China UnionPay builds a trusted electronic certificate system based on blockchain

China UnionPay started the research and innovation of electronic invoices in 2011, studied a variety of technical architecture systems, and established a decentralized electronic invoice system by introducing advanced blockchain technology. Enterprises and users can join the blockchain network established by UnionPay through any node, thereby effectively reducing the cost of establishing financial "credit", solving the trust problem caused by the electronicization of certificates, and building the country's first trusted electronic certificate system based on blockchain, opening up the "last mile" of paperless Internet information age.

background

Electronic vouchers have become a trend. Electronic vouchers refer to the electronicization of various vouchers that verify business. Common electronic vouchers mainly come from people's daily consumption and payment, mainly including purchase orders, payment bills, insurance policies, corporate receipts, etc. In recent years, China's e-commerce has developed significantly and has penetrated into every financial link. Through the pilot application and promotion of the use of electronic vouchers, it will bring great convenience to the daily lives of both government and enterprises as well as consumers.

First, enterprises save a lot of costs and achieve more efficient voucher management. The government reduces regulatory costs, thereby freeing up more government resources to improve the level of government services. Second, ordinary consumers choose to use electronic vouchers, which reflects the green and low-carbon environmental protection concept. Third, through flexible and convenient mobile APP and other clients, it is very convenient for consumers to receive, store and use electronic vouchers. Electronic vouchers can be checked in real time, downloaded repeatedly and stored permanently. Consumers no longer have to worry about fake invoices, lost invoices, repairs and warranties, reimbursements and other matters in their daily lives. With the further development of informatization and financial concepts, it has become an inevitable trend for electronic vouchers to replace paper vouchers.

In 2005, my country promulgated the "Electronic Signature Law", which established the legal status of electronic signatures. In 2015, the State Administration of Taxation issued the "Internet + Taxation Action Plan", which clearly stated that "we should explore and promote the paperless invoice pilot, reduce the cost of invoice use and management, and gradually realize the transformation from paper invoices to electronic invoices". After that, the relevant competent authorities also successively issued a series of norms and standards involving management and application. These legal norms provide a good foundation for the realization of electronic vouchers.

Many companies have begun to provide consumers with electronic vouchers. For example, UnionPay has launched the POS electronic receipt business, hoping to eventually replace paper receipts and provide cardholders, merchants, acquiring institutions, and card issuers with a convenient way to obtain electronic receipts. Non-bank payment services such as WeChat push electronic payment vouchers and one-stop electronic invoice solutions to users after they complete payment. Banks push electronic bills to cardholders through WeChat, emails, and APPs, and provide users with services such as electronic receipts downloaded from online banking.

Problems and challenges. However, most vouchers are basically not separated from the paper carrier. Even if there are some "electronic" vouchers, their accounting treatment is not significantly different from manual accounting treatment. For example, bills for water, electricity, gas, telephone charges and broadband are still sent to users in the traditional paper bill mailing method. Merchants still retain the process of printing paper UnionPay POS purchase orders, and have not fully promoted and realized paperless. Although some e-commerce companies have begun to try to use electronic invoices, paper invoices still exist in large quantities.

Therefore, in general, the electronicization of vouchers is still in its infancy, and is outside the tide of informatization. Unlike paper vouchers, current electronic vouchers rely on the credibility of a third party and are based on a centralized architecture. Electronic vouchers stored in the system may be lost or tampered with. Trust issues restrict the promotion and development of corporate electronic vouchers. The existence of paper bills not only consumes a large amount of paper resources, but also occupies a lot of manpower, material resources and financial resources in their custody.

Trusted electronic credentials. Trusted electronic credentials refer to electronic credentials that cannot be maliciously tampered with during network transmission, local storage, query and download. The trusted electronic credential solution provides a way to verify the validity of electronic credentials, and solves the trust problem faced by electronic credentials by recording summaries and timestamps.

Blockchain technology provides a reliable way to build trust and reduces the cost of mutual trust. UnionPay uses blockchain as a supporting technology to build a trusted ecosystem. On this basis, it proposes a trusted electronic certificate solution to solve the following four problems caused by the electronicization of certificates: First, it can identify the authenticity of electronic certificates without worrying about malicious tampering or forgery. Second, the third-party hosting model can effectively reduce the cost of enterprise system construction and operation and maintenance, and the way to query and obtain electronic certificates from a credible third party provides enterprise users with a safe and reliable access channel. Third, solving the trust bottleneck faced by the data storage industry is conducive to business development. Fourth, by recording electronic certificate summaries and circulation records, electronic certificates can be traced, meeting the needs of business supervision and review.

In summary, the trusted electronic certificate based on blockchain solves the trust problem existing in the process of electronic certificate, truly guarantees the legitimate rights and interests of all parties involved in the business, and helps to completely realize paperless certificates.

