There are so many things wrong with this post, I may have trouble untangling it, but I will try.

Quote from: MrFlibble on December 03, 2010, 03:28:06 AM

Currency = small physical money tokens (coins & notes).
Money = more general concept of spendable stuff including currency and credit.
(My summary based on http://en.wikipedia.org/wiki/Currency and http://en.wikipedia.org/wiki/Money )

Wikipedia is nice, but is sometimes a poor reference. This is one of those times.

Currency is a commonly accepted unit of exchange. It does not need to be more, but is often 'backed' by some promise from it's issuing agency, such as a gold standard. It is best when it is very difficult (read expensive) to fake, which is why paper currencies are ever increasing the 'security measures' in their notes. Also, a currency is an arbitrary mathmatical unit of measurement, in much the same vein that both an inch and a meter are arbitrary units of length. Both measure the same thing, just as the US $ and the Euro both measure an elusive concept of quantifications of value, but the units themselves are simply a matter of convention.

Money, in the other hand, isn't a unit. An ideal money has several characteristics that lend to it's suitability as a natural currency, but it does not need to be a currency.

Those characteristics are...

Durability - It cannot rust or rot. Nor should it require a container to either protect it from harm or it's user, one reason that mercury was never used as a money as far as I know.

Divisability - The ability to 'make change' without impacting the value of the money. Cattle have a definable value, but are a terrible way to pay one's mortgage.

Fungibility - This basicly means that the quality is uniform, so that one measure of the money is equal to any other.

Transportability - This should be self evident, but the money should be valuable enough that carrying it shouldn't be a burden.

Congizability - Which means that money should be easily recognizable as probably being authentic by normal human senses, without the need to trust testing devices or experts.

The above conditions, historicly, have only been met by material classes that we commonly refer to as commodities, but the closest naturally occurring commodity to the ideal money has always been refined gold.

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Quote from: creighto on December 03, 2010, 02:11:22 AM

Then I'm really confused, because money requires an intrinsic value by definition.

I'm not sure about that. Which definition?

I thought money's main necessary properties were

Mostly conserved. Sure you might lose some if careless, but you can't duplicate it (double spend, shaving the edge off gold coins, counterfeits).
Like currency, needs to be transferred around in useful-size easy-to-validate denominations without too much inconvenience (= cost).
Scarce. Hence, in part, the Hitchhiker's Guide joke about using leaves off trees as money? I put it last, but I suspect it is of primary importance.

Scarcity is not a requirement of money, and can be a detriment. Historic case, platinum is much more rare than gold in nature, but also rare enough that most people had no experience with it (this was also somewhat true with gold, which is why nations traded in gold but the citizens traded mostly in silver or copper) so the Spanish made cannons out of platinum that was mined in central America. Also, scarcity doesn't always equate to concentration of value. Although silver is about 17 times more abundant in nature than gold, there is much more gold in a refined state than silver today. This is mostly due to the fact that silver is an industrial commodity in our modern world, with little to no monetary value, so most of the silver mined has been consumed in industry; whereas gold's monetary value has always priced it out of it's industrial uses, so nearly all of the gold that has ever been mined in recorded human history can still be accounted for.

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Various forms of money have problems,

Consider diamonds & rubies as currency. Now they can be made (some would say counterfeited) industrially it is very difficult to justify or enforce a high price for the ones coming out of mines.

Jewels might have a high unit value, but they still make a poor money because they are neither fungible (two diamonds may both be the same carrot rating, but one be more valuable for some other characteristic, such as cut, color or clarity) nor are they congizabile (it's an expert skill to be able to judge the value of a diamond). They don't always have a high unit value, either.

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Consider the popular electronic fiat money forms - credit cards and paypal. The inconvenience here seems to me to be running quite high (~5% per transfer). How this compares with the old days of shipping gold coins on horseback, I don't know.

I'm not sure of your point here, paper currencies were originally receipts of gold on deposit at a goldmonger or bank, and were traded as a symbol of that gold. The improved portability of paper over metal is not a new concept, and neither is the improved portability of electronic forms of credit, but neither is an example of a money.

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Does money need to be useful for something else? I suspect not, but back when money was just currency the options were more limited.

Again, you seem to be conflating the two concepts. They are related, but still distinct.

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As kiba said, gold is good for decoration & its physical properties. If it wasn't useful, we wouldn't work so hard to dig it out; but if it's not hard work to get some more, the "scarce" property is absent.

The scarcity of gold, relative to many other comparable commodities, is absent. You need to get past the idea that scarcity is a condition of value, it's not. Your fingerprints are rare, but I would say you would be suspicious of anyone who valued them. Water is the most abundant molecule on the planet, but has a quantifiable value almost everywhere. The difference is that water has common utility, whereas your fingerprints do not.