“We have a generation we’re raising of crypto-natives. Crypto is going to be commonplace… decentralized systems powered by blockchain are paving the way for that.”
Sheila Warren is the head of Data, Blockchain & Digital Assets at the World Economic Forum. She co-hosts a weekly podcast and television show called Money Reimagined on CoinDesk TV.
The journey to fully understand Bitcoin and its underlying technology came in stages. The interest in Bitcoin came first before realizing the far-reaching nature of the revolutionary blockchain technology and all of its potential applications. Often, too little thought is given to the value we ascribe to government-backed currency when criticizing Bitcoin. In reality Bitcoin and the blockchain offers a unique type of security and backing. “Bitcoin has value in part because people think it has value, but I also think the underlying principles behind it, the technology, governance have inherent value, even more so than the money printer.”
We are a raising a generation of digital natives who will more seamlessly adopt a crypto-centric approach to the world. This will only accelerate the normalization and adoption of blockchain-powered applications like non-fungible tokens (NFTs).
LISTEN AND SUBSCRIBE
SPEAKER
Sheila Warren
Head of Data, Blockchain & Digital Assets
World Economic Forum
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darcie: (00:07)
Hello everyone. And welcome back to salt talks. My name is John Darcie. I'm the managing director of salt, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. Salt talks are a digital interview series with leading investors, creators, and thinkers. And our goal on these salt talks is the same as our goal in our salt conferences, which is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And again, as we've talked about many times here on salt talks, we don't think there's any bigger idea. That's disrupting finance and other industries as well. Then the digital asset decentralized finance and Bitcoin space. So we're very excited to welcome you to the latest episode of our digital asset series on salt talks with Sheila Warren.
John Darcie: (00:59)
Uh, Sheila is the head of data, blockchain and digital assets and a member of the executive committee at the world, economic forum, AKA Davos. Uh, she founded, uh, the blockchain and distributed ledger team at the forum center for the fourth industrial revolution C4 I R, where she serves as deputy head, uh, Sheila co-hosts a weekly podcast and TV show called money re-imagined, which airs on CoinDesk TV, CoinDesk being one of the leading, uh, media outlets that covers Bitcoin and digital assets. And she was also the architect of Presidio principles, the ground bay thing, a groundbreaking ethical framework for blockchain applications. Her pioneering policy work, uh, is helping shape the data and technology spaces to be more inclusive, ethical, and equitable. Sheila began her career as a wall street attorney at Cravath Swaine and Moore before turning to philanthropy and civic tech over a decade ago, she was most recently the VP of strategic alliances and general counsel at tech soup.
John Darcie: (02:00)
And prior to that role, she launched, uh, she designed and launched NGO source, which is a software as a service product focused on international grant making. She's an honors graduate of Harvard college and Harvard law school. If there was any doubt about whether she's a genius or not, she obviously well-educated as well, but Sheila, it's a great pleasure to have you on, uh, at SkyBridge, we are members of the world economic forum. I've been to Davo several times, obviously it's sort of the cream of the crop in terms of the event circuit and the thought leadership forums that exist out there. So congratulations on being an integral part of what is a fantastic event in Davos and generally a fantastic organization. But I want to talk about your Eureka moment as we often do at the beginning of these salt talks on digital assets and decentralized finance and on blockchain. So you come from a fairly normal wall street background, you were a lawyer by trade. When did you stumble upon digital assets and say, wow, this is something that's going to be really huge. And it's going to transform finance.
Sheila Warren: (03:02)
Yeah. You know, I'm one of those, uh, rare people who actually got into Bitcoin digital assets and blockchain as distinct things, which, which, you know, now I've corrected that initial, uh, uh, confusion let's call it. Uh, but I was into Bitcoin far earlier than I was into even understanding what the heck the technology was that underlay it. Right. So, um, funnily enough, my husband got me the Bitcoin. So he's like, there's this thing called Bitcoin, you know, people. And I was at that moment, I was still a lawyer practicing attorney. So my immediate frame was that's criminal money. Like what I talking about, we can't possibly, you know, and the story is kind of a funny one. So one day, uh, there were helicopters, we live in the mission in San Francisco and there were helicopters outside as sometimes happens. So we looked outside and we're like, what's going on? So we went to Twitter, as one does figure out like what's happening in my city, you know? And it turns out SWAT teams had invaded, were arresting, uh, silk road, like Ross basically. And they were like, that was all going down, pretty close to us. And my husband turned to me and he's like, Bitcoin just went on sale. So that's a story of how we got into grew into it.
Speaker 4: (04:08)
What was the price at that point? I don't want to out
John Darcie: (04:10)
You for being a Bitcoin billionaire right now, but what was the, well, if only
Sheila Warren: (04:13)
We had it flipped it earlier than we should have, we have been a, let me just say, we'd be sitting on quite the, quite the pocket, but of course, you know, we were smart enough to get back in at a different point in time. Um, you know, I think that for me, I thought of that initially very much as the alternative to gold, the digital gold narrative, you know, really struck me in the early days. And then frankly, I didn't pay that much attention to it for a little while. And then what happened was on the blockchain, on the technology side, uh, I was at the time general counsel of a group called tech state social enterprise who worked in 200 countries with non-profits. Some of whom were operating in very hostile environments. So we had this instance where we were working in Uganda. There was a law that was passed about LGBTQ, uh, being illegal, like actually, like you could get imprisoned if you were outed as being somebody who was LGBTQ plus.
Sheila Warren: (05:03)
And we had information organization servicing that community, like we had their addresses of the brick and mortar where these organizations were working. We were very concerned about how the state might get out and what might be the results of this from a very humanitarian perspective. And I had a dinner with some friends, the state department who were telling me about blockchain technology, like, oh, you should look at blockchain. And you know, we're all going to be paying, we're paying attention to this and it's a database and it's going to be a more secure database, blah blah. So that's when I actually read the white paper. So she didn't know how much white paper I went out and read it. And I was like, this is on real. So that's how I went down the rabbit hole. And then of course I connected the two biggest together and I was like, oh, that's Bitcoin. And the same thing, like, you know, so it, it took me a little while to get away from the digital goal narrative into understanding how powerful the underlying technology to consensus that governance really was. But once that connection was made, I mean, like everybody else in this space, you know, it became annoying and obsessed and wouldn't talk about it
Speaker 4: (05:58)
Exactly. Right, exactly.
