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> If I buy some cryptocurrency coin for $10 somebody received $10 from me. If now the value of the crypto goes $0, I have lost $10 but the who I gave $10 to still has that money

Here's an example of how this works:

FTX "minted" their own cryptocurrency. They minted billions of dollars of it.

When people purchased a tiny fraction of it, that established a price for one coin.

Once that happened, FTX could say "we're worth billions of dollars."

But keep in mind:

* the cryptocurrency was created out of thin air

* the value of the crypto crashed by over 90% in the past month

On top of all that, there was a "multiplier effect" when the "assets" were used as collateral on loans to counterparties.

The net effect is that the "assets" were worth billions at some point, but that value has evaporated. And loans were made on those "assets" which may have multiplied the actual impact several fold.

It's a banal comparison, but this is a lot like Beanie Babies in the 1990s. At one point the market was worth millions of dollars, and then it evaporated overnight.

That's deflationary, and if there's one thing the world needs right now, it's deflation.




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