Blockchain White Paper

（2018）

China Academy of Information and Communication Technology

Trusted Blockchain Initiatives

December，2018
 COPYRIGHT STATEMENT

The copyright of this white paper is owned by CAICT

(China Academy of Information and Communication

Technology) and Trusted Blockchain Initiatives protected by

law. If the text or viewpoints of this white paper are

reproduced, excerpted or used in other means, the source

shall be marked: CAICT (China Academy of Information and

Communication Technology) and Trusted Blockchain

Initiatives. If anyone violates the above statement, this Court

will pursue his legal liabilities.

 Foreword

Blockchain, with its unique trust-building mechanism, has become an

important direction for the deep integration of finance and technology. With
the support of policy, technology and market, Blockchain technology is
promoting the integration of the real economy, which is providing help for
the high-quality development. Therefore, it is of great significance for China
to explore a new model of sharing economy, build a digital economy
industrial ecology, and improve the quality of governance and public service.

As an integrated innovation of peer-to-peer networks, cryptography,

consensus mechanisms, and smart contracts, Blockchain provides a trusted
channel for information and value transfer in untrusted networks. At present,
the application of Blockchain has been accelerating, and key technologies
such as cross-chain, privacy protection, and security supervision are
becoming research hot spots. However, while the Blockchain technology is
still at the stage of social experiment, there is no consensus on the concept,
structure, technical characteristics, development route, governance and
supervision of the Blockchain.

To promote the deep integration of Blockchain technology and the real

economy, as well as to form development consensus, China Academy of
Information and Communications Technology and Trusted Blockchain
Initiatives co-organized the "Blockchain White Paper"(2018). This white
paper deeply interprets the concept of Blockchain, proposes a Blockchain
technology architecture, analyses the key technology development routes,
the latest situation and development opportunities of current Blockchain in
terms of policies, industries, technologies and standards. In the end, the
white paper discusses the challenges with the development of Blockchain
and puts forward corresponding policy recommendations.
 catalogue
1 The Concept and Characteristics of Blockchain ............................................................................1

1.1 Concept of Blockchain .................................................................................................................1

1.2 Characteristics of Blockchain .......................................................................................................2

1.3 Scenarios applicable to blockchain ...........................................................................................3

2 The key technology architecture and development trend of blockchain ............................5

2.1 Blockchain technical architecture ..............................................................................................5

2.1.1 Infrastructure ............................................................................................................................6

2.1.2 Utility ...........................................................................................................................................6

2.1.3 Ledger .........................................................................................................................................8

2.1.4 Consensus .................................................................................................................................9

2.1.5 Smart Contract ...................................................................................................................... 12

2.1.6 System Management .......................................................................................................... 14

2.1.7 Interface .................................................................................................................................. 15

2.1.8 Application ............................................................................................................................. 15

2.1.9 Operation and Maintenance ............................................................................................ 17

2.2 Blockchain technology development trend ........................................................................ 18

2.2.1 From prospective of architecture, the integration of Public Blockchain and

Consortium Blockchain evolution is continuing ................................................................... 18

2.2.2 From prospective of deployment, blockchain-as-a-service are accelerating

applications to land ....................................................................................................................... 19

2.2.3 From performance prospective, the demand for Cross-chain and high

performance is highlighted ......................................................................................................... 20

2.2.4 From the consensus prospective, the consensus mechanism evolved from a

single to a mixed approach......................................................................................................... 23

1
 2.2.5 From smart contracts prospective, pluggability, usability and security have

become the focus of blockchain development. ................................................................... 24

3 The Current Situation of Blockchain .............................................................................................. 25

3.1 Various countries are competing to lay out Blockchain and occupy the

commanding height in industry. .................................................................................................... 25

3.2 The Integration of Blockchain and Real Economy Proves to Be the Theme. ........... 27

3.3 The Innovation of Blockchain Technology Is Becoming More and More Dynamic.

.................................................................................................................................................................. 32

3.4 Speeding Up to Establish Blockchain Standard System .................................................. 37

4 Challenges Blockchain are facing ................................................................................................... 39

4.1 Hidden dangers at the mature level of Blockchain technology ................................... 39

4.2 The application scenario model is unclear. ......................................................................... 40

4.3 Industry professionals are relatively scarce. ........................................................................ 40

