This article is a part of EqualOcean's 'Blockchain, China's Story' report. Read more about it or download the sample and check out the contents.

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JD Digits – the fintech and digital technology arm of JD.com, one of the largest online retailers in China – entered the blockchain industry in 2017, and was known as JD Finance at the time.

Declaring in its business statement of purpose that it intends to "connect financial and digital industries with digital technology," its initiatives in blockchain tend to focus on enterprise-level digital financing applications. In particular, it launched China's first Asset-backed Security (ABS) standardized solution in June 2019, which will be addressed in detail in the latter part of this article.

By the end of 2019, JD Digits had applied for nearly 200 blockchain global patents, and has formed a preliminary product system encompassing JD Chain – a distributed ledger architecture – and JD BaaS, an enterprise service platform.

JD Chain

JD Chain acts as the base of the blockchain product scheme of JD Digits. As a bottom layer infrastructure element, it aims to solve key technology issues in blockchain – for example, computing capacity, scalability, security – so that practical industrial solutions could build upon it.

The development team of JD Chain values encryption algorithms, consensus protocols, the Hyperledger fabric model, data storage and API as the five core elements of blockchain technology that the company seeks to make breakthroughs in. Based on these points, plus its consideration of the needs of enterprises in real business, JD Chain has acquired the following technical characteristics:

High performance: Achieves a 10,000 level TPS processing speed, and transaction confirmation in seconds.

Flexible customization: Consensus, ledger, contract and storage functions are independent of each other; with standard interfaces serving as starting points for interaction with the software, JD Chain can allow clients to customize the system according to the function they need and switch across different encryption algorithms freely.

Moreover, JD Chain provides two deployment solutions for large enterprises and SMEs. Their difference in size can potentially result in variation in their information infrastructure and technical capabilities, thus necessitating a flexible solution.

SMEs can directly adopt the simplified deployment model, which only needs one client node, one gateway node and multiple consensus nodes, which is the minimum configuration to ensure that JD Chain operates. It can support hundreds of millions of transactions when the corresponding hardware meets the requirements, and is usually used for demo experiments or small-scale applications.

As the scale of applications increases, the demand for data storage increases correspondingly. Under this circumstance, JD Chain uses the database cluster for each consensus node to realize the parallel expansion of storage, which is able to support billion-level transaction processing.

JD Chain also provides deployment solutions customized for application scenarios in big enterprises that involve complex relationships and business processes among parties. In such deployment models, different types of terminals are employed, as there are multiple parties that collaborate, able to join the blockchain network from any authorized gateway node through different access methods.

Effective data governance: Data ledger adopts a standardized structure, can achieve cache penetration and multiple dimension analysis on business data, and allows isolated data backup, archiving, supervision and auditing.

Cross-chain collaboration: Enables cross-chain data verification and transaction processing, the splitting and merging of chains as well as combination into lightweight public chains.

Low entry barrier: With lightweight gateway nodes deployment, data can be quickly recorded in chains without developing contracts. Besides, the codes of the contracts can be reused, upgraded and locally tested. These characteristics let JD Chain have lower costs and make it easier to maintain.

JD BaaS

JD BaaS is a cloud service platform that combines the function of blockchain that aims at providing enterprises with an 'out-of-the-box' blockchain solution, which significantly lowers the entry barrier for companies in adopting blockchain – especially in terms of technology and labor expenses. This promotes the incorporation of blockchain technology in real-world business scenarios.

JD BaaS allows enterprises to collaboratively deploy blocks on public, private and hybrid clouds. As a bridge between blockchain infrastructures and real-world applications, JD BaaS has five layers, namely a cloud platform resource layer, blockchain infrastructure layer, solution modules layer, Web console and SDK and API interface layer and an enterprise applications layer.

Key characteristics

Among the five layers of JD BaaS, the function of each layer tends to be isolated, where the solution modules layer acts as the BaaS core. Here we will address some of its unique capacities:

Blockchain network: JD BaaS provides enterprises with two networking models, one-click deployment and enterprise networking, based on their actual needs.

