Leaving the side the fact that CK has rarely seen cash made of paper for three decades (most currencies use a form of plastic these days), the reason is the same as why a Van Gogh painting is worth more than the canvas it’s painted on.
Literally true.
And bear in mind that Van Gogh only managed to sell one of his own paintings in his lifetime. And his day job to pay the bills was selling other people’s paintings. So Van Gogh paintings weren’t much valued during his lifetime.
It’s called ‘the bigger fool problem’.
One will accept a currency, or anything else that has no intrinsic value, in exchange for goods and services just so long a one is confident that there is an even bigger fool around to whom one can pass on the currency (or other item, such as a painting), at the same or more value.
Bye and large considering money to have value is a voluntary collective societal delusion. And so long as most members of society continue to share the collective delusion money serves as a very useful medium of exchange.
Sometimes, the delusion collapses. Venezuelan Bolivar are an example of a currency that almost no one wants to hold anymore. There is no real confidence that there are bigger fools around who will accept it. Everyone would prefer to be holding some other currency.
In 1922–23 the Weimar Republic Deutchmark in Germany underwent hyperinflation to the point where one US Dollar equalled 4.2 trillion marks.
Hyperinflation in the Weimar Republic - Wikipedia
The paper was worth literally more than the value of the money printed on it and people were burning it to keep warm.
So - unless it has intrinsic useful value - like a loaf of bread, value is always about people’s opinion. In fact, even with intrinsic value, value is usually about opinion.
A bottle of Evian potable drinking water in the middle Lake Victoria is worth far less than the same bottle of water in the middle of the Sahara Desert, even if it costs exactly the same amount to get it there.
This is why economists spend so much time looking at market confidence, business confidence, consumer confidence, etc. This confidence represents an opinion which determines values (of such things as real estate property).
People are inclined to think that scientists use independent objective observations and constant yardsticks for measuring things. This in only true in some sciences, such as physics, chemistry and astronomy. It is NOT true in sciences such as economics, sociology and psychology.
And once society loses confidence that there is a bigger fool around who will accept your Venezuelan Bolivars … then you may be wishing they were printed on paper. Paper has its uses around a toilet.
Hope this helps.