4.4 Relevant laws and regulations need to be improved ...................................................... 41

5 Some Measures and Suggestions for Development ................................................................ 42

5.1 Guide the public to learn Blockchain objectively and rationally .................................. 42

5.2 Strengthen the research on core technology ..................................................................... 42

5.3 Promote deep integration with the real economy ........................................................... 43

5.4 Improve the policy environment of Blockchain development ...................................... 43

2
1 The Concept and Characteristics of Blockchain
1.1 Concept of Blockchain

A Blockchain is a decentralized, distributed and public digital ledger,

which is jointly maintained by multiple parties, using cryptography to
ensure the security of transmission and access, to achieve data storage
consistency, data tamper-proof, and prevention of repudiation. It is also
known as Distributed Ledger Technology (DLT). A typical blockchain
stores data in the units of blocks. Each block includes the cryptographic
hash of the prior block in the blockchain for linking the two adjacent blocks.
The linkages of blocks are “chains”. Blockchain, as the new computing
paradigm and collaboration model in an untrusted competitive
environment, is changing the application scenarios and operating rules of
many industries with its unique trust-building mechanism. It is one of the
indispensable technologies for building a new trust system and developing
digital economy in the future.

In a typical blockchain system, each party shares information and reaches

consensus in accordance with rules agreed in advance. In order to prevent
the consensus information from being tampered with, the system stores
data in units of blocks which form a cryptographical chain of data structure
in chronological order, and the record nodes are selected by the consensus
mechanism to determine the data of the latest block and other nodes
participate in the verification, storage and maintenance of the latest data
block. Once the data is confirmed, it is difficult to delete and modify, and
only the authorized query operation can be performed. Depending on
whether the system has a node admission mechanism/control, blockchains
can be classified into Permissioned Blockchains and Permission-less
Blockchains. The joining and exiting of the nodes in the permissioned
blockchain require the permission of the blockchain system. Depending on
whether the entities with control rights are centralized or not, Permissioned
2 Blockchain White Paper（2018）

blockchains can be divided into the Consortium Blockchain 1 and the

Private Blockchain2. The Permission-less Blockchain, also be called as the
Public Blockchain3, is completely open, which nodes can join and exit at
any time.

1.2 Characteristics of Blockchain

Compared with the traditional distributed database, the blockchain reflects

the following characteristics: First, from double-entry accounting to
distributed accounting. In traditional information system, each accountant
records separately, and There are multiple different ledgers at each
reconciliation. The blockchain breaks the original double-entry accounting
and becomes a distributed account book for “whole network to share”,
which the parties involved in the bookkeeping prevent data tampering and
ensure the consistency of data. Through the synchronous coordination
mechanism, avoiding the complicated multi-party reconciliation process.
Second, from “insertion, deletion, selection and update” to “insertion and
selection”. Traditional databases have four classic operations of insert,
delete, update, and select. From the prospective of the whole network book,
the blockchain technology is equivalent to the databases of giving up
deletion and update options4, leaving only two manipulation, insertion and
selection, through the "block-chain" structure of blocks and linked lists,
and corresponding timestamps to consolidate the voucher forming trusted
data sets that are interlocking and difficult to tamper with. Third, from
unilateral maintenance to multi-lateral maintenance. For each entity, the

1
Consortium Blockchain: According to a certain feature to select the nodes that can participate in and
make transaction, and the consensus process is controlled by the pre-selected node blockchain.

2
Private Blockchain: Write permissions are in the hands of an organization, and blockchain access
permissions may be restricted.

3
Public Blockchain: Anyone can read the blockchain information, send the transaction for confirmation,
participate in the consensus process. It is the actual decentralized blockchain, and the bitcoin blockchain is
the best representative of the public blockchain.

4
Users can delete or update local data, but it does not affect the data consistency after the network
consensus.
3 Blockchain White Paper（2018）

traditional database is a single-party maintained information system,

whether it is a distributed architect or a centralized architect, which has a
high degree of control over data records. The blockchain introduces a
distributed ledger, which is a distributed information system that is jointly
maintained by multiple parties with no a single point of failure. Data
writing and synchronization are not limited to one subject and are further
required to be verified by multiple parties for reaching consensus to decide
which data can be written. Fourth, from a plug-in contract to a built-in
contract. Traditionally, financial capital flow and business information
flow are two distinct business processes. Contracts signed by business
cooperation, after manual review and results verification, can notify the
finances to make a payment and form a corresponding capital flow. The
emergence of smart contracts, based on arranged rules, is performed
independently through code execution, collaborative writing, and a "built-
in contract" that integrates information flow and capital flow through
algorithmic code.

