Nobel laureate Paul Krugman compares Tesla to Bitcoin. they “have more in common than you think”

Nobel Prize-winning economist Paul Krugman says Tesla may have more in common with Bitcoin than you think. He explained that Tesla’s sales depend in part on the perception that CEO Elon Musk is an “awesome guy,” while the price of bitcoin is “held up by a die-hard group of true believers.”

Paul Krugman compares Tesla to Bitcoin

Paul Krugman, who won the 2008 Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel for his analysis of trade patterns and the location of economic activity, op-ed in the New York Times on Tuesday about Tesla, Bitcoin and their massive valuations. . He wrote:

Tesla and Bitcoin may have more in common than you think.

The economist explained that mega-corporations such as Apple, Microsoft and Amazon have maintained their dominance because these companies “benefit from strong network externalities, to put it mildly, everyone uses their products because that everyone uses their products.”

Still, “it’s hard to see what would allow Tesla to lock in the electric car business long-term,” Krugman described. “Where are the powerful network externalities in the electric car business?” He asked a question emphasizing. “Manufacturing electric cars is not just like a network outsourcing business.”

Krugman continued.

It’s hard to explain the huge valuation that the market had placed on Tesla by then [price] decline, or even its current value.

The Nobel laureate went on to explain “why Tesla has ever cost so much.” He believes it’s because “investors fell in love with the story of a brilliant, brilliant innovator, despite the lack of a good argument about how this guy, even if he really was what he seemed, could have lasted.” find money car.” Krugman added: “Tesla’s sales certainly depend, at least in part, on the perception that Musk himself is a cool guy.”

Describing the parallel between Tesla and bitcoin, the Nobel Prize-winning economist elaborated:

Despite years of effort, no one has yet managed to find any serious use for cryptocurrency other than money laundering. But prices rose anyway because of the hype and are still held by a die-hard group of true believers.

“Something like that definitely happened with Tesla, even though the company actually makes useful things,” Krugman concluded.

At the time of writing, Tesla stock is down 70% year-to-date, while the price of Bitcoin is down 65% over the same period.

Do you agree with Paul Krugman on Tesla and bitcoin? Let us know in the comments section below.

Kevin Helms

An Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests are bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.

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