Monthly Archives: August 2021

Yellow Rain

This article from ADST reminds me of a trip I made to Udorn, Thailand, while serving at the embassy in Bangkok.  Udorn had been a huge Air Force base during the Vietnam War, but when I was in Thailand in the 1980s there was very little left there, except an American Consulate with very few employees. As the embassy computer systems manager, I went up to Udorn to help them with their computers. An embassy secretary (administrative assistant) with a lot of time on her hands used her new PC to inventory everything in the consulate, down to the number of pencils. I was happy to help her do something c

On my way home to Bangkok one of the officers at the consulate asked me if I would take something back for the embassy. He gave me a picnic cooler with biohazard labels on the side. This was about the time when the dispute about “yellow rain” was at its peak. Was it bee pollen or a deadly biochemical weapon? I was inclined toward the bee pollen viewpoint, so I wasn’t too worried, but I wondered what Thai Airlines would say about putting a biohazard in the overhead luggage rack. They didn’t say anything. We all arrived safely, and I took the picnic cooler into the embassy. I never knew what happened to it.


Cybercurrencies are here to stay.  Maybe Bitcoin is too, but not at the levels it currently holds.  Tulips are still here, but the tulip mania of the 1630s has passed.  Bitcoin was originally intended to be a medium of exchange that would be insulated from almost all external control.  This anonymity made it an excellent means of exchange for illegal activities, most recently illustrated by the fact that most of the ransomware attacks on private data have demanded payment in Bitcoin. 

Bitcoin transactions are recorded by blockchain, which is like an old accounting ledger.  It contains every Bitcoin transaction, although looking at blockchain from the outside, you can tell that a transaction is verified, but you cannot tell who the parties were or how much Bitcoin was involved.  As one of the parties to the transaction, however, you can pull out the specific information.  So, if Elon Musk for example says you never paid him for your Tesla, you can prove that you did using blockchain. 

The Economist magazine recently explored what would happen to the financial markets if Bitcoin went to zero.  It illustrates how far Bitcoin has come from mainly being a payment mechanism for drug dealers and other criminals to store of value rivaling gold bullion.  Many old school financial institutions — banks, hedge funds, and payment systems like PayPal — have begun to invest in and accept Bitcoin.  The Economist speculates that a Bitcoin crash would also crash the broader financial markets, and the more widely accepted Bitcoin becomes, the bigger the crash would be.  Because there is so much speculation today in Bitcoin, much of the investment is leveraged, likely leading to margin calls and liquidations in the event of a Bitcoin crash. 

The Economist says that “because changing dollars for bitcoin is slow and costly, traders wanting to realize gains and reinvest proceeds often transact in stablecoins” pegged to the dollar, like Tether.  The fact that traders think Bitcoin transactions are slow and costly is ironic, since Bitcoin was conceived as a payment mechanism.  But the reliance on Tether and other stablecoins creates problems for these currencies, which are somewhat like money market funds that are vulnerable if they are insufficiently backed, which many regulators believe they are. 

It is ironic that as Bitcoin has become seen as a store of value, it has become less used as a transaction mechanism, which was its original purpose.  But many Bitcoin proponents tout Bitcoin as a way for the poor, unbanked people around the world to participate in the financial system with their wealthier cohorts. 

Because of that prospect of some kind of cybercoin becoming a worldwide medium of exchange, central banks around the world, like the US Federal Reserve, are looking a creating cybercurrencies that would not have some of the negative aspects of Bitcoin.  If cybercurrencies become widespread, will that take some of the luster off of Bitcoin. 

Bitcoins will always represent the massive amounts of energy that were required to produce them.  This unenvironmental aspect of Bitcoin is supposedly what make Elon Musk change his mind and refuse to accept Bitcoins for Teslas.  If Bitcoin were to go to zero, that would be an awful lot of wasted energy and greenhouse gases. 

Bitcoin will have to find its long-term value.  When it was first being mined, it was worth a few thousand dollars.  I would guess that in the long term, it will return to something like that, less than $10,000 per Bitcoin.  It will retain some value as a medium of exchange for criminals, since national cybercurrencies will be more traceable.  Also, national central banks will probably be able to print their new cybercurrencies like the Fed now prints paper dollars, making the new currencies less valuable as a hedge against inflation. 

World Heritage Convention

This Economist article on World Heritage sites in Africa misses a distinction between the US and the European approach to the World Heritage Convention.  When I was on the US delegation to the World Heritage Convention annual committee meeting many years ago, I learned that over the years, the US has favored designating natural sites as additions to the World Heritage List, while the Europeans have favored adding manmade cultural and historical sites to the List. 

This preference for natural sites may date back to the US accession to the World Heritage Convention in 1973, when Richard Nixon was President.  I don’t think of Nixon as an environmental President, but he created the Environmental Protection Agency as well as joining the World Heritage Convention.  His supporters included many rich businessmen, whose environmental interests generally run toward preserving nature as it is.  I think of the Nature Conservancy as the kind of environmental organization rich people would support, as opposed to Greenpeace, for example.  Both of these organizations are genuinely interested in preserving the environment, but they go about it in different ways.  A Congressional Research Service report on the Convention was prepared in 2011, giving a lot of background on the US participation. 

There is an additional reason for the lack of African World Heritage sites described in the Economist article.  The Convention requires that countries where sites are located must take care of them.  Many African countries with wonderful natural sites do not have the resources to preserve them.  We are all familiar with the damage done by elephant poaching over the years, for example, even though elephant habitat is in some of the more advanced African countries.  On the protection issue there is a division between the overseers.  I come down on the side of those who support naming a worthwhile site even if there is some doubt about whether the host country can care for it properly.  Others will only support a new site if they are confident the country can care for it.  I think designating a site at least gives the Convention the ability to pressure and cajole the host country to preserve the site.  Otherwise, development or poaching is almost sure to lead to its destruction.