The Somali Schilling has fascinated me for years - because it's living proof about how mediums of exchange work - all people have to do is believe that something is worth something.
The something is unimportant, could be slips of paper, rocks, bits of shiny metal, trees, really anything - there object need have no intrinsic worth - it doesnt even need to be portable either, just that people agree X object changed hands and Y person owns it now.
Or they believe that something will happen if they don’t have it.
If I impose a tax on you in Simolians, and I have the power to enforce it by confiscating all your assets and your liberty then you will obtain whatever amount of Simolians I demand as that is almost certainly the cheaper alternative.
Then the exchange value of the currency is down to what you have to do for me to get me to issue Simolians.
The something is unimportant, could be slips of paper, rocks, bits of shiny metal, trees, really anything - there object need have no intrinsic worth - it doesnt even need to be portable either, just that people agree X object changed hands and Y person owns it now.