1.3 Scenarios applicable to blockchain

As an emerging technology, blockchain has the potential to be applied in

many areas. However, the blockchain is not a panacea. It is technically
decentralized and difficult to tamper with, making it with a high applicable
value within a limited number of scenarios. The applicable scenarios can
be summarized as “new database, multi-service entity, mutual trust, strong
business related".

Firstly, application scenario from the needs of the database. The blockchain
is essentially a new type of time-stamped database. From the perspective
of reaching the organization's requirement of real, effective, unforgeable,
and tamper-proof data, they have a new starting point and new demands
compared to traditional databases. Secondly, it needs to be a cross-
subject, multi-party application scenario. The maintenance of the books
by multiple entities is often caused by the fact that the data is not shared,
and the business logic is not uniform, resulting in the phenomenon of
4 Blockchain White Paper（2018）

“Reconciliation Failure”. In contrast, each entity in the blockchain can

have a complete copy of the book, ensuring data consistency between
multiple entities through an instant clearing mode, avoiding complex
reconciliation processes. Again, application scenarios are to build math-
based trust in an untrusted environment. The blockchain guarantees the
system's data trust (cryptographic algorithm, digital signature, timestamp),
reliable results (smart contract, formula algorithm) and historical trust
(chain structure, timestamp) at the technical level, so the blockchain
provides an "intermediate machine" that is particularly useful for industry
applications where the collaborators are not trusted, have inconsistent
benefit, or lack the involvement of a third-party authority. Finally,
scenarios can be classified into the cases of whether the system control
rights and transaction information are open or not. The public
blockchain allows the joining of any node, and it does not restrict the
dissemination of information, and the information is disclosed to the whole
system; the consortium blockchain only allows the accredited institutions
to participate in the consensus, and the transaction information and
consensus mechanism is limited to a certain extent; in contrast, the private
blockchain has the narrowest scope, only applicable to a limited
organization.
5 Blockchain White Paper（2018）

Figure 1. Scenarios are applicable for blockchain

2 The key technology architecture and development trend

of blockchain
2.1 Blockchain technical architecture

Different blockchains have different implementations, but there is a

general blockchain architecture that is widely acknowledged. This white
paper suggests a classification of nine dimensions. They are layers of
Infrastructure, Utility, Ledger, Consensus, Smart Contract, System
Management, Interface, Application and Operation, and Maintenance.
6 Blockchain White Paper（2018）

Figure 2. Blockchain Technical Architecture, Source: CAICT, August

2018

2.1.1 Infrastructure

The infrastructure layer provides physical resources and drivers for the
upper layers and is the base support for the blockchain system. The
infrastructure layer provides the operating environment and hardware such
as Physical Machine, Cloud, etc. required for the blockchain system to
function properly. It provides network resources (Network Cards, Switches,
Routers, etc.), storage resources (Hard Disks and Cloud Storage, etc.) and
computing resources (CPU, GPU, ASIC, etc.) for upper layers.

2.1.2 Utility

The utility layer enables the recording, verification and dissemination of

information in the network of blockchain systems. In the utility layer, the
blockchain is a distributed system based on the transmission mechanism,
verification mechanism and storage mechanism. The entire network has no
centralized hardware or management organization, and any node has the
7 Blockchain White Paper（2018）

opportunity to participate in the records and verification of the general

ledger by broadcasting the calculation results to other nodes, and the
damage or exit of any node will not affect the operation of the entire system.
In particular, it mainly includes five types of modules: network discovery,
data transmission and reception, password library, data storage, and
message notification.

1) Network discovery
The blockchain system consists of a number of nodes connected by a
network. Especially in public blockchain systems, the number of nodes
tends to be very large. Each node needs to discover neighbor nodes through
the network discovery protocol and establish links with neighbor nodes.
For the consortium blockchain, the network discovery protocol also needs
to verify the identity of the node to prevent various network attacks.

2) Data transmission and reception

After the node is connected to the neighbor node through the network
communication protocol, and the data transceiver module completes data
exchange with other nodes. Transaction broadcasts, message consensus,
and data synchronization are all performed by this module. According to
the architecture of different blockchains, the design of the data transceiver
needs to consider factors such as the number of nodes and cryptographic
algorithms.

