Money is a medium of exchange for trade, and a measure of wealth. We've always had money of some sort-- Greek drachmae, huge stones on Yap Island, Federal Reserve Notes, pretty beads and shells...
The important thing about money is that it rarely has any value itself, but reltes to something else of value. Of course, gold coins have the gold value in them, but that's why we don't use gold coins any more; the price of gold varies too much and screws up trade. We've been off the gold standard effectively since the 30s and semi-officially since 1971. For interminable boredom, have a looksee at "bimetallism" and "Bretton Woods" to see some of the history. And don't forget Gresham's Law-- which states when there are two sort of equal currencies, chaos will ensue and one will die a horrible death. Usually the one you bet on.
Nowadays, money is basically backed by the "full faith and credit" of the issuing authority-- usually a government. It is assumed that the big guys have a handle on things, so Sterling, Euros, Yen and such will maintain something of a stable value. African and South American money isn't always looked upon so kindly. Gresham's Law doesn't apply, because each currency is independent and tightly controlled by some government.
Next question is-- how is money created? Printing massive amounts of $100 bills is NOT the way. It guarantees instant inflation. Banks are ultimately the creators of money, and always have been.
It's called the Multiplier Effect-- you deposit your $100 in the bank. The bank knows it will be in there for a while, so it lends out $80 of it. SHAZAMM-- there is now $180 in circulation! If you take it out, there's always someone else to hit for it. (If there isn't that's called a run on the banks and is big trouble, but that's for another time.)
This is all regulated and controlled by central banks to assure things don't get out of hand. Regulation doesn't always work perfectly, but usually works well enough to stop the whole mess from crashing.
So, now we have this magical Bitcoin, not backed by anything or anyone, which has no clear means of valuation and no formal or informal regulation. On top of that, there's not much you can buy with it.
If you haven't heard of the Dutch Tulip Bulb craze, look it up. And back then they really had tulip bulbs.
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