The Forum's head of distributed ledger technologies practice says the concept of cryptocurrencies is here to stay
WEF's Sheila Warren: blockchain is the door to new digital reality
Sheila Warren equates the light bulb moment that people have when they realise the potential of blockchain technology to the scene in the 1999 film The Matrix when lead character Neo chooses to take the “red pill” he is offered, opening the door to the “truth of reality”.
“You see the world for what it can look like and you realise you can have a hand in shaping that,” says Ms Warren, who is head of the Blockchain and Distributed Ledger Technologies practice for the World Economic Forum.
Blockchain is the technology behind the cryptocurrency Bitcoin and is a digital distributed ledger on which transactions can be recorded securely, pseudonymously, but at the same time be open for anyone on the platform to see.
The blockchain has been touted as a revolutionary innovation that could potentially change the way we do business, particularly where financial transactions or supply chains are concerned, and for the way governments provide services to its citizens.
Ms Warren describes how one chief executive she knows had a light bulb moment when he understood what blockchain technology can do. “I said ‘welcome my friend’, because I know your evolutionary path. You’ll be up at night for the next week, at 2am saying, ‘it can do this, it can do that’. Then the challenge is, when do you start,” she says.
When asked about the criticism of Bitcoin’s rise in value in 2017 being a bubble that could burst at any time, she says “if there is one thing I want people to take away [from the current hype around cryptocurrencies, it is that] Bitcoin is not the same thing as blockchain. Bitcoin is to blockchain what the email is to internet. To claim that if email failed the internet would fail is ridiculous”.
Anyone expecting the concept of Bitcoin or digital currencies to soon fade away like a fad are likely to be disappointed, according to Ms Warren, who is part of the roster of experts working at the WEF’s Centre for the Fourth Industrial Revolution.
The centre in San Francisco aims to foster co-operation across sectors and between institutions to create governance mechanisms for emerging technologies like artificial intelligence, the Internet of Things and autonomous transport. It does this by piloting policy projects such as protocols for the use of drones together with the Rwanda government. The centre is not a think tank, Ms Warren clarifies.
The UAE said in January that it is working on plans with the forum to open a Centre for the Fourth Industrial Revolution in the Emirates, too.
With blockchain technology specifically, there are different projects in the works at the centre, yet to be announced, she says. The centre is currently finding a baseline for where things stand with blockchain, “we are mapping and creating connections”.
The WEF plans to release a decision-makers tool kit, which will serve as a guide and decision tree for how blockchain could help them.
“Don’t start with the solution, blockchain is a tool, start with the problem. We help you figure out is it relevant to your problem space?” says Ms Warren.
Globally, including in Estonia, Sweden and Switzerland, governments are paying a lot of attention to the blockchain space, in particular regulators and every central bank in the world “whether they acknowledge it or not”.
“Governments are really looking at this and they’re thinking about what are the inefficiencies in our systems, how can we deploy this technology to benefit our citizens and state. The second thing is the banks are similarly thinking about this. Once we get a digital fiat [currency], it is going to shift the conversation. It isn’t that much of a psychological step,” she says.
Ms Warren, who is a former lawyer and a Harvard graduate, makes the additional point that once a concept takes hold, you don’t then “unhave it”.
“It is like social media. It is part of the fabric of our lives. There is some pushback against that but it is a normal part of the tech adoption curve or a normal innovation adoption curve. We are not going to go back to not having that, we are refining it,” she says.
“When we think of adoption at a widespread scale of an emerging technology there are two things; one is infrastructure and the other is psychological readiness.”
Her argument is that, in the digital currency space, in terms of psychological readiness, we are there.
“It is not a big leap to go from mobile payments to digital currency exchange, that’s not actually a big thing. It is only a matter of time before we see digital fiat [currencies]. Cash is on its way out anyway. The idea of paper transactions is something that is localised to certain sorts of geographies and certain kinds of environments,” she says, pointing out that you worry more about charging your phone’s battery than having cash in advanced economies.
“My grandchildren I fully expect will have no idea what a dollar, nickel or penny is.”
Ms Warren joined the WEF after a career in the tech-focused non-profit sector, which has somewhat informed her view on the potential impact of emerging technologies like blockchain on civil society.
“We are in this new world, we can accept it or we can deny it but I think it is just a reality and the sooner that we, on an institutional level, on a multi-stakeholder, multilateral way, accept that reality the more we can make sure we create a reality, that will uplift every member of society and not just localise in a wealth creation for the few context,” she says.
So what does Bitcoin – a source of controversy these days – represent in the grander scheme of things?
“What Bitcoin represents is that transformation, that transition into a world in which digital currency and thinking about money in a slightly different psychological way has kind of been achieved, or is at least well on the way to having been achieved.”
Ms Warren identifies the Cryptokitties app, which operates on the Ethereum blockchain and allows users to collect, breed and trade digital cats, as a sign of the interesting developments in the space. She likens the current era of development to the early days of video games.
“It seems somewhat frivolous and cutesy but when you think of store of value and you think of collectibles as an asset class, essentially that is really interesting and what might we see developed as an example of that. Like early video games they begin to push the technology.”
What about the many limitations and criticisms around blockchain technology?
“The good news is there are a number of very, very smart minds thinking about these problems around inclusion, the potential of this technology is financial inclusion, social inclusion around identity,” she says.
She believes that the next phase after the Bitcoin, initial coin offering craze, will be that the energy monster narrative around the mining of Bitcoin is shown to be over-hyped.
“The reality is that there is going to be policy that comes into place that’s very heavily linked to the alternative energy space that is going to help mitigate and address that in addition to the work the technologists are doing around alternatives including potentially on the Bitcoin blockchain,” she says.