3) Password library
Multiple links in the blockchain use cryptographic algorithms. The
cryptographic library provides basic cryptographic algorithm supporting
the upper layer components, including commonly used encoding
algorithms, hash algorithms, signature algorithms, privacy protection
algorithms, etc. Furthermore, the password library also covers functions
such as the maintenance and storage of private keys.

4) Data storage
Depending on the data type and system architecture design, the data in the
blockchain system uses different data storage modes. Storage modes
8 Blockchain White Paper（2018）

include relational databases (such as MySQL) and non-relational databases

(such as LevelDB). Usually, the data that needs to be saved includes public
data (for example, transaction data, transaction data, status data, etc.) and
local private data, etc.

5) Message notification
The message notification module provides a message notification service
between different components in the blockchain and between different
nodes. After the transaction is successful, the client typically needs to track
the records during the execution of the transaction and obtain the results of
the execution of the transaction. The message notification module can
complete the generation, distribution, storage, and other functions of the
message to meet the demand of the blockchain system.

2.1.3 Ledger

The ledger layer is responsible for the information storage of the

blockchain system, including collecting transaction data and generating
data blocks for validity of the local data and passing the checked block to
the blockchain. The ledger layer embeds the hash of the previous block
into the next block to form a blockchain data structure, which ensures
data integrity and authenticity. This is the source of tamper resistance and
traceability of blockchain systems. A typical blockchain system design
uses a block-chain data structure stored in chronological order.

There are two ways of recording data at the ledger layer, which are based
on assets and based on accounts respectively. In the asset-based model,
the asset is the core for model establishment, and then the ownership of
the asset is recorded, that is, ownership is a field of the asset. In the
account-based model, an account is created as an object of assets and
transactions, and an asset is a field under the account. In contrast, an
account-based data model makes it easier to record and query account-
related information, and an asset-based data model can better adapt to the
concurrent environment. In order to obtain high concurrent processing
performance and timely query status information of the account, multiple
9 Blockchain White Paper（2018）

blockchain platforms are developing towards a hybrid mode of the two

data models.

Table 1： Two models’ comparison in the Ledger Layer

Asset-based Account-based

Modeling Asset Account

Objects

Data Record Asset Ownership Account Operation

System Center Status（Transaction） Event （Operation）

Computing Client Node

Concentration

Dependency Easy to estimate dependency Difficult to estimate

Judgement dependency

Parallel Easy Hard

Account Hard to manage account Easy to manage account

Management metadata metadata

Suitable Query Easy to fetch transaction status Easy to fetch account balance

Scenarios

Client Complex Easy

Examples Bitcoin, R3 Corda Ethereum, Hyper ledger

Fabric

2.1.4 Consensus

The consensus layer is responsible for coordinating and ensuring the

10 Blockchain White Paper（2018）

consistency of data records of all nodes in the whole network. The data in
the blockchain system is stored independently by all nodes. With the
coordination of the consensus mechanism, the consensus layer
synchronizes the books of each node, thereby implementing functions such
as node election, data consistency verification and data synchronization
control. Data synchronization and consistency coordination make the
blockchain system with feature of transparent and data-sharing.

Table 2: Two types of Consensus Mechanism Comparison

Type I Type II
Write order Write first and consent later Consent first and write later
Representat PoW、PoS、DPoS PBFT 、BFT etc.
ive
algorithms5
Consensus Consensus relies on probability Consensus after confirmation
Process Confirmation guaranteed by
engineering structure
Complexity High Computing Complexity High Networking Complexity
Arbitration If there are multiple record Quorum vote to reach
Mechanism nodes after making consensus, agreement via P2P broadcast
forks will occur, and the longest communication between nodes
chain will be kept.
Fork Yes No
Security No more than half of sum of Number of malicious nodes is not
Threshold malicious nodes equity more than one third of total
node number
Node The node number is free to alter, The performance decline as
Number the more node number is, the node number increase and the
more stable system is. number of nodes is not free to alter.
Application Mainly used in Used in Permission Blockchain