System Implementation

Design idea. The alliance chain is used to store electronic certificate summaries, timestamps and other information, which are written into the alliance chain after node consensus, ensuring the openness, transparency, fairness, and security of the information, forming trust in the data among all participants, and quasi-real-time synchronization to each node. The business will not be affected by the risk of a single point service at a certain point. The hash value of the alliance chain data (the hash algorithm maps a binary value of any length to a smaller binary value of a fixed length. This small binary value is called a hash value. The hash value is a unique and extremely compact numerical representation of a piece of data.) is anchored to one or more public chains to prove the validity of its data and further enhance the transparency and immutability of the data.

Main functions. The first is cloud storage, which provides enterprises with safe and reliable electronic certificate hosting services and cardholders with a convenient and reliable way to query electronic certificates. After the enterprise submits the electronic certificate, UnionPay calculates the electronic certificate summary according to the agreed algorithm, creates a transaction in the blockchain, records the electronic certificate summary and other information, and returns an index that can retrieve the certificate summary. Cloud storage can not only reduce the storage cost of the enterprise, but the third-party hosting mechanism also enables cardholders to use electronic certificates with confidence, which is conducive to the promotion of electronic certificates for enterprises and reduces costs.

The second is cloud verification, which provides services and methods for enterprises and cardholders to verify electronic certificates. For enterprises using UnionPay's third-party escrow service, after obtaining the electronic certificate, they can parse the electronic certificate summary from the transaction information obtained from the blockchain for comparison to verify the authenticity of the electronic certificate, without worrying about the certificate in the escrow mode being maliciously tampered with. For enterprises that store electronic certificates locally, UnionPay can provide cardholders with a unified electronic certificate verification service. In subsequent development, it can also further cooperate with third-party evidence storage and notary agencies to conduct verification or certification services through different channels. In the early stage of the alliance chain, the reliability of the alliance chain data can be proved by anchoring to the public chain. When there are enough credible accounting nodes, there is no need to verify the ledger.

Technical features. First, the trusted public ledger uses blockchain technology as the underlying support. The multi-party data co-maintenance and common trust mechanism established by this technology has the characteristics of high reliability, traceability, error reduction and improved data quality. UnionPay has built a trusted electronic certificate platform based on blockchain and successfully completed the verification and implementation of the first phase of blockchain applications. At the same time, the scalability is fully considered in the platform implementation design, and the technical and functional basic support is established for the subsequent expansion of blockchain applications in the financial field. At present, the underlying layer of the verification prototype adopts the Onchain distributed ledger technology framework, which can quickly realize the construction of independent public chains, alliance chains, and private chains. After testing, the distributed ledger technology framework runs smoothly and can meet the needs of the pilot of innovative electronic certificate business.

Second, for massive data storage, relying on the UnionPay big data platform, non-relational databases are used to achieve the persistence of electronic credentials, as the electronic credential custody business has a large amount of data, grows rapidly, cannot be accurately predicted, requires simple key-value pairs to read and write frequently, and has very high requirements for the system's concurrency, throughput, and response delay, and hopes that the system can maintain strong consistency. Data reading and writing services are not limited to a single point, and service capabilities can grow linearly with the growth of servers, reaching a scale of dozens or even hundreds of servers. Writing does not decrease with the growth of data volume, and can meet the needs of massive electronic credential storage and query.

Application Scenario

The application scenarios of trusted electronic certificates can develop from electronic purchase orders to cover common financial business processes such as electronic contracts, electronic invoices, electronic insurance policies, specific financial certificates and certificates, and based on the basic blockchain network of trusted electronic certificates, it can be expanded to a larger extent to more pan-financial business processes.

Electronic purchase order. POS electronic purchase order is a pilot business launched by UnionPay to provide technical support for the subsequent gradual elimination of paper purchase orders and achieve complete paperless operation, as well as to provide cardholders, merchants, acquirers, and card issuers with convenient access to electronic purchase orders. It is to solve the serious waste of natural resources caused by the large-scale use of paper purchase orders and to open up the "last mile" of offline POS acquisition. Different from the traditional method of printing paper purchase orders, the cardholder signs on the electronic signature board after the transaction is completed. The signature and transaction information are sent to the UnionPay system by the POS terminal to generate an electronic purchase order, which is pushed to the cardholder and stored in the UnionPay electronic bill platform. Combined with the trusted electronic certificate solution, it can solve the worries of merchants and cardholders who do not save paper purchase orders. When the electronic purchase order needs to be consulted or provided in error handling, product returns, etc., the validity can be verified through the summary and timestamp of the POS electronic purchase order in the blockchain, effectively protecting the interests of the relevant parties.

