Should cryptocurrencies to be considered a credence good? They are not backed up by anything tangible other than computer code and the belief that others will accept them for value in trade. There is no central authority, government, or central bank that guarantees their value. And yet, the value of several cryptocurrencies has grown explosively over time. Consider Bitcoin Links to an external site.for example: Bitcoin got its real start as a medium of exchange in black markets, such as Silk Road Links to an external site., albeit later it was adopted for a number of other more legitimate uses (Bitcoin - Wikipedia Links to an external site.).

Initially, the trading value of Bitcoin was about 30 cents per coin. The peak value of $68,770 was reached on November 10, 2021. Less than a month later, on November 29, 2021, the price of Bitcoin was $58,314. Then, yesterday (November 27^th), the price stood at $16,466. This is a loss of $41,848 per Bitcoin, or a decrease in value of 71.76% over the last calendar year. And yet, the loss over the last year notwithstanding, in terms of the initial price of 30 cents, the current price of $16,466 still represents an almost five and half million times increase in value over time (5,488,666.67% to be exact).

There are a number of different reasons for the explosive growth and volatility in the value of Bitcoin over time: the ability to trade without government interference and oversight, lack of faith in formal media of exchange, expectations about future economic conditions, etc. The biggest threats to cryptocurrencies are probably government regulations and scandals. In that context, a number of crypto traders have carefully cultivated their own image and, by proxy, the image of what they were trading, by contributing to political causes Links to an external site., etc. The recent collapse of FTX Links to an external site.is only the latest in a series of scandals related to cryptocurrencies. No doubt, it will not be the last one either. And yet, as outlined above, the value of some cryptocurrencies remains high, and some argue that the FTX scandal was no more than a hiccup in what they see as a bright future for cryptocurrencies Links to an external site..

In this context, your assignment is Explain on whether we should consider cryptocurrencies to be credence goods. And, to the extent that we should, what are the likely future implications of that perspective on their value? Also, in the context of your essay, make sure to discuss what it would take for new cryptocurrencies to be trusted and as accepted and as successful as Bitcoin has been, notwithstanding the recent fall in Bitcoins value following the fall of FTX.