user119900: Is money that has gone into bitcoin already spent? When I buy a bitcoin from someone and they get USD I get bitcoin. They go buy lambos or real estate for their gains. So the underlying currency is spent, but BTC market cap is increased. This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind crypto?

user119996: I don't really see much issue with the other answers but I think you are confused about some basic concepts here.
First of all, let's define market capitalization or 'market cap'.  This is simply price of a 'share' of an asset multiplied by the number of shares available.  This is a term that is usually used with relationship to stocks.  The implication is that this is what the market 'believes' the total value of the asset is.  For a company, it's roughly of the total value of the company.  As a side note, the idea of BTC having a market cap implies it's an asset. For 'currency' we would use terms such as 'money supply' and 'circulation'.
So let's talk about Lambo's for a second.  Let's say you sell some BTC, and buy a lambo.  The person you bought it from goes to the casino, and gambles it away.  The money is spent, gone.  Does the lambo have any 'money in it'?  It's lost some value but you should be able to find a buyer and get most of what you paid for it.  But let's say you then drive it into a tree and total it.  It bursts into flames as you escape and it is completely destroyed.  You pay to have the remnants of a lambo hauled away to a scrap yard.  Does it have 'money in it' now?
Money is a fiction: there's no such thing as 'real money', all money is imaginary.  But it serves a really useful purpose: it relieves us of the time and effort required to determine e.g. how many eggs a candle is worth.  When you buy BTC, you are giving up money and 'receiving' BTC in exchange.  What that BTC is worth to you is what ever you are able to get for it in exchange for something else.  What you exchanged for it in the first place is irrelevant.  These are independent transactions.  It's just like selling a home.  The buyer doesn't care how much money you spent on it or what you put into fixing it up, the price buyers are willing to pay is based on market value.
You might be thinking of so-called 'stable coins'.  These are digital currencies/assets that are 'pinned' to a fiat currency such as the US dollar.  Some countries do the same thing and tie their currency to the value of the USD.  The question is, though, do they actually have enough dollars to cover the pseudo-dollars they have issued.

user120007: 
This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically.

Short answer: Yes
Longer answer:
The value of bitcoin is what other people are willing to pay. If noone wants to buy bitcoin the value is zero.
Bitcoins are "marketed" as the new payment system with zero transaction cost. If true, it would be fantastic. In the meantime there are a number of issues with bitcoin -- I will list some, whether they are important is up to others to decide.

Bitcoin is marketed as a payment currency / system. But compared to the total value of all bitcoins the payment flow is probably small. Most people hold bitcoins as speculative investments, not to pay for good or services. Compared to national and International payment flows the bitcoin usage is totally insignificant.
Bitcoins are forbidden in some countries, and more may follow. Polititians may believe either that they have no control or that bitcoins are mostly used for illegal transactions such as drugs (true or false, decisions are often made on beliefs).
Transactions are far from free: it is estimated that bitcoin mining currently uses about as much electrical energy as a smaller country, say like Netherlands. Energy usage is hardly free.
There is as already known no intrinsic value in bitcoins. It is really only a "key". Compare to as example gold -- even if gold prices goes to zero you can actually use gold for making things.

So the longer answer is still yes -- the value may go down to very close to zero. And it could happen in a very short time.

user95422: Bitcoin is separate from fiat (dollar or euro or any governement currency) people choose to exchange a certain amount of dollar for bitcoin, once the exchange is done, the buyer got bitcoin and lost his dollar and the seller got dollar and lost his bitcoin.
If peoples dont want to exchange their dollar for bitcoins, then yes the price will go toward zero.

