FOXCONN 4.

0
How Blockchains Can Handle the World’s Most Complicated
Supply Chain

Nolan Bauerle
CoinDesk
October 2017

A BLOCKCHAIN RESEARCH INSTITUTE LIGHTHOUSE CASE STUDY

Realizing the new promise of the digital economy

In 1994, Don Tapscott coined the phrase, “the digital economy,” with his
book of that title. It discussed how the Web and the Internet of information
would bring important changes in business and society. Today the Internet
of value creates profound new possibilities.

In 2017, Don and Alex Tapscott launched the Blockchain Research Institute
to help realize the new promise of the digital economy. We research the
strategic implications of blockchain technology and produce practical
insights to contribute global blockchain knowledge and help our members
navigate this revolution.

Our findings, conclusions, and recommendations are initially proprietary to

our members and ultimately released to the public in support of our mission.
To find out more, please visit www.blockchainresearchinstitute.org.

Blockchain Research Institute, 2018

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World’s Most Complicated Supply Chain,” foreword by Don Tapscott,
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Contents
Foreword 3
Case in brief 4
Introduction 4
Managing complexity 5
Total supply chain upgrade 6
Deep tier finance 7
Digital market makers 9
Chain of custody and provenance 9
Digital authentication 10
New economic relationships among people
and things 10
New consumers and relationships 11
Cybersecurity 12
Regulatory compliance and privacy by design 13
Key takeaways 14
About the author 15
About the Blockchain Research Institute 16
Notes 17
FOXCONN 4.0

Foreword
Computer companies rarely make computers any more. The big
technology brands outsource their manufacturing and often their
design to the electronics manufacturing industry. The industry is
dominated by one player, Foxconn Technology Group, which operates
one of the world’s largest and most complicated supply chains
from its headquarters in Taiwan. When word got out that it was
experimenting with blockchain to transform this global operation,
many observers were curious, to say the least.

This case study is the first to tell the story in depth, and we are
fortunate to have the well-known and highly regarded blockchain
authority and researcher Nolan Bauerle leading this project. Bauerle
has beautifully articulated Foxconn’s suite of digital relationships and
its application of blockchain technology. The case looks at Foxconn’s
application of advanced cryptographic techniques and decentralized
networks to build trustable digital relationships among its many
partners, suppliers, products, factories, tools, and customers. It
also explores Chained Finance, the payments and supply chain
management tool launched by the finance arm of Foxconn to solve a
number of integration problems.

I found this study to be instructive, lucid, and enjoyable—and I think

you will, too.

DON TAPSCOTT
Co-Founder and Executive Chairman
Blockchain Research Institute

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Case in brief
»» Foxconn is the second largest private sector employer in the
world with over a million employees who coordinate the roll
out of its enormous product line, which accounts for over 40
percent of consumer electronics sold in a year.

»» While Foxconn has made history as the most important

contract manufacturer of its time, its value chain has grown
into a complex web of relationships and responsibilities.
To continue making history, its leadership must effectively
manage this complexity.

»» The company’s operational strategy has blockchain technology

at its core. Foxconn is building out a digital backbone, which
will deploy blockchain to secure supply chain management,
safeguard its own Internet of Things, transform its network
into a commodities marketplace, and offer new types of
Foxconn grew to be the commercial relationships that benefit its customers. Integral
world’s second largest to these capabilities is a set of blockchain-based trade finance
tools that will create deep tier finance opportunities for its
private employer after suppliers.
Walmart.
»» Foxconn’s blockchain strategy aims to position it as a leader of
the fourth industrial revolution and among the most important
manufacturers in the second era of the Internet.

Introduction
The Asian Miracle—the financial success of the four original Asian
Tigers of Korea, Taiwan, Hong Kong, and Singapore—grew from the
contract manufacturing business model. This model spurred the
miracle because it was good for the attraction of foreign buyers
whose capital fueled growth.

Named Hon Hai Precision Industry when the Taiwanese company

started operations in 1974, Foxconn rose to become the largest
contract manufacturer in the world. Along with its partner Apple,
Foxconn made history with important products and industrial
processes. While Apple’s product innovation is prolific, it is also
regarded as an important innovator for supply chain management
and procurement. Steve Jobs himself performed this role until he
recruited future CEO Tim Cook to relieve him of those duties.1

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Apple chose only partners that shared a goal to make history.