Sheila Warren: (05:59)
Right. But the story then becomes, I think pretty common for all of us, right? Like we all have that. Nobody wanted to be a productive us anymore. And then of course, everybody wanted to talk to us. So that was kind of the path that we all went down.
John Darcie: (06:09)
Yeah, exactly. You know, we were a little later to our intellectual journey, uh, at SkyBridge and salt, frankly, in terms of, yeah. I I've been skeptical of Bitcoin for years as well because the same narratives that are perpetuated by, uh, people that are skeptical about it, they say, you know, it's used for criminal activity, illicit financing, uh, you know, it's, it's, uh, damaging to the environment, all the different things, the elements of FID, uh, fear, uncertainty, and doubt that you hear today. And then we just, we did more research on the space, got more comfortable with, uh, issues like security and custody, then a, and made a decision to enter the space last year in a timely, a timely manner. But we won't get too far into that, but you know, how going back into the macro themes around how blockchain technology will focus on Bitcoin, more in a second, but blockchain technology, I feel like there's this narrative in narrative that exists that, you know, I think there are some libertarian routes to Bitcoin and decentralized finance and all that type of stuff. But I think that blockchain and decentralized finance are actually tools of economic empowerment. So I think there's a little bit of a misunderstanding politically in the U S for example, you see some people on the left that attack Bitcoin. Cause I think it's, it's some libertarian nefarious scheme, but how can it really be a tool for economic empowerment?
Sheila Warren: (07:24)
I think it's important to say that it, it can be both, you know, and so the technology itself lends itself to a variety of different applications. Some of which can very much be used, uh, to exploit like any technology can be used to exploit, you know, but, uh, if the correct policies are in place, I think they can very much be tools for economic empowerment. And that's simply from the idea that there's no longer a centralized gatekeeper who is controlling the storage use of funds, uh, and they're released for that matter. And so I think that in my mind, you know, fundamentally what we're seeing in society and this goes well beyond the financial system, is people really wanting to feel like they are more active stakeholders in any system they're engaging in. You see this a lot with no centralized platform, social media and kind of push around, like, why don't I own my own data?
Sheila Warren: (08:10)
Why am I locked in here? And why is it hard to pull things from place to place? You know, the same thing is true in finance, right? So why do I need to be locked into a certain kind of currency and pay an at its orbited feed and transfer that into a different currency or whatever it might be, right? There's all these kinds of ways that people feel locked in. Um, now there's a certain level of sophistication to understand those nuances. And that's where I think you get some of the kind of criticism around this. Like how can it be economically empowering if people don't really understand it. But I think that it's not that important that you understand it. It's kind of the mechanisms that are being built around it that are so powerful. I think defy is one of these centralized finance and the entire movement there. Uh, I think that for example, NFTs, you know, non fungible tokens are another example of this, of how creators are being empowered to actually value their creations and get compensated in new and exciting ways. All of these things, I think fundamentally fundamentally are about, uh, economic empowerment and more of a stakeholder model. Just something the forum believes very strongly.
John Darcie: (09:06)
How much of Bitcoin's rise in the rise of NFTs and decentralized finance do you think is born out of the macro environment that we're in, where post 2008, uh, governments borrowed tons of money and kick the can down the road in order to stimulate the economy and trigger some level of growth. I don't think that we've grown as quickly as they would have hoped given the, the amount of debt that was printed during that time period. And then that was even accelerated and by, by several factors, uh, during the pandemic where the U S government was at the forefront of that in terms of, you know, we created 25% of existing money supply in 2020, which is a staggering amount, how much of that, uh, that ecosystem that decentralized finance and Bitcoin ecosystem is driven by all that debt and how much of Bitcoin is just a brilliant technology that was going to be inevitable, regardless of what governments did.
Sheila Warren: (10:00)
I, you know, I tend to think it's more the latter. And I think that we accelerated the adoption curve on it because of the former, right. So it's interesting to, no one knows, we don't know who's the Toshi Nakamoto is or who they were, you know, which I, my view is it's gotta be a collected, but regardless we don't know. And so it's impossible for us to assign motives to the creation of Bitcoin and people do it all the time. So why not me not to interrupt you, but I suspect at some point there will be some will or trust or document that is released upon posthumously. That's like, here's the proof that I am and what they donate.
John Darcie: (10:37)
So Toshi, whether it's Tishi or they, they donate their Bitcoin to some, some cause or something like that, or they, or they throw it out in the trash so that all the other Bitcoins are worth more, or what are they doing?
Sheila Warren: (10:47)
Well, maybe because I grew up watching a lot of television, but I feel like I like a dramatic reveal. So I feel like we're, we're on a path to some sort of very dramatic reveal that, you know, that is planned by this or those individuals. Um, and, um, I'm holding out for that, but, you know, we don't know, we just don't know. And so there's a mythology around that. I actually, by the way, don't think that the mythology around it is, uh, should be divorced from the attractiveness it had in the, especially the early days, right? The mystique around this was part of what do people to it. And the fact that there wasn't there literally is nobody had ever controlled this because the author of the paper that spawn this and the first Genesis blot, we don't know who that person is. So there is no way to influence that person because no one can do that because they don't know who it is.
Sheila Warren: (11:28)
So actually it was a very powerful and very wise move, whether deliberate or otherwise, I assume deliberate to ensure that the true lack of centrality was kept forever in perpetuity. So is, have you seen what happens? But you know, the, the problem addressed in the paper fundamentally is one of double set, right? It isn't necessarily like how to tumble economic systems or whatever. I mean, people imply all kinds of things and read and do it, whatever they want, and I've done the same guilty of the same. Um, but I do think there, there was a recognition that this was a cool cryptographic problem. We wanted to kind of solve it. We wanted to understand what it could do. I find it highly unlikely that the Scotia collective could foresaw all the phases of this would spawn. I just, I find it hard to assign that level of foresight and creative thinking to any individual group of individuals who knows, you know, I mean, maybe we're
Speaker 4: (12:21)
All in the simulation and this is all just been broken. Yeah. I mean, the point about
John Darcie: (12:25)
Satoshi, if, if that person is still alive and still holds all those Bitcoins that talk about being, having diamond hands and being a hotline, that person has just continued to hold those Bitcoins from 1 cent all the way to $58,000 per Bitcoin, they're now, you know, multi multi-billionaire. That is somebody who has incredible belief in what they created and incredible foresight. Um, but that's a whole, yeah.
