From what understand, money doesn’t just disappear. When you’re at a poker table playing, the sum of money everyone started with is the same at the end(when someone loses $100, other(s) gain $100). If I sell you a crypto for $100 and it drops to $0, I would still have your $100. In this case, wouldn’t someone/some groups of people get all the money that is currently being lost?
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What happen is that they created value out of thin air to begin with. They said ‘tell your computer to use up electricity grinding these mathmatical formula and we will pay you in fake dollars, aka bitcoins’
People did it and lots of them amassed tons of bitcoins.
Now people started using bitcoins to buy and sell drugs, to avoid taxes, to send money back home without using normal currency exchanges, and even buying subway sandwiches.
The value of these fake coins started going up, investors saw an opportunity and put real money in, driving the exchange rate on bitcoins and other fake money even higher.
All along they have made it difficult to cash out of bitcoins and because the value kept going up there was little incentive to cash out.
But fundamentally if you look at the total number of coins ever minted and multiply that by the exchange rate you would get a value astronomically higher than the total amount of real dollars that has been invested in bitcoin (applies to all crypto)
So what you have is sort of like a bank that let people earn free digital money vouchers in their accounts but the bank never actually had that money and if/when people start to come to this realization and they all try to get their money out the bank can’t possibly make good on it and everyone trying to withdraw cash from the ATM only gets a tiny fraction of what they thought they had.
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