No partner met this criterion more than Foxconn. In the process,
Foxconn grew to be the world’s second largest private employer after
Walmart, and the largest employer in China. An estimated 40 percent
of all consumer electronics sold worldwide in a year come from
Foxconn’s factories.2 Now Foxconn is looking to be a leader in the
fourth industrial revolution, including the Internet of Things—hence,
Foxconn 4.0.3

Foxconn Technology Group at a glance

Actual name: Hon Hai Precision Industry Co., Ltd.4

Headquarters: Tucheng, New Taipei, Taiwan
Opened: 1974
Employees: 1.3 million
Company Type: Contract Manufacturer
Impact: Manufactures 40% of worldwide consumer electronics
sold annually
Total assets: $80 billion
Total Revenues: $134 billion
Foxconn’s goal with
blockchain technology is
no less than to continue
making history as the most Managing complexity
important manufacturer of
its time. Foxconn’s goal with blockchain technology is no less than to continue
making history as the most important manufacturer of its time. This
vision centers on the management of the complexity of the entire
company.

Jack Lee, CEO of FnConn, the finance arm of Foxconn, leads these
creative efforts:

We see it at the heart of everything we do. With our entire

network, we can arrange how we finance agreements with
partners and suppliers, how we manage procurement and
logistics, what we produce and sell, and how we engage with
our customers. All of our departments, everything we do
across our operation. It is seen as a core technology.5

This study spotlights Foxconn’s efforts to bring blockchain technology

into the core of its complex business activities and to help manage
the complexity (Figure 1, next page). In short, it takes a close
look at the application of advanced cryptographic techniques and
decentralized networks to build trustable digital relationships
among Foxconn’s partners, suppliers, products, factories, tools, and
customers.

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Total supply chain upgrade

The first spike for FnConn’s work is Chained Finance. Launched this
past year, it’s a payments and supply chain management tool. At its
most general level, it’s designed to solve a number of integration
problems. Jack Lee described the logic behind the design decision
this way:

We see this as a gigantic I see it in three parts. There’s the information flow – purchase
opportunity. Information, orders and procurement. There’s the logistics flow – the
goods, and money all flow of the actual goods. And there’s the payment flow – the
integrated for the whole money movements. These three systems cannot talk to each
system. other. They are not integrated. We see this as a gigantic
opportunity. Information, goods, and money all integrated for
the whole system.6

The integration needed to solve these problems prompted FnConn to

enter into a partnership with Dianrong, nicknamed the Lending Club
of China because its founder and CEO, Soul Htite, co-founded the
peer-to-peer Lending Club headquartered in San Francisco. Together,
FnConn and Dianrong launched Chained Finance – a finance platform
which, as Lee pointed out, aims to integrate the flow of information
and agreements, the flow of goods, and the flow of money all into the
same place (Figure 2, next page).

FnConn recently tested the platform and successfully moved $6.5

million in loans among a number of partners.7 In the process, records
of transactions about agreements, the flow of goods, and the flow
of payments moved between multiple parties, were collected in one
place and in the correct order. Through this platform, the entire story
of each trade became easy to track.
The simple application of
The simple application of this integration is a vast improvement on
this integration is a vast current practices. For the last two hundred years, the flow of money
improvement on current alone has been difficult to follow. The flow of money over this period
practices. was processed through a network of correspondent banks.

Figure 1: Making blockchain a core technology

Foxconn’s vision for the use of blockchain spans all departments.

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The correspondent banking system is a network of banks in different

countries that hold accounts with each other. Because two particular
banks in two different countries might not hold accounts with each
other, the sending banks push transactions into a network of banks
that do have relationships. The money then charts a wandering path
through a string of correspondent banks until it hits on the final
destination bank.

Money transferred this way flows through its own information

communication network, SWIFT, for the Society for Worldwide
Interbank Financial Telecommunication. Created in 1973, SWIFT
standardizes messages and thus expedites the information flow
among correspondent banks.

While this network moves money, it does not account for the
movement of goods. Industry practice puts goods in motion before
money moves, thus creating a delay between two tiers/links in a
supply chain. The more tiers/links in the chain, the longer the delay,
as each tier/link waits for its financing to come through.

