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1/ To expand on this further, the idea of money "storing" value is just a metaphor, and often leads to the illusion confusion. People don't really agree or believe or imagine that money "has" value. Instead, individuals simply seek to obtain money as a means to further ends.
2/ They accept money as an intermediary good which they can subsequently exchange for something else. Each individual is constantly making a series value judgements on which goods to accept in exchange for the goods they produce themselves, on a path to satisfying their own ends.
3/ This will of course take into account how many people are demanding various intermediary goods at that instant—which goods are most "saleable"—but will also take into account other factors, including properties that might cause goods to be more or less demanded in the future.
4/ What intermediary goods people will or will not demand in the future is key. Regardless of what other people are accepting, imagining, or agreeing together at any instant, only certain goods are useful as an intermediary—those that satisfy the objective properties of money.
5/ Paramount in the properties of money is the difficulty of production, which produces a high stock-to-flow ratio, or what we might call "scarcity." The more scarce a good is, the more it inhibits attempts to create more during the period between acquiring and offloading it.
6/ This is important because the period between acquiring money (in return for goods preferred less) and offloading it (in return for goods preferred more), could be a few minutes or a few years. In order to be a good means to the ends of exchange, it must be sufficiently scarce.
7/ Through both direct experience and the observation of economic trial & error in the market, people will naturally gravitate towards the monies (it could be more than one) which are scarce enough to provide the best odds of satisfying their ends both *now* and *in the future.*
8/ It should be noted that: a) convenience matters too, hence why fiat's portability and divisibility redeem its inferior scarcity; b) a monetary good's properties can be extrinsic rather than intrinsic, e.g. fiat's scarcity and verifiability are mostly enforced by a third party.
9/ The oft-heard claim "gold/bitcoin are real and fiat is the illusion" is therefore false, fiat is as real as any other good. But the common misconception that "money is a shared illusion" helps fiat succeed by ensuring people don't look too closely at its real world properties.
10/ E.g. 1: Bitcoiners still hold fiat because it gets them what they need now, not because they believe it "has value". They simultaneously acquire bitcoin in the expectation it will get them *more* of what they want in the future—despite current shared acceptance being low.
11/ E.g. 2: People in China accept yuan and don't accept the dollar. This is not because they have agreed on the value of one and not the other, but because they expect one to be more useful for obtaining the things that they want. Some even hoard dollars on the same basis.
12/ E.g. 3: Gresham's Law. The is no psychic communion between fellow men in the decision to spend artificially-priced bad money and hoard good money. Each individual simply observes the physical properties of each money as the basis for a prediction on the future supply of each.
13/ Using an intermediary good is objectively more efficient for an individual to satisfy their ends than barter or debt—this is not an illusion or agreement—and only requires more than one person to recognise this for it to work.
14/ Likewise, the goods that are suitable for sustained usage as an intermediary good are strictly limited based on objective, real world, tangible, observable properties. Some are more efficient than others based on these properties and not on some fiction.
15/ A good's suitability as a money has nothing to do with what is imagined or how many people are imagining it. No amount of imagination can make wampum or the bolivar a good money, and continued imagination in their suitability as a money would be counterproductive.
16/ Technically, there is no "money," only goods and a market. Within this market, every individual is making a series of individual decisions to accept certain goods in return for their own goods, at ratios that make sense based on their own imperfect knowledge of the market.
17/ When an individual subsequently exchanges an intermediary good in return for something else that better satisfies their ends (now or in the future), they make no commitment to accept the same good back in return, and especially do not agree to any particular exchange ratio.
18/ As such there is no commonly accepted value of money. Nor a shared illusion, agreement, contract, belief, cult, consensus, religion, imagination, fiction, or social construct.
Money is real in every way, and its usage only relies on a *shared recognition of reality*.
Money is real in every way, and its usage only relies on a *shared recognition of reality*.