The former is more or less a 'rookie model,' which assists in easy application of blockchain technology. Under this, developers are able to start a private chain in seconds – besides, owners and executives often have enough work simply focusing on the daily work of the business itself, without considering how the blockchain function is implemented in detail.

On the other hand, the enterprise networking model helps companies to easily create or join an enterprise alliance chain, achieving a rapid docking of business and blockchain networks.

Chain ID: This is a blockchain-based decentralized identity authentication system used to endorse users and the blockchain nodes of JD BaaS. Through Chain ID, any parties connecting to JD BaaS are able to verify the identity of other users, which facilities a transparent identity management environment that can elevate trust.

The aim of the function is not to replace the traditional Public Key Infrastructure (PKI) authentication system; rather, it is a collaboration of PKI and blockchain technology in providing an enhanced trust identity system. Meanwhile, it can also solve the serious consequences caused by the loss or theft of the traditional Certificate Authority (CA) root key.

Key management: How to manage the keys and ensure data security is a central issue for any enterprise service platform. The key management function of JD BaaS secures users' data in three aspects:

1. Channel security: Ensuring the security of the transmission channel during the transmission process through enforcing SSL/TLS two-way authentication by API interface;

2. Access security: Provides complete access control policies so that operations can be blocked to those forbidden to access them – what’s more, each operation will be assigned a corresponding access token, and access will be denied if the token expires or is invalid;

3. Storage security: With a complete data encryption system, the root private key is distributed into N shares, where M copies (N≥M) are required to unlock the data. Such that even if the data is taken out of storage, the offender will only obtain the encrypted data, unless it is lost together with M copies of the key.

Browsing and visualization: Mainstream blockchain infrastructures usually provide blockchain-oriented browsers. However, most of them tend to focus on presenting raw data which is difficult to associate directly with specific applications. Targeting this issue, JD BaaS has developed a browser named 'ChainEye,' which is able to provide a unified and immutable data display function that is in line with standards and norms in real practices.

China's first application in digital finance

One of the most representative applications of JD BaaS is its ABS solution in the financial sector, which the first standardized digital financing blockchain solution in China.

Simply put, it helps sponsors, plan managers, law firms, rating agencies, accounting firms, custody and other ABS business participants in optimizing their business processes – for example, lowering credit risks, broadening financing channels, reducing labor costs in risk control and post-investment management – and thus improving efficiency throughout the entire procedure.

Its 'CITIC Security No.9 JD.com Baitiao Account Receivable Credit Assets Special Support Plan' issued in June 2019 by Shenzhen Stock Exchange with a CNY 500 million scale, was rewarded as one of the "2019 China Blockchain Excellent Application Cases" named during the 2019 Smart China Expo.

The enterprise networking scheme empowered by JD BaaS significantly reduces the time and cost of reconciliation between parties in solving the issue of information asymmetry through the automatic ledger synchronization and audit function, which considerably improves cash flow management efficiencies.

The interface of a new ABS service node can be completed within 2 days, which can reduce deployment time by 85% compared with the original technical solution. Each business node can save on performance of over one million operations and maintenance costs per year.

Meanwhile, the JD BaaS ABS solution also effectively improves accountability and transparency among the inter-agency network of relevant parties, which better guarantees the security of financial data.

A bottom line

Infrastructure, BaaS, and industry-tailored solutions – we see the way that JD Digital approaches blockchain industry to a large extent follows the typical practice of large firms on emerging technology. More or less, we see Ant Financial, Tencent and Huawei are stepping into this battlefield in a similar manner, plus several emerging blockchain-focused startups who would also like to take a share, like Hyperchain and 9BaaS.

Among these players, its strong innovation and capabilities in digital financing blockchain solutions would probably constitute the primary character that differentiates JD Digital from others.