Deep tier finance

Because of these delays, banks’ financing terms for suppliers farther
Banks give great financing down the chain are less favorable. Banks give great financing terms
terms to direct suppliers of to direct suppliers of companies like Apple. They do not for suppliers
companies like Apple. They caught up in the delays inherent in the higher tiers of a supply
chain. Consequently, the latter group of suppliers either sells deeply
do not for suppliers caught
discounted invoices or holds unpaid invoices for months at a loss
up in the delays inherent in because of currency changes or loan interest.
the higher tiers of a supply
chain.
Figure 2: Three parts of Chained Finance
The platform aims to integrate the flow of information and agree-
ments, the flow of goods, and the flow of money all into the same
place.

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“85% of SMEs in China are Lee pointed out that,

unable to get financed.
They have to go to shadow Over the years, Foxconn has dealt with the biggest banks
in the world. For Foxconn, finance is easy. We’re a direct
bankers.” supplier, financing can happen. When we talk with those banks
JACK LEE about financing our suppliers, tier two suppliers, the answer
CEO from the banks is no. Only a large multinational bank like Citi
FnConn will budge, and its answer is basically the following: “We can
partially finance, but with the guarantee of 30 percent.” That’s
30 percent cash. When we ask about a third tier supplier, it
answers, “Impossible.” Eighty-five percent of SMEs [small
and medium enterprises] in China are unable to get financed.
They have to go to shadow bankers. It’s inefficient and costly,
especially for the upper tier SMEs. We realized this problem
a year ago, and that’s why we decided to launch Chained
Finance.8

Foxconn’s complex supply chains can stretch as deep as eight or nine

tiers. The stretch of Foxconn’s network gives Chained Finance the
chance to extend invoice financing and credit straight through all the
tiers in Foxconn’s supply chain (Figure 3).

As Lee put it,

“If suppliers need working
capital, they can get it from We can leverage Foxconn’s supply chain and do deep tier
Chained Finance on the finance for our partners. We can hook in the payment data
platform.” with procurement data, and supplier data. Also, we can
have the direct supplier invite the tier two supplier and tier
JACK LEE three supplier and so on. This payment data will be within
CEO the accounts payable for Foxconn. If suppliers need working
FnConn capital, they can get it from Chained Finance on the platform. 9

Figure 3: Deep tier financing

Foxconn’s complex supply chains can stretch as deep as eight or nine tiers. The stretch of the network
gives Chained Finance the chance to extend invoice financing and credit through all of the tiers of the
supply chain.

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Digital market makers

As a contract manufacturer, Foxconn has grown into one of the
largest companies in the world, with $136 billion in revenues and
a network of thousands of suppliers, partners, and customers.10
Foxconn’s visibility and coordination of trade relationships through
Chained Finance hints at an even greater power around market
formation.

For its own production processes, Foxconn gets wholesale prices on

such materials as atomized aluminum used in the body casing of
tablet and phone devices. conn plans to offer the wholesale price on
aluminum it receives to any member of its vast network. Lee said,
“We can use the integrated tool to build a powerful marketplace. We
can grow the value and efficiency of our network. We can help our
suppliers this way.”11

The idea is to form transaction parameters for network members

to find trade partners and secure deals for certain products. This
collaboration builds on Foxconn’s deep tier finance work and allows
its network to be used by all members of the network in an efficient
and useful marketplace structure built from price discovery.

Chain of custody and provenance

Through Chained Finance, The flow of money and agreements plus the creation of markets is
Foxconn plans to offer not the only core complexity problem Lee believes can be managed.
As mentioned, for trade, only after the money flows can the goods
the wholesale price on flow. The flow of the goods themselves is important and is another
aluminum it receives to any vital quality that can be strengthened through blockchain technology.
member of its vast network. Lee said,

Yes, Chained Finance is aimed at the painful problems SMEs

have for finance. However, we think the most important
aspect of this for us will be tracking and provenance. Tracking
the flow of goods, information, and procurement. So, we pay
high attention to how to track goods. We want to integrate
supply chains and procurement and the money flow all on
the blockchain. That’s why we are a founding member of the
Trusted IoT Alliance along with Cisco and Bosch and a handful
of blockchain start-ups. 12

The Internet of Things (IoT), a relatively new and powerful

technology, allows manufacturers to use data produced by physical
assets. McKinsey Global Institute predicts the value of the IoT to
surpass $11 trillion by 2025.13 The $30 Raspberry Pi demonstrates
how inexpensive and ubiquitous strong computing power is and will
continue to be.14 The effective use of data is central for industries as
they enter a new era.

