This writing assignment asks you to use basic relationships from the course to assess the crypto-currency Bitcoin (BTC) and its valuation in U.S. dollars (USD). The assignment also asks you to critically assess the usefulness of those relationships for unconventional currencies.
Writing
Suppose you are writing to explain Bitcoin valuation to a freshman in economics at UC San Diego. Plan on writing four
paragraphs and up to 500 words total. If you need more paragraphs or more words, the cap is not binding. However, if
you choose to exceed the recommended cap on length, note that grading will reward concision and penalize redundancy,
imprecision, and superfluous information.
In your paper, 1) write an opening paragraph that explains what Bitcoin is, as a currency. 2) Use both valuation methods
above, or if you like another method (related to course material) and online data, to describe either the change in the
fundamental USD value of a Bitcoin or your best estimate of a fair USD price of a Bitcoin. Make sure to explain your
reasoning. If you need more than two paragraphs to do so, write more than two paragraphs. 3) In a final paragraph critically
assess the usefulness and limitations of the basic relationships from the course for the valuation of Bitcoin.