free us from the greed of currency, and move the value into what people can create uniquely. But hat is still a few decades off before we evolve to that level.