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by gyom 3078 days ago
Here is something to consider. Assume for a moment that people use rare Pokémon cards as a form of payment, because everyone plays Pokémon. You can buy a card with Pokémon cards. But these cards aren't being printed anymore and the supply never increases.

If I issue some kind of "IOU" certificate, redeemable for a rare Charizard card, and people trade those IOUs instead of redeeming them (good thing because I don't have those Charizard cards in my possession at the moment), then I'm basically expanding the supply "things that people trade and commonly use to pay for goods" (i.e. money/currency).

I didn't create any new Charizard card, but as long as people don't ask me to redeem them, it's roughly as though the market had 10 more copies of that card circulating.

There isn't more "value/wealth" created, but there is now more "money/currency" circulating. You can imagine how something similar is happening with derivatives.