5
Consensus algorithm representatives include: PoW (Proof of Work), PoS (Proof of Stake), DPoS
(Delegated Proof of Stake), PBFT (Practical Byzantine Fault Tolerance), BFT ( Byzantine Fault Tolerance).
11 Blockchain White Paper（2018）

scenarios Premissionless Blockchain

There are two types of current in operating consensus mechanisms in the

blockchain, which are determined according to the order in which the data
is written, as shown in the table 2. From the perspective of the requirements
of business applications, the implementation of consensus algorithms
should consider the application environment, performance and other
requests of application. In general, the permissioned blockchain uses a
consensus mechanism for node voting to improve system performance at
the cost of lowing security level. The Permission-less blockchain adopts a
consensus mechanism based on Proof of Workload and Proof of Stake and
other evidences, which mainly emphasizes system security, but its
performance is poor. In order to encourage the participation of all nodes
and maintain the safe operation of the blockchain system, the Permission-
less blockchain adopts the method of issuing tokens as the compensation
and incentive mechanism of the participants, that is, through the means of
economical balance, to prevent tampering with the contents of the general
ledger. Therefore, according to the operating environment and trust
hierarchy, selecting the applicable consensus mechanism is one of the most
important factors that should be considered when the blockchain
application landing.

Table 3: Comparison of Consensus Algorithms

Characteristic PoW PoS DPoS PBFT VRF

Node No No No Require Require

Management permission permission permission permission permission
required required required
Transaction High Low（in Low（in Low (in Low（in
Latency (in minutes) seconds） seconds） millisecond） millisecond）
Throughput Low High High High High
Energy-saving No Yes Yes Yes Yes
12 Blockchain White Paper（2018）

Security Malicious Malicious Malicious The number The number

Boundary computin equity is no equity is no of malicious of malicious
g power is more than more than nodes is no nodes is no
no more 1/2. 1/2. more than more than
than 1/2. 1/3. 1/3.
Representative Bitcoin, Peercoin Bitshare Fabric（Rev Algorand
application Ethereum 0.6）
Scalability Well Well Well Poor Poor

2.1.5 Smart Contract

The smart contract layer is responsible for compiling, deploying,

implementing the business logic of the blockchain system with coding,
achieving the conditional triggering and the automated execution of the
established rules, to minimize manual intervention. Most of the operating
objects of smart contracts are digital assets. The smart contract is hard to
modify after data is on the blockchain and its trigger conditions are rigid,
therefore, the applications of smart contracts express characteristics of both
high value and high risk. How to avoid risks and exert values are obstacles
for the wide application of smart contracts.

Smart contracts can be divided into two categories of whether Turing

Complete 6 is fulfilled, that is, Turing complete and Turing incomplete.
Typical reasons for affecting Turing completeness achievement are
including: loop or recursion being constrained, incapable arrays
implementation or containing complex data structures. Smart contracts

6
Turing completeness: In computability theory, a system of data-manipulation rules (such as a computer’s

instruction set, a programming language, or a cellular automation) is said to be Turing complete or

computationally universal if it can be used to simulate any Turing machine. (Gannon, Paul, Colossus:

Bletchley Park's Greatest Secret, London: Atlantic Books, 2006-01-10 [2006], ISBN 978-184-354-330-5)
13 Blockchain White Paper（2018）

with Turing complete have considerable adaptability and can program for
more complex business operations than ones not, but it is possible to run
into an infinite loop. However, Smart contracts with Turing incomplete are
simple, more efficient, and secure despite of incapable of operating
complex business logic.

Table 4: Smart Contract Characteristics of some Blockchain System

Blockchain platform Turing Developing

Completeness language
Bitcoin Incompleteness Bitcoin Script
Ethereum Completeness Solidity
EOS Completeness C++
Hyperledger Fabric Completeness Go
Hyperledger Completeness Python
Sawtooth
R3 Corda Completeness Kotlin/Java

Currently, the progress of smart contracts landing is still at its early stage,
and smart contracts have become the “hardest hit area” for blockchain
security issue. from the security incidents caused by previous smart
contract vulnerabilities, there are many security vulnerabilities in contracts
writing, which poses great challenges to maintain security. There are
several approaches operated currently for improving the security of smart
contracts: One is the Formal Verification. The rigorous mathematical proof
is used to ensure that the logic expressed by the contract code conforms to
the intent. This law is rigorously logical, but it is difficult to operate.
Generally, it is necessary to entrust a third-party professional organization
to conduct audits. Another method is the smart contract encryption. Smart
contracts cannot be read in plain text by third parties, thereby reducing
smart contracts from being attacked due to logical security breaches. This
method is low-cost but not available for open source applications. Another
method is to strictly regulate the syntax of the contract language. The
14 Blockchain White Paper（2018）

standardization of smart contract coding, such as the summaries of

excellent smart contracts model and the smart contract templates standard
development, are aiming to improve the quality and security of smart
contracts.

