PayPal balances--are they money? What is money?

Recently I bought and sold some items through PayPal. To wit, I sold an old but rare and highly sought after pair of jeans and then, a couple of days later, bought myself a different pair, all on eBay.

Normally, if I buy something from a store, or even an individual, a check or actual cash changes hands. Or I might use a debit card, which is also linked to a bank account. But, in this case, I was struck by the fact that when I sold my old jeans, the buyer paid $79 into my PayPal account, so this “money” was just sitting there. But it didn’t come from a bank; it’s almost as if this money was created out of thin air to be used in the transaction. Once I had this PayPal credit I could conceivably spend it anywhere on the internet that accepts PayPal, for example, like renewing my subscription here, which I just did.

So PayPal money doesn’t “exist” in a banking system like regular money, but it’s certainly usable real money on the internet. In terms of backing, is it correct to say that PayPal money is backed by the accepted value of the merchandise, the buying and selling of which it is used for? If the American banking system collapsed, but somehow computers and the internet were still available, could PayPal or something similar be used as the basic currency of the economy?

The money in your Paypal account had to have come from either a bank or a credit card. How else would it get there? Or am I not understanding the question?

Damn! An Uncle Billy moment.

Sorry, I’ve been under a lot of stress lately.