This is a really interesting post, as it's a perspective that I'd never considered before. This does make one wonder how currencies develop without the backup of a large organization to collectively make it in everyone's best interest to use it. For example, how have Bitcoins not flattened out? Why is there such a huge market for virtual hats in Team Fortress 2? What about gold farming and WoW? I assume that it has to do with the rather free-wheeling nature of the unregulated micro-economies involved, but I'd love to know if I'm correct about that, as well as any additional details.
At the core, money serves as a unit of account (that is, it's a way of expressing relative values of goods) and a medium of transaction, so the question isn't necessarily "why would we use money?" so much as "why would we use this particular brand of money?" Though the question of why we would use money at all is interesting, and as minimum_wage said, I've heard that Graeber's book Debt: The First 5000 Years is an excellent treatment of that topic. Suffice it to say, the parables of the goldsmith and of Robinson Crusoe are almost certainly false, and (from an anthropological perspective) the origin of money is almost certainly rooted in the origin of the state. World of Warcraft fits perfectly with the taxes-drive-money view, in that there are still plenty of taxes that are denominated in gold: chiefly (at the high end), equipment repairs, though at the low end one could also consider taxi costs, mounts, certain vendor items, and auction overheads. If there were no demand for gold in WoW, then it's conceivable that auction houses wouldn't be used, and instead player-driven barter systems would emerge (as they did in Everquest and Diablo 2). Indeed, Diablo 2 poses a telling example. I never played the game online, but I was told that gold was so plentiful and so useless that the unit of account in player trading was some (otherwise worthless?) legendary item, and the only thing anyone ever did with gold was the little gambling minigame. I've never played Team Fortress 2 so I don't know anything about any hat market, though certainly it's been shown that players can be heavily driven by vanity, because what else is there to do in online games? For example, I bought a few motorcycles during The Wrath of the Lich King, which is sadly an accomplishment that's been diminished by gold inflation. Player vanity is largely independent of this argument, though. I don't know very much about bitcoin, but I'd wager that either it's a fad, or if there really is narcotics trading in bitcoins, then of course the answer is similar to the US dollar black market in Zimbabwe: it's a convenient currency, but somewhat spurious to real national monetary systems. That is, for a black market, it really does make sense to suggest that the most convenient currency wins (after all, black markets aren't taxed); in normal markets, there's a lot of resistance to choosing a currency by convenience, since for example the euro is still limping along.
Bitcoin immediately came to my mind too. Personally, I think 'the greater fool' scenario works. Once there is a critical mass of 'fools' it will be very difficult to completely dispell the value of the asset. Furthermore, the more time that goes by that a critical mass of 'fools' exchange and desire this asset, the more difficult it becomes to dispell. Although income taxes collected specifically in that currency definitely butresses the fools delusion, I see it as an arbitrary value judgement. That is, the fact that I can exchange BTC for $ to pay my taxes might give value to BTC, but the fact that I can exchange $ to BTC to buy heroin also gives value to my $.