Currency is a record of social credit, of what one person believes another person is entitled to without doing additional work. Words can absolutely function as currency; if you can convince someone that they are entitled to receive something without doing work, then you have given them credit by speaking. This is how gift economies function.
However, this does not scale beyond communities too large for everyone to know everyone else or to trust all vouches for someone — word of mouth is subject to false claims, mistruths, deception, confidence tricks. Thus, we settled on a standard quantifiable record of who is entitled to what. How many apples is Alice entitled to, given that she has tended to the trees? How much land is Bob entitled to, given that he tends to the local farms? How fast of a car is Charlie entitled to, given that he is responsible for maintaining the IT systems of the local library?
The way that market economies work, any commodity that society at large perceives to have a certain mutually agreed upon value can be used as currency. This is just barter with a fixed intermediate item. When you work for your employer for 8 hours, get paid in dollars for those 8 hours of work, and then go down to the grocery store and use one eighth of your wages to buy groceries, you are just bartering 1 hour of your time for those groceries, with extra steps. Those extra steps are currency, and the result is that the grocery vendor doesn't need to rely on your employer's word of mouth in order to believe that you are entitled to receive those groceries.
The currency needn't be dollars. It could be anything, such as apples; your employer could pay you in apples and you could go down to the grocery store and exchange some of those apples for the groceries that you actually want. However, apples don't make a convenient form of currency, as they are burdensome to carry, they spoil relatively quickly, and so on.
Money is just currency that doesn't spoil and is easy to carry and transfer. As such, things like precious metals generally work as money.
Fiat currency is currency that some particular entity has control over. A government or bank cannot issue apples; they would have to grow them. However, they can issue banknotes and coins, or simply increase the balance in their written account, at will.
The trouble comes when the currency can be obtained easily, like in the case of the bank issuing banknotes; or in the case of a society that uses shells as currency, which they think are rare, but that a single person discovers are abundant and easy to get in a particular location known only to them. At that point, the system of points represented by the currency can be gamed. The points no longer unilaterally represent the entitlement to something without doing work, because they are not necessarily obtained by doing work in the first place. In effect, the aforementioned possibility of deception (when using words as currency) has re-entered the picture (when using an abundant item as currency).
Precious metals don't have that issue (currently, at least). Bitcoin also doesn't (and cannot, unless its users decide en masse to change the rules under which it is issued).
These are just some of the reasons that bitcoin is more useful as money than apples or gold or banknotes.
Gold, apples, banknotes — these things scale well as currencies because one's account balance is recorded locally; it's the amount of that item that they physically possess, and this amount cannot be forged (as long as the other party is willing and able to do what is necessary to verify the authenticity of the item, e.g. that the gold is not fake, that the apples are not wax, that the banknotes are actually issued by the bank). Bitcoin flips this on its head by just forcing everyone to know the balances of all accounts, i.e. it records each account's balance globally. This removes the physical aspect of the currency whilst maintaining the unforgeability.
Currency is a record of social credit, of what one person believes another person is entitled to without doing additional work. Words can absolutely function as currency; if you can convince someone that they are entitled to receive something without doing work, then you have given them credit by speaking. This is how gift economies function.
However, this does not scale beyond communities too large for everyone to know everyone else or to trust all vouches for someone — word of mouth is subject to false claims, mistruths, deception, confidence tricks. Thus, we settled on a standard quantifiable record of who is entitled to what. How many apples is Alice entitled to, given that she has tended to the trees? How much land is Bob entitled to, given that he tends to the local farms? How fast of a car is Charlie entitled to, given that he is responsible for maintaining the IT systems of the local library?
The way that market economies work, any commodity that society at large perceives to have a certain mutually agreed upon value can be used as currency. This is just barter with a fixed intermediate item. When you work for your employer for 8 hours, get paid in dollars for those 8 hours of work, and then go down to the grocery store and use one eighth of your wages to buy groceries, you are just bartering 1 hour of your time for those groceries, with extra steps. Those extra steps are currency, and the result is that the grocery vendor doesn't need to rely on your employer's word of mouth in order to believe that you are entitled to receive those groceries.
The currency needn't be dollars. It could be anything, such as apples; your employer could pay you in apples and you could go down to the grocery store and exchange some of those apples for the groceries that you actually want. However, apples don't make a convenient form of currency, as they are burdensome to carry, they spoil relatively quickly, and so on.
Money is just currency that doesn't spoil and is easy to carry and transfer. As such, things like precious metals generally work as money.
Fiat currency is currency that some particular entity has control over. A government or bank cannot issue apples; they would have to grow them. However, they can issue banknotes and coins, or simply increase the balance in their written account, at will.
The trouble comes when the currency can be obtained easily, like in the case of the bank issuing banknotes; or in the case of a society that uses shells as currency, which they think are rare, but that a single person discovers are abundant and easy to get in a particular location known only to them. At that point, the system of points represented by the currency can be gamed. The points no longer unilaterally represent the entitlement to something without doing work, because they are not necessarily obtained by doing work in the first place. In effect, the aforementioned possibility of deception (when using words as currency) has re-entered the picture (when using an abundant item as currency).
Precious metals don't have that issue (currently, at least). Bitcoin also doesn't (and cannot, unless its users decide en masse to change the rules under which it is issued).
These are just some of the reasons that bitcoin is more useful as money than apples or gold or banknotes.
Gold, apples, banknotes — these things scale well as currencies because one's account balance is recorded locally; it's the amount of that item that they physically possess, and this amount cannot be forged (as long as the other party is willing and able to do what is necessary to verify the authenticity of the item, e.g. that the gold is not fake, that the apples are not wax, that the banknotes are actually issued by the bank). Bitcoin flips this on its head by just forcing everyone to know the balances of all accounts, i.e. it records each account's balance globally. This removes the physical aspect of the currency whilst maintaining the unforgeability.