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Digital authentication
The Trusted IoT Alliance launched in January 2017 with blockchain
start-ups BitSE, Chronicled, ConsenSys, Filament, Skuchain, and
Slock.it, partnered with corporate giants BNY Mellon, Bosch, Cisco,
and Foxconn to work on standardization of machine interactions.

The Trusted IoT Alliance has started its work with tests on
The goal is to strengthen authentication schemes; how to secure the schemes individually
the bond between the and within the network, and how to process the data from all these
physical object and devices in a useful way. The first protocols they’ve established are
the digital world to for multiple weaker identities, including serial numbers, QR codes,
provide registration that RFID tags and UPC codes. The protocol links these to stronger
cryptographic identities that use private keys to sign transactions.
commercial legacy systems strengthen the bond between the physical object and the digital
can deploy immediately. world to provide registration that commercial legacy systems can
deploy immediately.

These digital identifiers are an important feature for manufacturers

going forward as they can be leveraged for improved supply chain
management. An alliance partner of Foxconn, Chronicled, is a San
Francisco-based start-up with this idea as its business plan. In
partnership with Brooklyn-based GREATS, a shoe company partly
owned by NFL running back Marshawn Lynch, Chronicled embedded
RFID tags into pairs of Lynch’s signature shoe, the Beastmode Royale
Chukka, and hashed each individual shoe’s identity into the Ethereum
blockchain.15

This has powerful implications to fight counterfeiting and to supply

the assurances many brand names require in order to satisfy their
customers. Foxconn has long fought against counterfeit products
and has a bird’s eye view for what is needed in the marketplace.
Its current work with the alliance is about the creation of a
cryptographically provable anti-counterfeiting technology, not just to
expedite investigations and lawsuits but to deter counterfeiters and
minimize the need for legal action in the first place.

Chronicled embedded
RFID tags into pairs of NFL
running back Marshawn
Lynch’s signature shoe, the
New economic relationships among
Beastmode Royale Chukka, people and things
and hashed each individual
shoe’s identity into the But authentication for products is only one small step in the
Ethereum blockchain. integration of machines into our contractual relationships. Foxconn’s
physical assets add to the complexity of the massive company.
Buildings, machines, tools, and inventories drive the production
process. The effective use of data derived from these physical assets
is central for industries as they enter a new era.

A contract is a sort of meeting of the minds. What happens when one

mind is not a mind at all, but a microprocessor, cryptographic keys,

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and a programmed set of instructions? How do they have the legal

capacity to contract?

Take this scenario: a car whose manufacturer installed sensors

to augment the driver’s capabilities, and yet the driver is in an
accident. An insurance company performs a forensic assessment of
responsibility. With a connected car, who’s at fault? The driver? The
software maker? The hardware sensor maker or actuator? The auto
Through key possession company that bundled them? The owner of the vehicle? A hacker?
and signed transactions
arranged and time stamped This was once a relatively simple question for investigators. With
in a distributed data base, the questions mentioned above, answers are now confusing and
it is possible to establish difficult to ascertain with certainty. But answers must once again
be straightforward so that we can properly integrate the IoT into
a system that would help industry and allow it to assume the legal responsibility that machines
in any forensic audit of will require in a world of hundreds of millions of connected devices.
responsibility.
possession and signed transactions arranged and time stamped
in a distributed data base, it is possible to establish a system that
would help in any forensic audit of responsibility. For example, a
proximity sensor failed to alert a driver and a collision ensued – the
sensor’s failure could easily be identified in the travel log of all digital
interactions for every component in the vehicle if these technologies
were orchestrated on a blockchain.

goal is to integrate the physical assets within its vast and complex
factories. This work gives Foxconn insight into what is needed in the
market for products that can safely harness the IoT. That means
more sensors and actuators along with their attendant keying
material. Another unit of Foxconn, Engineering Services, works as
a consultancy and tech provider to grow the institutional capacity
needed to produce safe IoT devices for the market.