Sheila Warren: (12:50)
Keep the safe. Right. You know, I mean, I, it would not surprise me if that were the case. I also think that we know for a fact there are untold Bitcoin billionaires who will never realize those gains because they lost, I lost there.
Speaker 4: (13:03)
That's awesome. A big ones. We talked about 21 million. Yeah. You talked about 21 million
John Darcie: (13:08)
Outstanding. It's actually significantly less than that because of the amount of loss. So at least at least you or I aren't one of those people we might've missed out on, on part of the that's true. That's true that
Sheila Warren: (13:19)
You do not have any mosquitoes, but you know, sad to not being a person who had the foresight to them, you know, not stored them in a device that you'd been erased or something else
John Darcie: (13:28)
Actually, you know, VJ boy potty is somebody that we had on salt talks. And if you're in the Bitcoin ecosystem, you know who that is, he wrote a great paper called the bullish case for Bitcoin. I think it does as well as anything that I've read, make the intellectual case for why Bitcoin is sound money and why it is better at being gold than gold in your view, intellectually, how do you look at Bitcoin and people who say, well, it's not backed by anything. It doesn't have any real value it's just made up out of thin air intellectually. Why does Bitcoin make sound money? And why is it inherently worth something?
Sheila Warren: (14:01)
Yeah. You know, the, the reason we started the money reimagined podcast at which I coast Michael Casey on CoinDesk is exactly the point out this, the comedy of that statement, right? I mean like what actually is money? What backs money, you know, and now you could argue the full faith and credit of the U S government went back to the us dollar and that's not nothing to sneeze at, but you know, it's certainly not the paper it's printed on, you know, there's, there's that we have that whole idea. I'm like, it's not worth the paper it's printed on. Well, ha right. So, so money inherently is, is, is funny that way. Um, we point out how memes over time, you know, have generated value in and of themselves. And so, you know, Bitcoin has value. Yes, that's true in part because people think it has value, but I also think the underlying principles behind it, the technology that governance have inherent value beyond even more so than I would say the money printer, you know what I mean?
Sheila Warren: (14:50)
So, and it's, and that is less likely actually it's less in a way it's less plausible that that will, that could ultimately dramatically fail. Yeah. So right now we're relying on a lot of systems that are bolstering the value of certain kinds of currencies or relying on certain political leadership and decisions that are bolstering, you know, the value of certain kinds of currency. And I mean, Munis around the world, I'm not speaking about the, the dollar specifically, um, that is not true in Bitcoin. Bitcoin has an inherent value because of what it enables and what you can do with it. And the new system that it can eat is starting to bring into reality. And, and because of, I think, uh, the other thing that, that spawned, so, you know, there's a tendency to really focus solely on Bitcoin. And I understand why we do that, but I actually look at crypto as a space more, more generically personally, because I think that, you know, this is a rising tide and the value of it is going to be determined by the adoption that it gets by the ways it's being used by the creativity and the application layer, all of that is going to prove ultimately to be almost embedded into the value of the underlying coin.
John Darcie: (15:57)
So I want to build on what you just said about, you know, whether or not Bitcoin remains the overwhelming dominant player in the cryptocurrency space. So right now it is, and in these types of businesses, whether you look at Google or apple or Amazon, it's often a not winner take all, but win or dominate the ecosystem. Do you think Bitcoin is now so far out of the barn that it's going to continue to dominate market share in the cryptocurrency market, or you think there's a threat of a better technology and a better protocol coming through that could disrupt it and take a larger percentage of the market share than perhaps the consensus view.
Sheila Warren: (16:35)
So, you know, this just, isn't how I look at the space and I understand why, you know, people who are focusing on the price of death, look at the space in this way. But I actually don't think that there's a cage match ruin here between let's just say Bitcoin and Ethereum, right. As the two dominant players in the market, they're just, they're different things. You know, they were, they were built for different purposes. Uh, the application layer and Ethereum is, is becoming even more and more robust over time. You're seeing competitors, you know, to that. So I think for every sort of use case, yeah, there's probably going to be one thing that becomes, you know, dominant in a way with other players that are maybe, maybe they rise and fall, you know, whatever. Right. Um, but I think that, that you have to kind of look at it in that fashion.
Sheila Warren: (17:16)
So are you talking about it as a, maybe an exchange, the store value, or are you talking about an application level on top of it, that's enabling other kinds of transactions or trades. Like, I think all these things matter, and I'm hard pressed to see how one thing is suddenly gonna, I dunno, dominate everything else when we cannot even imagine at the moment, you know, what, what people are going to do with this stuff. Like we're still so early, you know what I mean? Like of tease, I mean, we have crypto kitties back in 2017, but like, I don't think any of us knew that it was going to blow up to be what it is today. You know,
John Darcie: (17:48)
Didn't think people was going to sell a piece of NFT, digital art for $69 million.
Sheila Warren: (17:54)
Right. Like we cannot even imagine what's going to happen here. So, you know, we're, we're all a role doing the best we can with information we have at the time. And in my mind, I feel like, yeah, you know, Bitcoin's dominant cause in part, because it was first in part because it's robust in part because there is color, we don't even know who built the thing. You know, like all these things I think, um, perpetuate its value. I don't see that really changing in a, in a negative way, but I do see other things coming up that are going to be probably just as valuable, you know, and they're, and they're not really competitive. So that's, that's how I see the space developing over time.
John Darcie: (18:28)
I agree with you. Uh, people like to look at the market cap of gold, you know, it's around 10 trillion, uh, but gold in an environment where people would typically think gold would outperform, uh, you know, there's this binge of debt that the U S government and global governments have been on. That's typically a very bullish environment for gold. Gold is actually performed pretty mediocre. And as, as Bitcoin has sort of taken that mantle, uh, as the alternative store value, let's talk about NFTs for a second. I think it's fascinating. Like my, my older brother, for example, he had all these old sports cards that were sitting at our parents' house that we didn't think two seconds about. They were in a plastic case. We all moved on. He's a doctor. He lives in Wisconsin. I live in New York. My parents live in North Carolina, suddenly this massive collectibles craze happens and we start fishing out these old sports cards.
