Five years ago in May of 2013 Charlie Munger quipped when asked about bitcoin that "I think it's rat poison". You might be surprised to hear me say it but we should listen carefully to Charlie Munger et al., and that indeed there are a few ways that bitcoin is rat poison. So it's been five years, have we poisoned any rats yet? Well not so many. It's slow acting rat poison.
You see public coin has no room for counterfeiters. You can't counterfeit a public coin because the list of all valid coins is public and anyone can check your coin against it quickly and easily. Counterfeiters, or private money issuers, are in some ways similar to rats living off the grain we have in our kitchen cupboards. Without doing any useful work they can grow fat and lazy, and such behavior leads to the spread of disease and inefficiency, not to mention malinvestment, ecocide, and stagnation.
By using public coin, we can effectively kill the rats because they will have nothing to eat. In such a way, bitcoin is indeed rat poison. Are there some brokers profiting by overselling stocks which they don't really have? Maybe. If so, putting securities on public blockchains will poison such people. Instead of having MyBroker[TM] tell you that you have 5 shares of MyCorp, and MyNewsPaper telling you that there are 10 million shares outstanding, you can now hold 5 share yourself, know which shares they are, and verify how many are outstanding yourself.
So bitcoin poisons the rats who are compromised private money issuers or issuance fraudsters. Are there any other rats around for bitcoin to poison?
Well yeah. Plenty. As public coin continues it's rise towards eventual fiat jubilee there will be many who see this bubble as an opportunity to get rich quick. The "get rich quick" folks might not be rats of the same caliber as the issuers but this is likely because they don't have the 关系 (they don't know the right other rats). So instead they will push company coins, pump and dumps, and various other short term schemes which might look good for some short time but eventually leave the rats flat on their backs with their feet in the air. The gamblers will get zhou tonged, trading on leverage. Meanwhile the casino operators will get fat and lazy. Both are victims of rat poison.
While the idea of some rat poison in our financial system is hugely appealing, we shouldn't get carried away with thinking that our extermination might be successful. What doesn't kill the rats makes them stronger and we can count on graft, fraud, and other idiocy to continue in many forms. After all it is the rat race.