New consumers and relationships

When Foxconn opened its doors, it entered into a niche inside
manufacturing. It was not consumer facing—it was a contract
For Foxconn, the goal is manufacturer that few had ever heard of. But in an era where the
to integrate the physical relationships among manufacturer, product, and consumer are in
flux—where digital ties that bind have established new relationship
assets within its vast and capacities throughout the value chain—Foxconn has pivoted to a
complex factories. This consumer facing brand.
work gives Foxconn insight
into what is needed in the In 2016, it acquired Sharp, a Japanese electronics company, for $3.8
market for products that billion.16 It focused Sharp’s growth strategy on connected cars and
can safely harness the IoT. smart homes, now the anchor products in Foxconn’s new consumer
IoT.

Through this IoT focus, Foxconn plans to create new sales

mechanisms and ownership models for its customers. This is another
example of the product as a crucial information carrier. Complex
products, like jet engines for example, have long been sold with
sophisticated ownership models that reflect the data produced by the
product.

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In the early days of private jets in the 1960s, Bristol Siddeley built
jet engines and offered a revolutionary ownership and servicing
contract that hints at the future of the combination of data, product
and ownership. Bristol Siddeley introduced the “power by the hour”
system. It offered a better way to forecast costs of jet engine
ownership by offering a fixed-sum per flying hour that included
all-engine servicing. The manufacturer’s relationship with the new
owners was for the lifetime of the product. While the power-by-the-
Through this IoT focus, hour name is trademarked by Rolls Royce, which acquired the engine
Foxconn plans to create maker, it is now a generic term to refer to other jet engines sold and
new sales mechanisms and managed this way by GE, Pratt & Whitney, and Bombardier.
ownership models for its
Between shoes and jet engines, virtually all products can now
customers. carry information that will affect ownership and sales models.
Products that carry information can solidify relationships between
manufacturer and consumer, ensuring they last much longer –
perpetual even – down the value chain. This idea involves an
extension of blockchain technology straight through to a perpetual
relationship with consumers. We may describe blockchain technology
as a “database innovation,” but this tells only part of the story.
Blockchain technology represents an innovation to systems of record.
A system of record is more than a database or snapshot in time. It
Between shoes and jet is data in its context, data with a history of itself. It takes note of all
engines, virtually all transactions, amendments, drafts, or anything else related to the
products can now carry story of the data.
information that will affect
ownership and sales While some analysts have scoffed at the idea that a contract
models. manufacturer can enter consumer electronics sales and predict the
kinds of growth that have come out of corporate projections, Foxconn
is confident. As Lee explained, “Through Sharp, we are going to
pioneer ownership models that will allow us to better serve our
customers, save them money, and earn more revenue for ourselves.
It’s about the most efficient and helpful relationship we can have with
customers.”17

Cybersecurity
The weakness in our
It is unsurprising that authentication is at the top of the Trusted
systems is rooted in
IoT Alliance’s list as well as a focus for Foxconn. Authentication is
centralized authorities an important weakness in our current cybersecurity arrangement.
created to organize The list of companies involved in important hacks and cybersecurity
authentication schemes. It breaches keeps growing–Sony, JP Morgan Chase, Home Depot,
is the act of centralization Anthem Healthcare, and now Equifax. Reputational damage from
itself that has characterized these attacks is difficult to mitigate.
“trusted third parties as
The weakness in our systems is rooted in centralized authorities
security holes.”
created to organize authentication schemes. It is the act of
centralization itself that has characterized “trusted third parties as
security holes.”18

In a centralized authentication scheme, people share their mother’s

maiden name or their dog’s name with an authentication authority
whose centralization endangers the whole system. Bitcoin offers
an example of decentralized authentication performed through

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the simple deployment of public key cryptography. Possession of a

private key equals ownership in the case of bitcoin, or authentication
in the case of blockchain technology, deployment in supply chain
management, or customer relationships.

If we use cryptocurrency, where the possession of the key means

ownership of some finite data, we can authenticate machines as
owners of assets or parties with responsibilities or obligations. The
demands of Bitcoin wallets have catalyzed the use and development
of new microchips that have trusted encryption enclaves that
allow for keys to reside on a device without exposing themselves
to the Internet. Keying materials (wallets or other devices that
store, generate or use keys to cryptographically sign transactions)
have begun to leverage this technology and several bitcoin wallet
providers have branched into the IoT sector. So, IoT devices will likely
come with software and hardware that functions and looks like a
bitcoin wallet.

