They are doing it for speculation. They buy it for 20k and sell for higher to profit

Yeah for a digital item with easy trading it's more like buying a stock vs a physical item which instantly depreciates. Basically holding $20k in an alternative form vs spending $20k.

"I can't even imagine how rich someone must be in order for a $20,000 imaginary knife with only cosmetic value to seem like a rational purchase."

its as real as people buy billions using made up money (BTC)

It is more harmful for those who cannot afford to spend 20K, 2K or even 200 but does anyway out of ignorance or stupidity.

You forgot addiction, which should not be reduced to just ignorance or stupidity.

24mil a year, 20k would be 1 hundredth of your monthly salary.