JD.com (NASDAQ: JD) the second e-commerce player in China, recently launched the open platform JD Blockchain, a blockchain-as-a-service platform that helps companies to develop their own blockchain-based applications. A blockchain is a decentralized ledger of data that is distributed in various positions. This data is protected in encrypted blocks, accessed via peer-to-peer networks. The first blockchain was a distributed ledger for bitcoin transactions, but technology can also significantly improve the supply chain and financial records with easily traceable and tamper-proof transactions.
China Pacific Insurance one of China's largest listed insurers, is JD's first partner to use its new platform. The insurer will use JD's blockchain infrastructure to "implement a traceable system for electronic invoices" by applying "unique blockchain IDs to each document." JD states that the app will help the insurer improve its overall efficiency by "streamlining the accounting process".
Tracing JD blockchain efforts
This is not JD's first blockchain initiative. Last year it launched a blockchain tracking platform that helps customers track the origins of food products. Subsequently, JD implemented blockchain tracing for over 400 brands and 11,000 SKUs (inventory maintenance units) on its market.
This March, an Australian beef producer used JD blockchain tracking to track beef imports and, in June, JD & # 39; s fintech affiliates JD La Finanza announced that it will issue asset-backed securities on a blockchain network through partnerships with Xingye Bank and Huatai Securities.
Launching a blockchain-as-a-service platform, JD could generate a new cloud-based revenue stream by allowing companies to create their own blockchain-based applications. In addition, it could increase the viscosity of JD's e-commerce ecosystem as customers become more dependent on JD's service offerings. This growth could add to diversify JD's revenue outside of its core online market business, which faces intense competition from (NYSE: BABA) Tmall .
Understanding logistical applications of the blockchain
Last year the head of food safety Walmart Frank Yiannas showed that the condition and origin of any food product through the network of the dealer could be traced in two seconds via blockchain – a process that would take about a week with older tracking methods.
That's why it's smart for JD to use blockchain tracking on food sold in its market. China has been plagued by food safety issues, and the implementation of blockchain-branded food offers customers a higher level of assurance, which integrates JD's corporate mantra "authentic products delivered today."
John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. Teresa Kersten is a LinkedIn employee and is a board member of The Motley Fool. LinkedIn is owned by Microsoft. Leo Sun owns shares in Amazon, Baidu, JD.com and Tencent Holdings. Motley Fool owns shares and recommends Amazon, Baidu, JD.com and Tencent Holdings. The Motley Fool has a disclosure policy.