Regulatory compliance and privacy by design

One of the great advantages to such a system for digital
authentication is that it makes it easier to adhere to many of the
privacy laws about to come into force in Europe. The concept,
If we use cryptocurrency, called privacy by design, was first coined by a study by the privacy
where the possession of commissioner in the province of Ontario in the 1990s.19 The idea has
the key means ownership grown to be an important feature of privacy law and is the basis
of some finite data, we can for a major exclusion from the EU’s general data privacy regulation
authenticate machines as (GDPR).20 These new regulations, to come into force in 2018, bring
owners of assets or parties sweeping penalties and wide applicability to anyone gathering data
on consumers who live in the EU member countries.
with responsibilities or
obligations. Lots of speculation and concerns have been raised on how
onerous the rule change will be. This is partly because the law
places responsibility on companies when dealing with any kind of
authentication information. The exclusion, privacy by design, works
as follows:21

Encryption and decryption operations must be carried out

locally, not by remote service, because both keys and data
must remain in the power of the data owner if any privacy is
to be achieved.

Furthermore, in the instructions:

If the personal data is pseudonymized with adequate internal

policies and measures by the data controller, then it is
considered to be effectively anonymized, and not subject to
controls and penalties of the GDPR.

Much of blockchain technology is actually based on the exception

in this rule. Many blockchain projects have as a business model the
personal guard and control of cryptographic keys. The security by
design exclusion helps pave the way for the technology to proliferate,

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especially for machine-to-machine, machine-to-person, and machine-

to-corporation dialogue and contracting.

Cybersecurity and customer privacy strategies are integral for

companies as they seek to meet the forces of the digital revolution.
Foxconn’s work with its finance platform, Chained Finance, as well as
through its IoT Alliance is part of the company’s strategy to protect
its operations, secure its relationships, and protect its customers.

Key takeaways
Foxconn has grown into such a complex company that we
could more accurately describe it as a planned society.
Like any society, leadership has difficulty coordinating the
many relationships, responsibilities, and obligations that the
company has undertaken.

Blockchain technology offers a tool for managing this

complexity. Foxconn’s goal is to create a backbone upon
which the company can arrange and organize its operations
Foxconn’s work with its
as it continues to lead as the most important manufacturer
finance platform, Chained of its era.
Finance, as well as through
its IoT Alliance is part of Foxconn has leveraged blockchain technology to create a
the company’s strategy tool for the movement of money, goods, and agreements to
to protect its operations, be orchestrated in one place. This tool leverages Foxconn’s
secure its relationships, network and turns it into a useful market for its partners.
and protect its customers.
Digital authentication schemes are a focus for the company,
both for the goods produced and for the data they
transmit. These new authentication schemes are useful
for the integration of machines into Foxconn’s contractual
obligations and responsibilities.

Through work on advanced cryptographic techniques

for authentication, Foxconn has put cybersecurity at the
forefront of its plans.

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About the author

Nolan Bauerle is the director of research at Manhattan-based
CoinDesk. His work with bitcoin and blockchain technology
began in 2013 with a long term study of cryptocurrencies for the
Canadian Senate Banking Committee where he dreamed up a fun
publicity stunt: as the report was tabled in parliament, it was also
simultaneously hashed into the Bitcoin blockchain.22 This was perhaps
the first government usage of the blockchain for something other
than buying or selling bitcoin. Over the last few years, Nolan’s work
has involved research and writing deep dives into tokens, supply
chains, trade finance, insurance, Internet of Things, cryptography,
privacy, and confidentiality.

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About the Blockchain Research Institute

Co-founded in 2017 by Don and Alex Tapscott, the Blockchain
Research Institute is a knowledge network organized to help realize
the new promise of the digital economy. It builds on their yearlong
investigation of distributed ledger technology, which culminated
in the publication of their critically acclaimed book, Blockchain
Revolution (Portfolio|Penguin).

Our syndicated research program, which is funded by major

corporations and government agencies, aims to fill a large gap in
the global understanding of blockchain technology and its strategic
implications for business, government, and society.

Our global team of blockchain experts is dedicated to exploring,

understanding, documenting, and informing leaders of the market
opportunities and implementation challenges of this nascent
technology.

Research areas include financial services, manufacturing, retail,

energy and resources, technology, media, telecommunications,
healthcare, and government as well as the management of
organizations, the transformation of the corporation, and the
regulation of innovation. We also explore blockchain’s potential role in
the Internet of Things, robotics and autonomous machines, artificial
intelligence, and other emerging technologies.