user84201: Bitcoin is like every other asset; it does not matter if you buy Bitcoin, or some stock, or a fond, a future, expensive cars or houses, raw materials, or even simply a foreign currency.
For all of these assets it holds true that they have almost no intrinsic value; they all only have the value that we as humans give them. Even food has no significant value if you've eaten and are full.
They gain value primarily because they are limited. To a starving person, the same piece of food that someone else would discard without a single thought may be worth more than a piece of gold.
All of these can "collapse without bottom", in principle. A company can immediately go bancrupt without warning. A future can go wrong. Your expensive car can total, a meteorite can strike your house, your raw materials can get lost at sea, and your food storage can be decimated by mice.
The "value" we attribute to Bitcoin specifically is that at the time it tickled the fancy of those who wanted to have a currency which is not centrally controlled. Other virtual currencies (e.h., Ethereum) add more features due to supporting contracts or even games built on top of the currency. If the designers and developers manage to convince people that they want to buy this stuff, then it becomes valuable.
Someone commented that bitcoin is not "real". Futures, ETFs and many other instruments are not "real" either, they are a pure bet on the future development of an underlying asset (which in turn might be virtual), or a mix of other assets. They are backed by something. Bitcoin is "backed" by a promise, an idea, or just the number of people already invested in it as well. Highly risky, yes, but nonetheless the same as many other assets.
And if you want to become more concrete, on a most technical level, the value of Bitcoin comes from the fact that we cannot conjure them out of thin air, but have to spend electricity. This is really a core (if not the core) function of the virtual currencies for now, if a little pedestrian. Obviously the energy has been spent and is now gone, so we cannot get it back. But this introduces scarcity, which often translates directly to value.

user65169: What is the difference between a dollar bill and a piece of monopoly money? Both are just pieces of paper with some print on it. Sure, the dollar bill has security features, but we could easily print monopoly money with the some security features.
The main difference is that all people collectively pretend that the dollar has value. The same is true for any fiat currency.
Back in the days, silver (or gold) coins had intrinsic value - the value of the metals present in the coin. Nowadays, almost all currencies are fiat currencies. They are literally just pieces of paper. The only thing distinguishing the from normal paper is that people collectively pretend those bills have value.
If you ever travel outside the US, you might actually encounter people who don't want to be paid in dollar, especially in Europe. For us, a dollar bill literally is a printed piece of paper. You can't do anything with it, except exchange it for paper we think has value - the Euro.
The same applies to cryptocurrencies. Cryptocurrencies only have value because someone else is willing to pay you for it. Bitcoins do not have intrinsic value. They are just a crypto token. They have value because someone is willing to buy them.
It doesn't really matter if you think of Bitcoin as currency or asset.
Lets pretend you buy a piece of art. you start with $1k. You buy a painting for $750. You still have $250, but also a painting worth $750, so your net worth didn't change.
Replace piece of art in the above with either Euro or Bitcoin and nothing changes.
It only starts to change if the piece of art, or the Euros, or the Bitcoins aren't worth $750 anymore -- either more or less. Your net worth changes accordingly, but you still only have $250 in hand. Only when you sell the asset/euros/bitcoin again you will realize those gains.
All of those can "collapse without bottom" -- including the Dollar! A piece of art might become worthless in a post-apocalyptic world, or simply because the artist is no longer en vogue. The Bitcoin bubble might burst. A financial crisis might make Euros or Dollars worthless, if people no longer believe that those things have value and start to barter again. We have already seen currencies collapse, e.g. the Reichsmark. Or look at the Venezuelan Bolivar for another example of hyperinflation.
The Dollar used to be backed by gold (Fort Knox). So there used to be some value to a dollar bill (the amount of gold is was backed with). But that hasn't been the case for about four or five decades.

user15430: As @RedGrittyBrick says, change the word "bitcoin" to "euros" and see if that helps you. All currencies work this way, not just cryptos:

Is money that has gone into euros already spent? When I buy a euro from someone and they get USD I get euro. They go buy lambos or real estate for their gains. So the underlying currency is spent, but euro market cap is increased. This would mean that euros don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind euros?

And someone in Europe probably has the exact same question about USD.
All currencies are fundamentally worthless. Except for things like gold, which you can use to plate the contacts of electrical switches, coins, which can used as paperweights, and paper notes/bills, which can be used as toilet paper.