John Darcie: (19:16)
And then I introduced him to NBA top shots, which is, uh, an T platform has gotten a lot of attention, but, and he started dabbling in that. And the values of those digital highlights started going crazy. And I just sort of had this Eureka moment where I'm like, wow, this is in a, in a world that's completely digital where most millennials and gen Z and gen X and whatever, all these generations are called live largely online. Why wouldn't a digital collectible have the same value as a physical collectible, if there is verifiable scarcity. But why in your view is this space exploding so much? Why is somebody willing to pay $69 million for a piece of digital art? And do you think this is just the beginning? Or do you think this is a speculative mania that's happening sort of at the early stages of NFTs driven, partly by easy money from the fed.
Sheila Warren: (20:03)
Oh, there's a lot there to unpack
Speaker 4: (20:04)
[inaudible].
John Darcie: (20:07)
But talk to me about NFTs, what they are, why they're significant and where you see the future.
Sheila Warren: (20:13)
Let me start with something that, that you, that you noted right. About the transition from physical object to a digital object. And so we talk a lot about digital nativity, right? So the generation that is, you know, it was called them gen Z. I don't even know what they're called anymore, but this generation of Pedalecs
John Darcie: (20:28)
Generation, I think I have some kids that are in the alpha generation. What might
Sheila Warren: (20:33)
Get there, my material, I have no idea what generation she's going to be called. Um, but they're digital natives, right? I mean, like just even seeing my seven year old and how she interacts with devices and just a natural way that that flow happens. And you have digital twenties, many very, very common, you know, even for generation of, of young adults right now, uh, which differs from, you know, the way that my parents' generation, right. Like, thinks about this stuff. Um, we have a generation that we are raising literally, in my case of crypto natives, like people who are going to be crypto is going to be so commonplace to them. And I can see my daughter saying to me, I can probably see her saying this in like six years when she's 13, you know, how could you possibly have given your data to a social media platform?
Sheila Warren: (21:11)
Like what the hell were you thinking, giving her anything about you as centralized player that you didn't control it? Like, what were you, I think that's going to be a math and motor people and decentralized systems that are backed by blockchain are paving the way for that, right? Like, well, you can have more ownership. NFT is, are an example of how a creator can create something and then own a stream of income that's coded basically into, you know, that, that, um, creation over time and not have to necessarily fight for that through an agency or a gallery or whatever it is right now. Uh, so I think there's going to be a natural way that people, the things that, that we find is still a little bit, maybe new or, you know, different, they're going to just be so natural to this generation. And so, so, uh, I think that we're, we're seeing some of that right now.
Sheila Warren: (21:54)
We're seeing a generation that, you know, they were never really going to buy a painting and put it on their wall because that's not how they interact with the world, right? The interact with the world, through their social media, through their, whatever it might be. And so having that image and having it be their background or their avatar or whatever it is, is much more powerful for them. And this is a way that reflects their mode of being just simply being in the world, which is, which is very digital and online. So I think we're just seeing the generational almost transition. This is a very logical extension of the way people think about these kinds of these kinds of things. That's kind of ownership right now. Next question I think is, do I think that $600 million, you know, that is really not for me to stay, right? Like, so we have to match that
John Darcie: (22:36)
Bid. You are a participant participate.
Sheila Warren: (22:40)
Yeah, no. If I had that, I would be say, San Francisco, how do we, you know, how do we get some, uh, how do we get something going here? There'll be other things I do with that money personally. Now that being said, you know, obviously that was worth that to someone, you know? And, and, and again, it's not for me to say, so I think that, yeah. You know, do I think that that is overvalued again? Totally not for me to say, because the market value of that at that price. Now, what I will say is that I think that there's a little bit of, you know, this is a fad right now, for sure. I don't want to call it hype. I don't like that term. I think it's a fad. People are really like, I want to miss something because it's cool. And a lot of what they're mentioning is kind of like, um, this, uh, there's this SNL skit that I talk about from a while ago, I was very little when this came out.
Sheila Warren: (23:25)
So I'm sure no one listening probably remembers that, but, um, the actor is playing Picasso. Okay. And so he's like painting in his studio and doing whatever and everyone's coming and biting, but, and paying all this money. And he goes to a restaurant and he's at the cafe and he doesn't have his wallet. And so the waiter's like, oh, sorry, you got to pay your bill. Right. And he's like, what? I'm Picasso. I don't know if we still got to pay man. And so he blows his nose into a napkin signs it, because, so, and he's like, [inaudible], here's what you got. Okay. So some of what we're seeing is a little more like that, you know, no matter, you know what I mean, than it is like the actual art, right. Um, and that's to be expected because people are playing around with this, you know? And so over time, I think you'll see that the true talent does emerge. And that's where the value is really captured. And a lot of NFCS are kind like, you know, they're there, but you know, it's not necessarily, uh, attracting this sort of this sort of price and the transaction level. Right.
John Darcie: (24:18)
I want to go back to Bitcoin for a second Bitcoin and decentralized finance and the cryptocurrency space at large, you work at the world economic forum, which there's a lot of big institutions that, that are members of the world, economic forum and active participants in all of your events and the programs you put together. What's, what's the, uh, the view from that institutional lens right now of Bitcoin and of this movement, you know, obviously, uh, Bitcoin has sort of libertarian grassroots type of origins, but you're seeing institutions, whether it be SkyBridge capital, where I am gainfully employed or insurance companies like mass mutual, New York life recently put someone on the board of a leading, uh, crypto Bitcoin focused investment firm. What's the lens. And the feedback that you're getting from members of your community about is this something that we need to be a part of, or are they still cast a skeptical eye at the whole thing?
Sheila Warren: (25:12)
You know, part of the beauty of my job is that we, we don't have skin in the game, right. So I'm not, uh, th the forum's not invested, you know,
John Darcie: (25:19)
You're not saying, Hey, invest in my world economic forum, a Bitcoin fund here. Yeah. Right.