Our findings are initially proprietary to our members and are

ultimately released under a Creative Commons license to help
achieve our mission. To find out more, please visit
www.blockchainresearchinstitute.org.

Leadership team
Don Tapscott – Co-Founder and Executive Chairman
Alex Tapscott – Co-Founder
Joan Bigham – Managing Director
Kirsten Sandberg – Editor-in-Chief
Jane Ricciardelli – Chief Marketing Officer
Hilary Carter – Director of Research
Jenna Pilgrim – Director of Business Development
Genia Mikhalchenko – Director of Member Services
Luke Bradley – Director of Communications

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Notes
1. Walter Isaacson, Steve Jobs (New York City, NY: Simon & Schuster, 2011), p.189.
2. Charles Duhigg and Keith Bradsher, “How the US Lost Out on iPhone Work,” The
New York Times, 22 Jan. 2012. http://www.nytimes.com/2012/01/22/business/
apple-america-and-a-squeezed-middle-class.html, accessed Sept. 22, 2017.
3. The first three industrial revolutions were steam power and mechanization,
electricity, and computing and telecommunications.
4. “Financials Information for Hon Hai Precision Industry Co., Ltd.,” D&B Hoovers,
http://www.hoovers.com/company-information/cs/revenue-financial.HON_HAI_
PRECISION_INDUSTRY_CO_LTD.d987375fdd77c3f8.html, accessed Sept. 22, 2017.
5. Jack Lee, interviewed by author, 23 May 2017.
6. Lee, interviewed by author.
7. Michael del Castillo, “Foxconn Reveals Plan for Blockchain Supply Chain
Domination,” CoinDesk, 13 Mar. 2017. https://www.coindesk.com/foxconn-wants-
take-global-supply-chain-blockchain/, accessed Sept. 22, 2017.
8. Lee, interviewed by author.
9. Lee, interviewed by author.
10. John Schmid, “Foxconn founder Gou maintains low profile even as he transforms
the tech world,” Milwaukee Journal Sentinel, 26 July 2017. http://www.jsonline.
com/story/money/2017/07/27/foxconn-founder-gou-maintains-low-profile-even-he-
transforms-tech-world/514646001/, accessed 26 Sept. 2017.
11. Lee, interviewed by author.
12. Lee, interviewed by author.
13. James Manyika et al., “Unlocking the potential of the Internet of Things,” McKinsey
& Company, June 2015. http://www.mckinsey.com/business-functions/digital-
mckinsey/our-insights/the-internet-of-things-the-value-of-digitizing-the-physical-
world, accessed Sept.22, 2017.
14. Liam Tung, “Raspberry Pi Compute Module 3 launches at $30, ready to power up
in other products,” ZDnet.com, CBS Interactive, 16 Jan. 2017. http://www.zdnet.
com/article/raspberry-pi-compute-module-3-launches-at-30-ready-to-power-up-in-
other-products/, accessed 26 Sept. 2017.
15. Jonathan Luk, “GREATS Unveil Revamped BEASTMODE 2.0 Royale Chukka,”
Highsnobiety, 24 Nov. 2015. http://www.highsnobiety.com/2015/11/24/greats-
beastmode-2-royale-chukka/, accessed Sept. 22, 2017.
16. Takashi Mochizuki, “Taiwan’s Foxconn Completes Acquisition of Sharp,” The Wall
Street Journal, 13 Aug. 2016. https://www.wsj.com/articles/taiwans-foxconn-
completes-deal-to-acquire-sharp-1470994207, accessed Sept. 22, 2017.
17. Lee, interviewed by author.
18. Nick Szabo, “Trusted Third Parties as Security Holes,” Nakamoto Institute, 2001.
http://nakamotoinstitute.org/trusted-third-parties/, accessed 26 Sept. 2017.
19. Ann Cavoukian, “Privacy by Design: The Seven Foundational Principles,”
Information and Privacy Commissioner of Ontario, Aug. 2009, revised Jan. 2011.
www.ipc.on.ca/wp-content/uploads/resources/7foundationalprinciples.pdf,
accessed 18 Sept. 2017.
20. “General Data Protection Regulation Key Changes,” European Union, n.d. www.
eugdpr.org/the-regulation.html, accessed 18 Sept. 2017.
21. Cavoukian, “Privacy by Design,” Jan. 2011.
22. Here is a link to the report: http://coinsecrets.org/?to=361625.000003.

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