Brexit is like Bitcoin: it is bound to disappoint

Brexit and Bitcoin both start with the letter “b”. Does the similarity stop here? As it turns out, no. Both these words refer to concepts that are quite alike. Of the two, Bitcoin is probably the least toxic.

Bitcoin keeps soaring, although nobody knows for sure who created the virtual asset that has now been known as a currency. The mysterious Satoshi Nakamoto may be a real person, or he may be a clever trick.

Very few people know how Bitcoin works, but its fans are sure that it will liberate the world from the tyranny of central banks and governments who want to “steal” our hard-earned money. In brief, Bitcoin is a concept that relies entirely on faith.

It can be argued to some extent that since the abolition of the gold standard, so do classic currencies. Zimbabwe, which debased its currency until it disappeared under a mountain of hyperinflation, shows what can happen to a currency that has no official backing.

Still, such cases have been rare. Usually, currencies enjoy the support of the central bank and of the government(s) that use them. Bitcoin only has the support of a virtual “blockchain” that records all transactions, without divulging the identity of those who own the currency.

Like Bitcoin, Brexit surged to victory seemingly out of nowhere, and we don’t exactly know who created it. Like in the case of Bitcoin, very few people have any idea how Brexit works — if indeed it works at all.

Britain wants to be a global trading nation, and yet it is leaving the world’s largest trading bloc. It wants to attract foreign talent, but treats skilled migrants already in Britain like bargaining chips in its negotiations with the European Union. It wants to control who enters the country from the EU, but also wants to keep the advantages of the single market.

But perhaps the most striking similarity with Bitcoin is that, in the case of Brexit too, nobody really knows what it is, either. Bitcoin was named a currency for lack of a better word. But it is not a widely accepted means of exchange, it is not a store of value (as the first serious crash will show) and it is not a unit of account. Therefore, it is not money.

People who voted for Brexit each believed they voted for a coherent, concrete strategy. Some voted for an ideal world in which Britain strikes trade deals with any country its wants, and magically those countries just give in to all of Britain’s requests.

Others voted in fear that the EU would collapse and Britain will find itself “shackled to a corpse”. Yet others voted to get rid of EU citizens, and particularly those from Eastern Europe, in the false belief that they are to blame for rising inequality and economic hardship in the UK. And there are others who voted for various other reasons.

But Brexit cannot be only one of these things, and it cannot be all of them at once. It cannot fulfill any of these hopes without crushing others.

Like Bitcoin, Brexit is an illusion. A beloved illusion for many, that’s for sure. And like any illusion, it is bound to disappoint.