Sheila Warren: (25:23)
Like we don't, yeah. We haven't issued a token. You know, we, uh, we, we aren't building, you know, we don't roll out any protocol or applications and things like that. Right. We're, we're really influencing the policy and the governance kind of landscape here. And so, you know, over time, you know, we there's always been interest in these topics. First mentioned on the program, the public program was actually 2015. We had a session that used the main Bitcoin and a title, but that of course means that prior to that, you know, there was a lot of conversation happening and closed door sessions, and that didn't make it to the public stage. So I would say, you know, almost from 2011 or so, this was a conversation happening on some of our major constituents. And part of what I see as my responsibility in this role is to really normalize those conversations, right. To say, like, you should be paying attention to this. It's fine to be open about your, the fact you're paying attention to it. It's fine to be open about the fact that you own it. You know, this is not going to be seen as like something where you're engaging in like criminal activity or fraud or laundering or whatever, right. You can be
John Darcie: (26:18)
To get fired from your job because you're delving into this sketchy asset class.
Sheila Warren: (26:22)
Exactly. And over time, I think we have been able to be a very strong influencer in, in the openness around the conversation, like people being willing to share their holdings. And then of course that leads to people be more willing to get into the market, you know, and explore the potential and figure out like what, what this really is. So a lot of the companies that, you know, we, that we've seen making some of these big moves been part of these conversations in various ways, or kind of heard the things that we've been talking about. Um, and I think, I think that, uh, that's going to continue, you know, I mean, we're, we're now getting before it used to be that we had to kind of really push to have these conversations, you know, be public and try to get speakers on our stage to be willing to talk about them now. I mean, in our lease the Davos agenda, you know, let me just put it this way. It was not hard to find very senior people who were willing to talk publicly about this topic during gender. Right. So, and that's even an only, I've only been here three and a half years, and the transition is extraordinarily dramatic in terms of that.
John Darcie: (27:18)
Yeah. I think the price appreciation will help people stick their neck out and say, yeah, actually we've been investing in this for awhile, you know, bang on their chest a little bit, but I'm talking about regulation, uh, around Bitcoin and around crypto. I think obviously the generation of regulators around the world as an older generation, they maybe don't understand certain elements of Bitcoin, but I think there's also plenty of reasons why, uh, they're just doing their job by, by continuing to be cautious. But, you know, there's this notion that that Bitcoin is used only for nefarious purposes for illicit financing. Janet Yellen has offered similar types of comments, uh, as she's assumed the role of treasury secretary, but there's also the IRS recently launched a program called operation hidden treasure, where they're training their agents to learn how to spot fraud, uh, and tax evasion on blockchains. Do you think we are inevitably going to get sound regulation of Bitcoin and of decentralized finance? Or do you think that's an impossible nut to crack what's your overall outlook on the regulatory environment globally for digital assets?
Sheila Warren: (28:26)
Well, I certainly think it's an area that is, uh, being heavily scrutinized or regulators all over the world. You know, so this is certainly not unique to United States. I think people are really struggling with how do we effectively regulate this in a way that it's going to provide the protections that we think are important for our citizens, but are also going to not, uh, you know, disincentivize innovation, right? If we want creativity. And so we've seen from, from the early days, you know, thinking like regulatory sandboxes or things like this, where you could have a more collaborative process in some jurisdictions, more than others to kind of figure out like what's the right thing. Now there's a couple of things I think are really important. And I think that along the lines that we've talked about with empowerment of actors in this space, you know, I think we have this shift in, when you think about crypto, it's a bit of a shift from consumer, you know, to user right.
Sheila Warren: (29:09)
In a way. And so I I've been saying, I think that our notions of consumer protection are kind of outdated, you know, like who's the consumer who we protected them from, you know, if there's no centralized in and to see like, who are they? Who is that? You know, and that's different from kind of like blatant fraud, like hacks and things like this that we all agree are just like, should be prosecuted. Non-starters are just like bad actors. Right. But in this case, it's, it's not, you can't quite port those concepts over, they don't work. They don't it's square peg and round hole with it. Now I think that impulses are reasonable fair. And part of, I would argue the role of a regulator, right. To make sure no one's getting fleeced or scammed or whatever it is. Um, but how do you do that? Isn't, it's very complicated question.
John Darcie: (29:50)
And part of that role is making sure that you have a regulatory framework in place. You know, I think you're seeing that play out in the U S there's only a certain number of vehicles that allow you to get exposure to Bitcoin. For example, one being the grayscale Bitcoin trust, which is now 40 plus billion in assets, some people invest in micro strategy, Michael sailors company, because they have three plus billion dollars worth of Bitcoin on their balance sheet. So you're, you're forcing people to invest in Bitcoin through channels that might not always be completely healthy. And, and, uh, and, uh, you could see a Bitcoin ETF in 2021 because you have the new sec chairman taught a blockchain course at MIT, or you have that similar mind. Do you think there's going to be more regulation and friendly regulation that at least allows the little guy to have a little bit more protection?
Sheila Warren: (30:42)
I think that's a direction of travel. You know, what the timeframe is for that? I have no idea. I think there are a lot of priorities that pandemic has raised. And so is this going to be kind of top of the agenda? You know, I don't know. Right. But I think that's the direction of travel. I think that it is not a coincidence, you know, that the Gary Gensler is in the position. Right. I think that it's interesting to see the contrast there. I think with Janet Yellen and its user are, uh, they're compatible in some ways, and in some ways they're, they're not, you know, so I think it's gonna be really, really healthy in some ways to have that sort of tension reflected, you know, across these agencies. Um, one thing I think is really important of course, is that, you know, well, this is true of many asset classes, but I think it's really true.
Sheila Warren: (31:20)
Crypto is it doesn't fall within what agency's purview. You know, you really have to think across a variety of agencies. And part of the early days of confusion was like, is it a commodity? Is it a security like, well, who was regulating it? You know? And I think with, with Bitcoin simply, it's kind of like, well, you know, it sort of depends on what facet you're looking at of the thing, you know, like, is it, is it the elephant? Is it the tail? Is this the truck? You know, so there's, there's kind of different ways of looking at this. And I think that coordination across the agencies is really critical. My hope is that with this new administration, they're really trying to put forth a much more collaborative approach. I think to these kinds of topics, you're going to see a holistic regulations. That's, that's what I want to see. And if that takes time. So I think rather than having, you know, the sec, for example, or, you know, whatever it was CFTC or whatever, just put something out there. I want that. I would prefer that, that be again, holistic thought about in context of other things that might come out of other agencies that are going to create a broader picture of, you know, exactly how to navigate this asset class.
