JD.com Subsidiary Rolling Out Privacy Tech From Blockchain Firm ARPA

China's second-largest online retailer, JD.com, is teaming with blockchain privacy platform ARPA to protect the financial data of major clients.

Specifically, the data platform for the firm's subsidiary JD Digits (formerly JD Finance) will integrate with ARPA's blockchain-based network, which uses technology known as secure multi-party computation (sMPC). JD Digits was formed to help other companies modernize with cutting-edge technologies like AI and blockchain.

Under the partnership, the sMPC technology will be utilized "at scale" to offer a range of privacy features for financial companies working with JD Digits, ARPA said in an announcement Monday.

“We believe privacy is the cornerstone of finance and business. With ARPA privacy-preserving computation, JD’s institutional clients will have peace of mind that their data is kept encrypted all the way during the analysis,” said Cao Yi, director of new media at JD Digits.

See also: The Problem With Money Is ‘Too Much Privacy,’ Says Ex-US Treasury Secretary Summers

“One of the use cases for sMPC is the Value at Risk model (VaR). Financial institutions use the VaR model to measure the overall risk exposure in stocks and bonds," Yi explained. "They want to keep the data of their positions private, the model parameters of fintech companies also need to be kept hidden."

The privacy tech was borne out of a paper written in 1982 by Yao C. and enables multiple parties to undergo an exchange of data without revealing any definitive information.

An example use case for sMPC is known as "The Millionaire Problem," first theorized by Yao. It details two individuals wanting to find out which one is more wealthy without revealing their net worth to each other.

sMPC technology provides data protection in such a case and has been touted as a means of moving past single private keys for cryptocurrencies.

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“Privacy-preserving computation is gradually being adopted and applied to financial and insurance risk control, OTC price consensus, asset management, digital marketing, and other fields,” said Felix Xu, co-founder and CEO of ARPA.

JD.com previously launched a blockchain-as-a-service platform alongside its first app – one that digitally tracked corporate invoices for one of the largest publicly traded insurers in China, Pacific Insurance, back in August 2018.