Ok then, I'll trade you any Government Bonds you might have (aka 'paper') for let's say, $100? I mean, worth more than paper, right?

Why do people have such difficulty grasping the abstraction of credit? And that it has value?

The entire system is based on credit - which is more intangible that 'bushels of wheat' or 'shiny rocks' but frankly it's not that hard to grasp.

The bonds are not 'paper' they are a 'promise to provide some value' - and most people take TBills at at least face value because the US Gov tends to honour the contract.

A currency based on a shiny rock has only one, small possible advantage, in that there is essentially a fixed supply of said rocks, and that it cannot be debased, however, this is in most ways not an advantage i.e. it precludes the possibility of any monetary policy.

Ergo we have systems of credit, currency based on that, and a whole bunch of rules around it.

"But the actual intrinsic value of the materials in a rare painting worth hundreds of millions of dollars might be a few bucks at best."

No, when things are configured in a certain way, they have value more than the constituent parts. A 'Tractor' is worth more than the 'Metal' it is made from. 'Art' is something that people like to look at beyond it's constituent bits of paper and dyes.

Yes, it's abstract, but it's not hard to grasp.