John Darcie: (32:17)
In some ways it feels like all these different agencies they're trying to avoid the, having the responsibility of actually regulating, like, don't talk to us, talk to the CFTC, don't talk to me, talk to the STC. But, uh, eventually one of these I'll jump in the pool together, but I want to talk about the geopolitics of Bitcoin, where we're talking about regulation. So China, for example, they run 60 odd percent of global mining operations for Bitcoin, but buying and selling a Bitcoin in China has been banned because some people are using it to evade capital controls. For example, places like Iran, Venezuela has started to engage in, in mining operations as well, because they see potentially, uh, whether it be central bank, digital currencies, or Bitcoin or other cryptocurrencies as a way to evade, uh, the swift system through which the United States operates a lot of their, uh, you know, financial, punitive programs to try to punish nations that they deem as being bad actors.
John Darcie: (33:21)
So do you think the United States, uh, first of all, why do you think those countries are doing it? Am I accurate and thinking that, okay, they see this as a new future that they can, uh, they can get more fairness on the global stage in terms of their economies. And do you think the us will eventually have to come to the realization that, okay, this is something that's inevitable with or without us, and we need to invest in and become a leader in Bitcoin specifically, and also in the idea of digital assets, central bank, digital currencies, and all those railings
Sheila Warren: (33:52)
On the last point first, you know, um, do I see the U S embracing Bitcoin in the ways you're describing? I'm not so sure about that, but digital assets
John Darcie: (34:01)
Are going to be out there buying Bitcoin. Yeah. I don't know that
Speaker 4: (34:04)
We'd ever know we put it that way or that it would be,
Sheila Warren: (34:09)
Yeah. You who knows, you know, what it was, would it surprise you? You know, so who knows? Um, I certainly don't and I think that, but on the digital assets a hundred percent, I mean, I think you're already seeing these statements that, you know, Jay Powell coming out and saying that digital dollar and looking at that as a priority, you know, that's a pretty strong statement for quite different from things we've heard before. That's of course, a reflection of, of five years of intense research that's been doing into the topic, you know, some of which we help facilitate some connections and things like that. So I think that, um, yeah, I think there's any question that things like CBDC are already, they're already exploring, you know, what is the use case? What makes sense, what problem solving with this? Why does it matter, you know, uh, have you ever robustly and digital assets similarly?
Sheila Warren: (34:48)
So I think those are different questions and I think we've already seen evidence that the latter is happening. Um, and then in terms of why countries are doing what they're doing, you know, it's interesting because I think there's some countries that have really embraced dollarization, you know, they're very, it's very important to them pay to form whether it's formally or informally, they've kind of embraced it and others that have not done that. And, you know, uh, there are others who are, you know, who could certainly speak to, you know, one of the patterns that we see there, you know, around that. So those patterns of you're kind of obvious, like there's just sort of political resistance on the part of leadership that can change over time as leadership changes, you know, this kind of thing. Um, but I think there is a sense that perhaps you can have a strong economy without necessarily pegging to any other currency, whether that's the Yuan, the dollar, you know, whatever it is.
Sheila Warren: (35:35)
And is that more possible if you, as a country kind of embrace these opportunities, it seems to me like a reasonable experiment, you know, so I think that's probably part of what you're seeing. I don't know that explicitly about sanctions avoidance and swift avoidance and those things. I mean, it may well be, uh, it would surprise me a bit if it were that, you know, targeted apart from maybe like a couple of jurisdictions here and there, which, you know, I think anything they can do to get away from the U S is not surprising. Um, but I also think we can't underestimate, you know, the sanctions effect has had on countries and their inability to engage in digital economy is, is quite profound. So if there are ways of circumventing that system, you know, it, it seems logical to me that they would be exploring that, although I have no evidence that that's the case,
John Darcie: (36:22)
Right? Another topic that you've written about that I think is fascinating. We had Marty Chavez on salt talks a few months ago, he's the former CTO of Goldman Sachs. And he was talking about how he's fascinated by the space and the profound impact potentially of decentralized digital identities, both financial identities and health identities and otherwise. So for example, he talked about, let's say we pass a $2 trillion stimulus package. We have a digital dollar. Every us citizen, uh, has a digital wallet through which we can instantaneously ascertain whether they're eligible to receive stimulus checks and we can zap that money into their bank account instantaneously, uh, so they can get it into the economy more quickly. And that has tremendous benefits. If we can do that all quickly, verifiably, there's also the health piece of it. So for example, we host a big conference, the world economic forum, hosted a big conference.
John Darcie: (37:18)
If we could verify that every individual who's attending our conference has been vaccinated or has antibodies for COVID, uh, we're test negative in the days leading up to the events that that has a lot of benefits as well. But there's also concerns about big brother about, you know, is this something where the government's going to have every piece of information about us and be able to track us and follow our digital lives as well? What promise to see decentralized digital identity have, and let's imagine a world where that's fully, uh, that's fully mature the idea of a digital identity. What does that look like? And are we able to avoid those concerns about big brother?
Sheila Warren: (37:57)
So, yeah, I, you know, this is the most foundational element of the entire thing, right? So when we really solve the questions and the, the, I don't want to call them problems because they're just things that have to be solved when we really crack this nut around digital identity. Uh, we're going to see massive escalation, I think, in, in the use and adoption of everything from visual currency, all these different kinds of applications, we're just going to blow up. And I use any question about that when it becomes super, super easy and obvious to hold digital, it's already very easy, by the way, to hold a digital wallet. That's not like a hard thing to do. People just don't realize how easy that is. Right, right. Um, and so once people kind of really understand that it's very normalized. You're going to see this becoming a very obvious way of decreasing the lag in stem. And you could almost have, you could imagine a super targeted stimulus, right? Like you could imagine, like you could do that because you can actually program into the code base, these kinds of people in this geography, some employment
John Darcie: (38:52)
Based on income, based on geography, you can do it in terms of it that really blew my mind when, when Marty started talking about all of that stuff. Cause that I hadn't really fully, uh, thought about what it meant.
