Paul Krugman, winner of the Nobel Prize for Economics, has published an op-ed in The New York Times where he compares Tesla and Bitcoin. According to him, they have more in common than one might think. Bitcoin has kept its value despite the years of hard work and still has some faithful believers.
Paul Krugman Makes Comparison between Tesla and Bitcoin
Krugman, who won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 2008, has recently made an analysis on business patterns and the locations of economic activity in an op-ed published by The New York Times. In this article, he included a comparison between Tesla and Bitcoin.
You may not be aware that Tesla and Bitcoin have a lot of similarities.
As per the economist’s analysis, big companies such as Apple, Microsoft, and Amazon benefit from strong network externalities, meaning that everybody uses them because everybody else uses them. However, he says that it is hard to see what would give Tesla a permanent lock in the electric vehicle business.
Krugman then added that it is difficult to explain why the firm is valued so highly. He claims it is because people believe in the story of a genius innovator, despite not being able to make a reasonable case for how this person, even though he is brilliant, can make lasting money.
When talking about Bitcoin, the Nobel Prize-winning economist stated that despite the years of hard work, it has not been possible to identify any serious uses for cryptocurrency other than money laundering. He believes that the hype is what caused the price to go up and is still being supported by a few believers.
At the end of his article, Krugman concluded: “Surely something similar happened with Tesla, even though the company actually does useful things.”
This writing comes as Tesla’s shares have dropped 70% in the last year, while the Bitcoin price has fallen 65% during the same period.
What do you think? Do you agree with Paul Krugman’s analysis of Tesla and Bitcoin? Let us know your thoughts in the comments section below.
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