Fiat Money
Money is fake.
The concept of fiat money is a very interesting concept often presented in introductory economics courses. At first, unintuitive, it can be understood much more easily once we bring in the idea of information cascades.
Let us take the US Dollar for example. By itself, it is almost useless. The value of the paper used to print it is mere cents if even that. However, we feel comfortable trading expensive goods for this magical paper. Why is that?
The reason that we can trust the currency in this way is due to the direct benefit of information cascades. As a US resident, you are aware of the fact that the 300 million other people living in the country believe in the US Dollar, and this gives it credibility. If nobody else used the US Dollar, it would be worthless. If you tried to trade a piece of paper for a TV, you would be mocked and laughed at. But because the country universally agrees upon the US Dollar as a currency, people are willing to trade valuable items in exchange for US Dollars because they know that they will be able to trade those same pieces of paper for something else later on.
This concept from networks is applicable to all areas of life, and I think this is one of the best example of it. The whole world runs on money that only has value because we all collectively decide to give it value. If nobody else used fiat money, it would be worthless. But the fact that everyone knows that everyone else will use it as well gives them the confidence to give it value.
Information cascades make modern society possible.
https://corporatefinanceinstitute.com/resources/knowledge/economics/fiat-money-currency/