Sheila Warren: (39:02)
Well, not just that, I mean, we know that the stimulus payments, you know, despite great effort on the part of the government, there was a lot of fraud in that system. You know, I mean, the checks were stolen, they gotta check cashing places and Mike's gone. It's lost one of the wrong people, you know? Yeah. A lot of people that are eligible
John Darcie: (39:16)
That didn't get it because they don't, they're not set up in the traditional
Sheila Warren: (39:19)
Banking that's right. Even worse, you know? And so, and so we have to recognize there's a last mile problem where an awful lot of people who really needed that money to just weren't able to claim it and file claims for it, like go through that incredibly burdensome process. So, so a lot of this I think is extraordinarily powerful. Now, a couple of comments on that since they went there, you know, I think it's really important that we recognize that last mile question, right? Like what we're, what digital wallets can do. Well, there's certain kind of profile of person that can easily hold digital wallets to clarify my earlier remark, you know, it's for you. And I, it's very easy to hold a digital wallet for a digital natives. It's very easy to do that for a lot of people. It's not easy to do that, you know, cause they have like, they like access to the right technology.
Sheila Warren: (39:59)
You don't have, the hardware is not available. You know, connectivity is not available. They can't rely on having reliable internet to access those funds as needed, whatever it might be there, you know, or the phone system, whatever it might be. There are reasons why we have to be very conscious of that and make sure that whatever we're building typically, if it's the government who's pushing us forward is going to be true inclusive. And so I think, I actually think to the credit of the U S government that has been a reason that the us government has kind of held off a little bit on these massive wide scale experiments because they really want to focus on the problems of poverty in our country, which are systemic and have a lot of other reasons beyond, you know, the ability to have a bank account. There's a lot of other reasons why that's the case.
Sheila Warren: (40:35)
So, um, so I just want to land that point and make that very clear. Now, moving away from that and saying to the point about these targeted singlets and opportunities like this, you know, I think that, um, it is tremendously powerful. I do think we're going to see a lot more normalization best. I do think we're going to see programmability. And I do think that that does lead to increased access or, or, um, on the part of, of any sort of big brother entity that could be a company. It could be a government, you know, I don't want to just use that term generically. Uh, we're seeing concern about this from China's DSF experiment. You know, so now in China, there's kind of a cultural norm around, you know, a certain level of surveillance. It's a quite different cultural expectation in here in United States, right? So rolling out an experiment, the jewel you want is not going to be as much of a dramatic thing there as it is here. You're already seeing a lot of privacy advocates to be very concerned about the implications here. And I think that that is well-placed concern,
John Darcie: (41:27)
Right? Let's talk about energy usage. So I think that's an increasingly common that Bitcoin detractors and detractors of the ecosystem are citing as a reason why there shouldn't be larger scale adoption of Bitcoin. Most specifically, I think because of the, uh, the volume of transactions and the amount of energy that uses. Do you have concerns around energy use, uh, related to Bitcoin? Janet Yellen has talked about that, uh, as along with others, but how do you view the energy consumption piece of Bitcoin?
Sheila Warren: (42:00)
So I always like to ask, you know, compared to what, like, what are we comparing the Coys energy usage to, you know, are we comparing it to software? Okay. Then, I mean maybe a buy it, are we comparing it to printing, storing, transferring, you know, money like paper and digital and sorry, paper, money and coins that I'm like, not so sure that, you know, we're doing so badly. Um, I, you know, what I'll say more generically is I find it really interesting as a society. This is true. I think across our entire society and our, the way we think about climate, we have, we, you know, the people I suppose, have decided that certain kinds of energy usage are bad and certain kinds of energy usage are good, right? Like there are some that we have no problem with. And some that were like, well, that's just terrible.
Sheila Warren: (42:43)
How dare you? And we really apply a moral judgment to these things. And I think that the moral judgment varies culture, the culture. So I think it's important to recognize that. And I think it varies, you know, person to person, right? We have different views about who should be able to use a lot of energy and who should not be able to use what energy, you know. So, um, I, I just, I always find this. There's a really interesting tell on the person who is making the claim, you know, and work what their perspective is, uh, versus others. Now, that being said, I think it's important to note that there are a couple of things that I find don't get enough airtime and be Bitcoin since we Bitcoin energy conversation. Right? So, cause I'm leaving aside the other kinds of cryptocurrencies and proof of stake and all that kind of thing.
Sheila Warren: (43:22)
But focusing on Bitcoin, number one, there's a lot of green energy being used to mine, Bitcoin like tremendous amounts of green energy are being used. And in fact, there's been a conscious effort on the part of many miners to transition away from kind of oil, gas, traditional energy, to more green energy. And I think that some of the experiments that have been done there are quite powerful for actually generating energy that can actually, uh, it kicks off access that can be used to power, you know, um, homes and other kinds of kinds of things. That's interesting. Uh, and that's getting, I think more and more, it's increasingly becoming a priority in the community and we're seeing more and more of that. Number two is a really interesting point made by Russ Stephens, which is that, uh, Bitcoin mine, mining facilities it's called them can really be set up and totally uninhabitable parts of the world.
Sheila Warren: (44:06)
So you can actually be solar for example, right? You could actually be mining Bitcoin, generating solar energy, gritting that using it to power parts of the world because you need so little, you know, maintenance of these minds. It's not the kind of thing where you have to kind of have somebody living there and have a whole infrastructure around that right. In these areas. So there's a possibility that if we really pay attention to that, and I think this remains speculative, but it's that we could actually be generating energy from sources and parts of the world that we couldn't before. And that could maybe be helpful in resolving the, the climate crisis that we're in. So, so it's a much more complicated conversation, I think, than the sort of black and white Bitcoin energy in a bad, you know, kind of thing that we often see.
John Darcie: (44:51)
Yeah. I try not to editorialize myself as the interviewer, but yeah, we've got a lot of interesting conversations around the, the energy usage piece. And I definitely believe that it actually is a great opportunity for us to equalize access to energy. We also had assault talk with Richard by Wirth, who is the CEO of digital X, which is a digital asset exchange based in Singapore. And he talked about it in a lot of countries. There are certain, uh, energy projects, whether it be hydro electric, solar wind that are being shuttered because they say, oh, we don't have the level of demand. It's hard to get it to the grid. It's more expensive to get the energy to the grid relative to producing energy. So we're going to shut down these existing projects and actually a Bitcoin mining is popping up in a lot of those places and being able to tap into what was dormant or stranded energy.
