It is my understanding that lost wallets which are not recoverable result in lost Bitcoins. That is, the coins are gone forever. If that's the case, then it seems theoretically possible, though impractical, that a person could destroy all existing wallets and all existing coins would essentially be lost forever.
How does the system protect against such?
Theoretically you could also destroy all humans and all fiat money is worthless. How do fiat systems prevent extermination attack?