Do exchanges actually need to back up crypto transactions with anything? I am talking about exchanges where you can’t actually deposit/withdraw crypto (etoro, revolut, paypal, etc).
I have thought of this as well. I'm not sure but I think they may be acting as a broker for you in one of those type of exchanges unless they have their own and they are syncing with the real markets or something. I haven't tried those that you mentioned though.
does it really matter that some cryptos have limited supply? BTC has only around 22 mil coins but if we have abstracted away and can trade without limiting to only the underlying asset, it means we’re just delusioned into burning money.
You know it's 21 million coins for BTC. Anyway, It does matter because the possible demand for it might be more in the future. It protects your money from being inflated. That's why a lot of institutions now are turning their cash reserves into BTC to hedge against the dollar. It's to protect them from the never-ending possible printing of money.
Conclusion: Supply Matters