John Darcie: (45:38)
Uh, so it's a fascinating conversation. I think, you know, as ESG becomes a more and more, uh, relevant topic, which I think it will continue to be. I think that conversation around energy usage is going to be increasingly relevant. So it it's going to be important for the Bitcoin community, I think, uh, to continue to tackle those questions and continue to make sure that investment in Bitcoin mining is done through renewable sources of energy. But the last question I have for you, and I always have to ask this, so we balanced the conversation a little bit cause you and I are obviously have been orange pill, but what are the greatest risks in your, in your mind? If we sit down in 10 years, uh, at the world economic forum and we're having a glass of wine at SkyBridge is famous, a wine party that we do at the piano bar there, uh, in Davos. And we say, man, that, that Bitcoin thing that, that really failed spectacularly or, or this entire crypto experiment falls apart, what would be the reasons for that? And what are the biggest risks and threats you think, uh, to this entire movement?
Sheila Warren: (46:33)
Well, I, I personally I'll answer it two ways. I'll PR I personally think the biggest risks and threats to the world around this are some of the things I highlighted earlier, which are going to massively massively increase the digital divide. There's going to be a crypto divide that sits on top of digital divide. And that means that people that already had access to certain kinds of wealth generation or whatever now have this new avenue and there's zero access to an increasingly large number of people who, for a variety of reasons are not able to access this. And so that is something I'm very concerned about, um, it's one of the reasons I pushed so hard on more inclusive teams building in the space. You know, I focus a lot of my, try to amplify a lot of voices that are focusing on this question of inclusion.
Sheila Warren: (47:15)
So for me personally, I think for the forum, that is a big concern that we raise a lot with, uh, those ecosystems who are, you know, who are in a position to really do something about it. So, uh, so that's how I'll, I'll add to that. Now, on the other hand, I do, what do I think would kind of kill and like it cause everyone to be like, oh God, that calling it a nightmare, you know? Um, honestly I think Bitcoin is, so I think it's something that's a PR situation truly. Like I think there's going to be something that could happen, whether it's some big reveal around, you know, the biggest owner Satoshi is a
John Darcie: (47:45)
No, she's actually Bernie Madoff's, uh, nephew and,
Speaker 4: (47:49)
And, uh, got to be
John Darcie: (47:51)
A polymath, but, but he invented it and then, and runs away with it.
Sheila Warren: (47:54)
There you go. Something like that. Right. I actually think the sotoshi reveal that we were talking about joking about earlier that there
Speaker 4: (48:01)
Are some people that nobody would be happy to know
Sheila Warren: (48:04)
Where the, the, you know, the, the brain behind this, right. Even if you could kind of say, well, oh, you know, it was a crazy person did this, but it's really actually turned out to be awesome. So I think that's, that's something, I think it's something like that that's going to cause because it's just such a fickle, it's a fickle thing, right? People are, people are into it, but then the minute there's a criminal kind of a thing that happens in France. Oh God, I don't want you to, so there's a big element. I think of alignment here where people are that, that is earns the reputational risks still that people perceive, which I, again, I try to push back against, I don't think it's really baseline real, but it is there. And that's what I think. Well, things
John Darcie: (48:39)
Like, like quantum computing and 51% nation state attacks, do you think, uh,
Speaker 4: (48:45)
Those would get to the point typically I
Sheila Warren: (48:47)
Just find the 51% attack to be, I mean, it's certainly theoretically possible. I just don't, I, again, we talked about how much of that's lost, right? Like who are you? Who are the 51%? You know, a lot of those people are who they are, you know, so who are you influencing? I don't really know how that, how that would work if Bitcoin specifically on other forms of crypto more possible. So fair enough. You asked about the quintile answered that and then quantum, you know, I think that everyone's so aware of it. And so I guess I have faith in the really brilliant minds or who are working in this space in a technology layer and that they're, they're staying where they need to be with that. You know? So it's something in the early days I was, I was concerned about because I thought we kind of get, I didn't know that we'd have, there was just a dearth of developers in the space, right? So now, I mean, like there's so many people who can code in this and you know, no, uh, who knew how to affect the core. And so I think that I, I'm not overly concerned about that coming up as a, as a big surprise attack.
John Darcie: (49:38)
Well, Sheila, it's been a pleasure to have you on salt talks. We hope to see you either at, at a world economic forum forum event. I know it's scheduled, not in Davos this year, but in Singapore in August. So if that happens, maybe I'll see you there. And we hope you come to New York for our salt, New York conference. We announced that last week, uh, September 13th to the 15th, we're hoping like the world economic forum that, that late summer fall period is when people start to get back to normal in terms of traveling and gathering and largest groups. Obviously everyone's going to still be cautious. They'll probably be masked wearing. And we're engaged with partners around that digital identity piece and ensuring that everyone who enters the venue is either vaccinated and or testing negative for the virus. So anyways, we'll be great to see you in person and get you to one of our live events or, or see you in.
Sheila Warren: (50:26)
Yeah. And fingers crossed that, that timing that we're also really banking on is in fact what transpires, it'll be really great to get some in-person time with, with you and others. Yes.
John Darcie: (50:36)
Like revolutionary to see humans gathering and supporting,
Sheila Warren: (50:40)
Wow, this
John Darcie: (50:40)
Feels, this feels weird. Like, I feel like I'm doing something bad.
Sheila Warren: (50:44)
It feels good. It's going to be a big adjustment for a lot of well, thanks for having me.
John Darcie: (50:49)
Yep. And thank you everybody for tuning in to today's salt. Talk with Sheila Warren, uh, from the world economic forum, just a reminder, if you missed any part of this episode or any of our previous episodes, you can access them on our website@salt.org. Backslash talks also on our YouTube channel, which is called salt tube. We're also on social media. Twitter is where we're most active at salt conference, but please follow us as well on LinkedIn, Instagram and Facebook, we're being more active. They're trying to be more, uh, generation Z if you will, digital native. But I guess if we're going to be in the digital asset space, we should be, uh, and please spread the word about these salt talks, especially these digital asset talks. I think freeing your mind and making yourself open-minded to these ideas. Even if you're still a skeptic of something like Bitcoin, I think, uh, irrefutably decentralized finance and digital assets are revolutionizing the traditional worlds of finance. So I think it's important that we spread the word about these conversations as well, but I'm half of the entire salt team. This is John Darcie signing off for today. We hope to see you back here soon.