119900: <p>Is money that has gone into bitcoin already spent? When I buy a bitcoin from someone and they get USD I get bitcoin. They go buy lambos or real estate for their gains. So the underlying currency is spent, but BTC market cap is increased. This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind crypto?</p>
 119996: <p>I don't really see much issue with the other answers but I think you are confused about some basic concepts here.</p>
<p>First of all, let's define market capitalization or 'market cap'.  This is simply price of a 'share' of an asset multiplied by the number of shares available.  This is a term that is usually used with relationship to stocks.  The implication is that this is what the market 'believes' the total value of the asset is.  For a company, it's roughly of the total value of the company.  As a side note, the idea of BTC having a market cap implies it's an asset. For 'currency' we would use terms such as 'money supply' and 'circulation'.</p>
<p>So let's talk about Lambo's for a second.  Let's say you sell some BTC, and buy a lambo.  The person you bought it from goes to the casino, and gambles it away.  The money is spent, gone.  Does the lambo have any 'money in it'?  It's lost some value but you should be able to find a buyer and get most of what you paid for it.  But let's say you then drive it into a tree and total it.  It bursts into flames as you escape and it is completely destroyed.  You pay to have the remnants of a lambo hauled away to a scrap yard.  Does it have 'money in it' now?</p>
<p>Money is a fiction: there's no such thing as 'real money', all money is imaginary.  But it serves a really useful purpose: it relieves us of the time and effort required to determine e.g. how many eggs a candle is worth.  When you buy BTC, you are giving up money and 'receiving' BTC in exchange.  What that BTC is worth to you is what ever you are able to get for it in exchange for something else.  What you exchanged for it in the first place is irrelevant.  These are independent transactions.  It's just like selling a home.  The buyer doesn't care how much money you spent on it or what you put into fixing it up, the price buyers are willing to pay is based on market value.</p>
<p>You might be thinking of so-called 'stable coins'.  These are digital currencies/assets that are 'pinned' to a fiat currency such as the US dollar.  Some countries do the same thing and tie their currency to the value of the USD.  The question is, though, do they actually have enough dollars to cover the pseudo-dollars they have issued.</p>
 120007: <blockquote>
<p>This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically.</p>
</blockquote>
<p>Short answer: Yes</p>
<p>Longer answer:
The value of bitcoin is what other people are willing to pay. If noone wants to buy bitcoin the value is zero.</p>
<p>Bitcoins are &quot;marketed&quot; as the new payment system with zero transaction cost. If true, it would be fantastic. In the meantime there are a number of issues with bitcoin -- I will list some, whether they are important is up to others to decide.</p>
<ul>
<li>Bitcoin is marketed as a payment currency / system. But compared to the total value of all bitcoins the payment flow is probably small. Most people hold bitcoins as speculative investments, not to pay for good or services. Compared to national and International payment flows the bitcoin usage is totally insignificant.</li>
<li>Bitcoins are forbidden in some countries, and more may follow. Polititians may believe either that they have no control or that bitcoins are mostly used for illegal transactions such as drugs (true or false, decisions are often made on beliefs).</li>
<li>Transactions are far from free: it is estimated that bitcoin mining currently uses about as much electrical energy as a smaller country, say like Netherlands. Energy usage is hardly free.</li>
<li>There is as already known no intrinsic value in bitcoins. It is really only a &quot;key&quot;. Compare to as example gold -- even if gold prices goes to zero you can actually use gold for making things.</li>
</ul>
<p>So the longer answer is still yes -- the value may go down to very close to zero. And it could happen in a very short time.</p>
 95422: <p>Bitcoin is separate from fiat (dollar or euro or any governement currency) people choose to exchange a certain amount of dollar for bitcoin, once the exchange is done, the buyer got bitcoin and lost his dollar and the seller got dollar and lost his bitcoin.</p>
<p>If peoples dont want to exchange their dollar for bitcoins, then yes the price will go toward zero.</p>
 84201: <p>Bitcoin is like every other asset; it does not matter if you buy Bitcoin, or some stock, or a fond, a future, expensive cars or houses, raw materials, or even simply a foreign currency.</p>
<p>For all of these assets it holds true that they have almost no intrinsic value; they all only have the value that we as humans give them. Even food has no significant value if you've eaten and are full.</p>
<p>They gain value primarily because they are limited. To a starving person, the same piece of food that someone else would discard without a single thought may be worth more than a piece of gold.</p>
