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.
Yes, the $10 exists, but that $10 trade may have inflated the value ("market cap") of the coin by billions.
At start you had 10 bucks and he had 10 bucks worth of crypto for total assets of 20
Now you have crypto with value of 0 and he has 10 bucks for total assets of 10
Overall 10 bucks is gone and yes there are winners and losers
Edit: TikTok quiz abbreviated: you buy for 50, sell for 60, buy again for 80, sell for 90. How much did you win / lose? ... the confusion for some people being created since they sold at 60 to buy back at 80
A day later the Russian army hits my car with a mortar. You have $10,000. I have some scrap metal. Rather than $20,000 worth of stuff, there's now $10,000 (plus some scrap metal) total.
It's like a gold mine being revealed as barren. Whether you say wealth was destroyed or wasn't there to begin with is... distinction without a difference.