Esco’s post illustrates something important with crypto: 99% of people don’t actually own the crypto, they own an account with an “exchange” that claims to own it.
These exchanges are regularly hacked or just giant frauds.
They also I suspect don’t have giant amounts of US dollars sitting around ready to redeem. As long as more money comes in than out, they can pay people who want to withdraw money. But if, say, 10% of people want their funds out, they will just say “sorry don’t got it.”
But in the meanwhile, people log in, see their account value in US dollars that do not actually exist on the exchange, and are happy and keep sending the exchanges more money.
