A money can only be used if there are more than two individuals and two goods in society.  It must be used to grow the size of the economy.  This removes the double coincidence of wants.  A good is traded for another good that can be traded for another good.  A good is not being traded to be consumed, but to be traded again.  You trade your labor services so you can pay bills and other necessities.

Regression Theorem proves it emerged as a commodity.  Money has value today because it had value yesterday.  It had value yesterday because it had value the day before.  This can be regressed back until the first day an indirect exchange was made.  The item used for the first indirect exchange had value the day before, value in the barter economy.  Money must have been a valuable commodity.  It’s impossible that anything else was used as money.

A marketable good would be chosen as money.  It is certainly possible that a less marketable good was used before, but there is a tendency to use a more marketable good.   Various goods may be used for exchange, but some will out compete others.  Since the first indirect exchange, the precious metals have been chosen.  They were chosen due to the natural qualities that make them uniquely fit for money.

Imagine if Crusoe, Friday, and John got together to decide what would be used as money.  They decide on sand.  How long before one adds sand to his own cash balance?  This is an aggression against the other two.  This does not make more goods available.  This just harms the other two.  Why would Crusoe exchange fish for a fist full of sand?  He wouldn’t.  It is impossible that money emerged as a social contract.

The object of money is to transmit value through space and time.  Sand doesn’t, and never did, have value.  Crusoe would have to exchange the fish for berries to exchange the berries for chicken.  Crusoe wouldn’t want sand, neither would John.  Money is not just a medium for payment.    It does serve as a medium for payment, but in order to do so it must have value.  Crusoe and company deciding to use sand is absurd as us using paper.

Reference

Ludwig von Mises; The Theory of Money and Credit