<p>All of these can &quot;collapse without bottom&quot;, in principle. A company can immediately go bancrupt without warning. A future can go wrong. Your expensive car can total, a meteorite can strike your house, your raw materials can get lost at sea, and your food storage can be decimated by mice.</p>
<p>The &quot;value&quot; we attribute to Bitcoin specifically is that at the time it tickled the fancy of those who wanted to have a currency which is not centrally controlled. Other virtual currencies (e.h., Ethereum) add more features due to supporting contracts or even games built on top of the currency. If the designers and developers manage to convince people that they want to buy this stuff, then it becomes valuable.</p>
<p>Someone commented that bitcoin is not &quot;real&quot;. Futures, ETFs and many other instruments are not &quot;real&quot; either, they are a pure bet on the future development of an underlying asset (which in turn might be virtual), or a mix of other assets. They are <em>backed</em> by something. Bitcoin is &quot;backed&quot; by a promise, an idea, or just the number of people already invested in it as well. Highly risky, yes, but nonetheless the same as many other assets.</p>
<p>And if you want to become more concrete, on a most technical level, the value of Bitcoin comes from the fact that we cannot conjure them out of thin air, but have to spend electricity. This is really a core (if not <em>the</em> core) function of the virtual currencies for now, if a little pedestrian. Obviously the energy has been spent and is now gone, so we cannot get it back. But this introduces scarcity, which often translates directly to value.</p>
 65169: <p>What is the difference between a dollar bill and a piece of monopoly money? Both are just pieces of paper with some print on it. Sure, the dollar bill has security features, but we could easily print monopoly money with the some security features.</p>
<p>The main difference is that all people collectively pretend that the dollar has value. The same is true for any fiat currency.</p>
<p>Back in the days, silver (or gold) coins had intrinsic value - the value of the metals present in the coin. Nowadays, almost all currencies are fiat currencies. They are literally just pieces of paper. The only thing distinguishing the from normal paper is that people collectively pretend those bills have value.</p>
<p>If you ever travel outside the US, you might actually encounter people who don't want to be paid in dollar, especially in Europe. For us, a dollar bill literally is a printed piece of paper. You can't do anything with it, except exchange it for paper <em>we</em> think has value - the Euro.</p>
<p>The same applies to cryptocurrencies. Cryptocurrencies only have value because someone else is willing to pay you for it. Bitcoins do not have intrinsic value. They are just a crypto token. They have value because someone is willing to buy them.</p>
<p>It doesn't really matter if you think of Bitcoin as currency or asset.</p>
<p>Lets pretend you buy a piece of art. you start with $1k. You buy a painting for $750. You still have $250, but also a painting worth $750, so your net worth didn't change.</p>
<p>Replace piece of art in the above with either Euro or Bitcoin and nothing changes.</p>
<p>It only starts to change if the piece of art, or the Euros, or the Bitcoins aren't worth $750 anymore -- either more or less. Your net worth changes accordingly, but you still only have $250 in hand. Only when you <em>sell</em> the asset/euros/bitcoin again you will <em>realize</em> those gains.</p>
<p>All of those can &quot;collapse without bottom&quot; -- including the Dollar! A piece of art might become worthless in a post-apocalyptic world, or simply because the artist is no longer en vogue. The Bitcoin bubble might burst. A financial crisis might make Euros or Dollars worthless, if people no longer believe that those things have value and start to barter again. We have already seen currencies collapse, e.g. the Reichsmark. Or look at the Venezuelan Bolivar for another example of hyperinflation.</p>
<p>The Dollar used to be backed by gold (Fort Knox). So there <em>used</em> to be some value to a dollar bill (the amount of gold is was backed with). But that hasn't been the case for about four or five decades.</p>
 15430: <p>As @RedGrittyBrick says, change the word &quot;bitcoin&quot; to &quot;euros&quot; and see if that helps you. <em><strong>All</strong></em> currencies work this way, not just cryptos:</p>
<blockquote>
<p>Is money that has gone into euros already spent? When I buy a euro from someone and they get USD I get euro. They go buy lambos or real estate for their gains. So the underlying currency is spent, but euro market cap is increased. This would mean that euros don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind euros?</p>
</blockquote>
<p>And someone in Europe probably has the exact same question about USD.</p>
<p>All currencies are fundamentally worthless. Except for things like gold, which you can use to plate the contacts of electrical switches, coins, which can used as paperweights, and paper notes/bills, which can be used as toilet paper.</p>
