In separate places, under different cultures, all over the world, the concept of a "medium of exchange" grew. People noticed that some goods were easier to trade than others. And people also noticed that these "more tradeable goods" had similar properties:
Over time, a shorter and shorter list of commodities passed all these tests. These select commodities began to exhibit a sixth property, all important in the evolution of money.
This short list of commodities (most of them metals) had one thing in common with all other commodities. They were useful and commanded an exchange value in their own right. But because they were easier to trade than any other goods, they came to be perceived as having a value over and above their basic utility. They came to have a value as a "most (easily) tradeable good". They came to have a value as a MEDIUM OF EXCHANGE.
Once this value became widely recognized, the commodity in question was no longer "consumed" for any but the most vital purposes. Instead, it was used in exchange. It had become a MONEY.
intrinsic (adj.) Of or relating to the essential nature of a thing, inherent.
In economics, there is no such thing as "intrinsic" value. This is true for the simple reason that value does not reside in the atoms, molecules, chemical composition, or structure of an economic good. It resides, always, in the MIND of the individual perceiving the good. When looking to acquire an economic good, an individual must decide how much time, or effort, or other economic goods he or she is willing to offer in exchange. That decision determines the value of that economic good, at that particular time, to that unique individual.
This is a crucial distinction. Value is not in what is beheld, it is in the eye (and mind) of the beholder. The reason why some goods evolve into money while most others do not has nothing to do with the "intrinsic value" of the goods so favoured. It is because a large number of individuals have realised that goods used as money have a unique usefulness. Unlike all other goods, they can be exchanged easily, and at any time, for anything.
Whatever its complexity, an economy stands or falls upon very basic foundation stones. Individuals must be free to think and act on their decisions. They must be able to gain the rewards of being right and must bear the cost of being wrong. They must be able to concentrate on what they do best, and what they most enjoy doing, instead of spending their time providing for their immediate wants. They must be able to make provision for the future by preserving a portion of what they have produced. In short, they must think, they must produce, they must save. And to do that to the greatest and most efficient extent possible, they must trade with each other.
A man or woman alone in nature can certainly think, act, and gain the rewards of being right or bear the cost of being wrong. He or she can also, by means of great effort, put aside savings, but only for a limited period of time. Indeed, any man or woman alone in nature has no choice but to do these things, if he or she is to survive at all.
In an advanced economy, physical survival is not often an issue. But all the imperatives which confronted Robinson Crusoe still apply. The extent to which individuals can think, work, produce and trade freely determines the potential of the economy. The confidence with which individuals can save and invest long term determines the prosperity of the economy. To save, invest, and plan for the long term is a luxury not granted to a man and woman alone in nature. It is the exclusive preserve of those living in an advanced economy.
Finally, an advanced economy must, by its nature, be one in which there is indirect exchange, using money. In the place of the seed corn and the week's supply of food, there is money. In the place of labouring all day to procure one's immediate needs for food and shelter, there is money. In the place of never being able to rest on the fruits of past effort, there is money. In the place of being at the mercy of nature or dependent on the nature of mercy, there is money.
That is what money does. The evolution of any civilized society is dependent on the discovery of the idea of money, and on the discovery of something that can be used as money. The future of any civilized society is dependent on the quality of what IS used as money.