Electronic contract. Electronic contract is a beneficial attempt by UnionPay to further ensure the validity of the contract and make up for the shortcomings of the existing electronic evidence storage system. By utilizing the real-time certification and joint maintenance characteristics of the alliance chain, and through the participation of multiple parties in the chain management and operation, it is ensured that the digital fingerprint information of the electronic contract, such as the signing time, signing subject, and file hash value, will be broadcast to the respective nodes of all members of the alliance chain. Once all information is stored, no party can tamper with it, which fully meets the requirements of judicial evidence storage of electronic evidence. When a contract dispute occurs and the contract needs to be called, the authenticity of the contract held by each participant can be verified through the summary in the blockchain, effectively protecting the interests of the relevant parties.

Electronic invoice. Electronic invoice is a new type of electronic invoice that is traceable and cannot be tampered with, which is proposed by UnionPay based on the premise of adapting to the existing invoice management methods and market operation rules. This business is based on a trusted electronic certificate solution, which can solve the problems of difficulty in anti-counterfeiting and reuse in the use of existing electronic invoices, and is another upgrade of invoices. Electronic invoices using blockchain technology have a single summary and timestamp, which can be used to verify authenticity and whether they have been used in actual use, and have stronger anti-counterfeiting performance than paper invoices. At the same time, the new electronic invoice also inherits the advantages of electronic invoices such as low cost, easy storage, query, and access.

UnionPay's electronic invoices using blockchain technology also meet the development needs of the transition period of business tax to value-added tax. It is an electronic invoice system that truly possesses the credible elements of "paperless", is low-cost, secure, and very convenient to use and maintain, thus truly releasing the huge potential of electronic invoices.

Electronic insurance policies. Currently, many insurance companies are actively developing electronic insurance policy services. However, due to the lack of trust in the electronic insurance policies provided by insurance companies, insurance companies still need to deliver various paper insurance policies to the insured. The electronicization process is slow and the electronicization of insurance policies has not been truly realized. In response to the above problems, UnionPay has carried out pilot cooperation with insurance and other institutions with the help of trusted electronic certificate solutions, aiming to replace traditional paper insurance policies, establish an electronic platform for insurers and insureds or policyholders, and realize paperless and information-based processing of insurance documents. The pilot business effectively reduced the credit cost of electronic insurance policies and made electronic insurance policy custody possible, thereby effectively promoting the electronicization process of insurance policies and providing reliable and trustworthy electronic insurance policy custody, query and verification services for insureds. The trusted electronic certificate solution uses blockchain to prove that electronic insurance policies have not been tampered with or entrusted, providing technical support for the popularization of electronic insurance policies and breaking down trust barriers. While reducing the electronicization cost of insurance institutions' insurance policies, it also avoids problems such as loss of certificates and inability to verify due to custody, which is conducive to the promotion of paperless insurance policies.

Electronic financial certificates. In the financial activities of enterprises and individuals, different types of business certificates and certificates from financial institutions are involved. Through the record support of the trusted electronic certificate system, the business costs of financial institutions are reduced, making it possible for certificates such as contracts and receipts to be completely separated from paper carriers. At the same time, it also reduces the cost of personal preservation of business certificates. There is no need to worry about the risks caused by the loss of certificates. The authenticity and non-tamperability of certificates and certificates can be established among all parties, reducing the cost of financial "credit". In some scenarios involving financial business certificates, trusted electronic certificates are easier to identify than traditional paper certificates, which can save judicial costs.

in conclusion

With the development of emerging technologies and the popularization of smart mobile terminals, online and offline are fully integrated. In the context of "Internet +", "paperless", "mobile", "automated" and "intelligent" have become important trends in the development of bills. Faced with many challenges that need to be urgently solved in the process of electronic bills, such as industry barriers, blockchain technology undoubtedly provides new ideas and opportunities for the development of electronic bills.

In the future, UnionPay will continue to explore and improve the blockchain-based trusted electronic certificate system in practice, and constantly enrich its application scenarios. Through the combination of blockchain technology and various technologies such as biometrics, trusted control, and cloud computing, it will promote the development of electronic certificates, break the information islands in the financial field, bring about changes in financial infrastructure, create opportunities for cross-field cooperation, improve resource allocation efficiency, help industrial transformation and upgrading, and promote business innovation. UnionPay will also actively cooperate with banks, insurance companies, and commercial enterprises to jointly develop a blockchain trusted electronic certificate system, form a good ecology jointly participated in and maintained by all parties, and widely expand it into a trusted ecosystem.

Original title: "The "paperless" era has begun - trusted electronic certificate application based on blockchain"
Author: Le Xu, Zhou Yuhua, Jinzhi, Zhang Limin The author works at China UnionPay Electronic Payment Research Institute and National Engineering Laboratory for Electronic Commerce and Electronic Payment