That's not how it works gastropod. In the scenario you created, the market cap of your coin is $1. Until someone actually buys the 999,999,999,999 other coins for $1 each, they add no value to the market cap of the stock.
Sorry, but that is precisely how it works. For instance, the 1M bitcoins Satoshi mined himself are absolutely counted towards Bitcoin's market cap. No money needs to have traded hands. You can mine 1T coins, sell 1, and the market cap will be 1T x the selling price. In practice, you'd probably sell more than just one, as Index explained. Mine 1T, sell 1M, and enjoy your sky high new net worth!
Both examples are incorrect.
You could sell 999,999,999,999 for 1 cent (altogether). Then if you sell one more coin at 1$ it magically transforms the valuation of all the coins out there to be a trillion dollars - based on the present traded price of the crypto.
This is not true. I think this is very important to understand.
You do not have to sell all the tokens. This is significantly different from an IPO, where a set number of shares will all be up for sale (and the market cap only references the number of shares offered). With a cryptocurrency, you can mine an arbitrary number of tokens, sell an arbitrary number, and have a colossal (and, clearly, ridiculous) market cap. Shiba Inu and countless other "shitcoins" have exploited this fact, to fleece unsophisticated crypto "investors".
It actually means plenty, and it works mostly like stocks do...
A stock's market cap is the number of shares x the price for each share.
A crypto's market cap is the number of coins x the price for each coin.
And yes, it is transparent. Here is a listing of some of the most common coins, so you can see examples of what I mean: https://coinmarketcap.com/
Sorry, I probably wasn't clear enough. Market cap works
similarly to stocks. But a business's market cap is a bit more realistic. There's a reason we don't refer to the market cap of the USD—it doesn't really make any sense. The market cap of a business is the market's best estimate of the value of a company. It's rather common for businesses to purchase other businesses at the full value of the market cap. Add to this fact that stocks are regulated and have a lot more actual transparency due to these regulations. Because of them, we have a much better grasp of actual trade volume, wash trading is illegal, margin is transparent, and market cap is denominated by shares in circulation—which can be readily measured.
The transparency I'm referring to isn't with respect to the market cap of these things. It's referring to: how much leverage is there? How much actual volume is there? How much is wash traded? Much of the volume is in the form of stable coins (USDT, USDC, etc.) What backs these? Publicly traded companies have accounting regulations, and banks have audits. Crypto has none. There's this widespread claim that it's all transparent, public to see on the blockchain!, but that's a rather unimportant aspect in the grand scheme of things. What's actually happening on the exchanges, between USD and these cryptocurrencies is very much a question mark.