Here in England we have £5, £10, £10 and £50 notes. We exchange one of these bits of paper for things in shops. Surely those little bits of paper aren't actually worth £5, £10, £10 or £50!

Also I noticed that English bank notes are actually IOUs because to the left of the Queenss's head it says "I promise to pay the bearer on demand the sum of..." and it is printed wiht the signature of the cheif cashier of the Bank of England.

Stupid question, but it makes it logical to ask how can I cash this IOU and in what form would it be paid?

This is why we use money.  It provides a common ground for us to get what we want.

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Money has always interested me on a deep level. Especially bank notes.

Here in England we have £5, £10, £10 and £50 notes. We exchange one of these bits of paper for things in shops. Surely those little bits of paper aren't actually worth £5, £10, £10 or £50!

Also I noticed that English bank notes are actually IOUs because to the left of the Queenss's head it says "I promise to pay the bearer on demand the sum of..." and it is printed wiht the signature of the cheif cashier of the Bank of England.  

Stupid question, but it makes it logical to ask how can I cash this IOU and in what form would it be paid?

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The IOU is usually cashed in the form of the currency tendered in the area it is written.  IOU's may have legal weight (in the US they do if signed - these are called promissory notes).  an IOU without an assigned time limit cannot be forced for redemption. (again US law).

Welcome to understanding how all fiat currency is essentially a scam.  Learn more about commodity currency.

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When they were first introduced they were receipts from banks. You had an amount of gold in a vault but instead of carrying it with you, you could transfer the IOU from person to person. Eventually the gold standard was dropped and out economies rest on the lie that the gold is somewhere. It isn't, of course. But as long as people believe that bank notes are worth something then they are worth something.

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Money is still backed by the good and services of the country, so they are worth something. Removing the gold standard simply allows the central bank to print as much as they want and steal from you lol.

Money as Debt

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All hope was fading... a darkness far beyond their might
But love came crusading on the wings of healing sacrifice