2.1.6 System Management

The system management layer is responsible for managing other parts from
the blockchain architecture. It includes two types of functions: rights
management and node management. Rights management is a key part of
blockchain technology, especially for Permissioned chains that have more
requests from data access. Rights management can be achieved in the
following ways: 1) submitting the permission list to the ledger layer and
implementing distributed permission control; 2) using access control list to
implement access control; 3) Using permission controls, such as
ratings/sub-regions. With rights management, you can render certain data
and function calls by corresponding operator.

The core of node management is the node identification, which are usually
implemented using the following technologies: 1) CA 7 authentication:
Centralized issuing of CA certificates to applications in the system, and
identity and authority management are authenticated and confirmed by
these certificates. 2) PKI8 authentication: The identity is confirmed by the
PKI address. 3) Third-party authentication: The identity is confirmed by
the authentication information provided by the third party. Node
management is variated due to the different application scenarios of the
blockchains. Business extensions can interact with authentication and
rights management.

7
CA: Certificate Authority, also known as the E-Commerce Certification Authority, is the authority
responsible for issuing and managing digital certificates. As a trusted third party in e-commerce
transactions, it assumes the public key in the public key system. The responsibility for the legality test.

8
PKI: Public Key Infrastructure is a key management platform that adheres to established standards. It
provides cryptographic services such as encryption and digital signatures and the necessary key and
certificate management systems for all network applications.
15 Blockchain White Paper（2018）

2.1.7 Interface

The interface layer is mainly used to complete the encapsulation of

function modules and provide a simple call for the application layer. The
application layer communicates with other nodes by calling the RPC
interface, and accesses and writes the local ledger data by calling the SDK
toolkit. At the same time, RPC and SDK should abide by the following
rules: First, it is fully functional and can make complete transactions and
maintain distributed ledgers. It has a comprehensive intervention strategy
and authority management mechanism. Second, it is portable and can be
used in many applications in a variety of environments, not just designed
for certain software or hardware platforms. The third is it has scalability
and compatibility. The design should at most forward and backward
compatible and consider its scalability. Fourth, it is easy to use. The
structured design and good naming methods are developers-friendly.
Common implementation techniques include calling control and objects
serialization.

2.1.8 Application

The application layer is the part that is finally presented to the user. The
main function is to call the smart contract layer. The interface adapts to
various application scenarios of blockchain to provide various services and
applications for users. Since blockchains have data validation attribute and
characteristics of value network, now, much of the work from applications
can be resolved by the underlying blockchain platform. In the process of
developing blockchain applications, the preliminary work must be very
cautious. Proper selection from the decentralized public blockchain,
efficient consortium blockchain, and secure private blockchain as the
underlying architecture ensure the core algorithm has no fatal errors during
the design phase. Therefore, proper packaging of the underlying
blockchain technology and providing a one-stop blockchain development
platform will be an inevitable trend in the development of the application
layer. At the same time, the maturity of inter-chain technology allows the
16 Blockchain White Paper（2018）

application layer to add flexibility when choosing a system architecture.

Depending on the implementation and the purpose of the application, the

current application based on blockchain technology can be divided into
three types of scenarios, as shown in Table 5: First, the value transfer.
Digital assets transfer between different accounts, such as cross-border
payment. Second, deposit certificate, i.e., information records on the
blockchain with no asset transfer, such as electronic contracts. Third,
authorization management. It uses smart contracts to control data access,
such as data sharing. In addition, there are mixed-typed of scenarios as
application requirements continue to escalate.

Table 5: Blockchain Application Scenarios Classification

Type Gov Finance Ind Hea La Cop
ernance ustry lthcare w yright
Value Digital bill; Energy Health
transfer Cross-border deal insurance
settlements;
Account
receivable;
Supply Chain
Finance
Receipt Electr Cash Secu Elect Nota Copy
onic serial number; rity ronic ry; right
invoices; Traceabil traceabilit Medical Digital verificatio
Digital ity; y Record; Receipt; n;
license; Supply Chain Medicine Online
Targeted Finance Trackabili Arbitratio
poverty ty n
alleviation
Authoriz Gover Credit Healt Copy
ation nment data Investigation h data right
Manage sharing sharing Managem
17 Blockchain White Paper（2018）

ment ent;

2.1.9 Operation and Maintenance

The operation and maintenance layer are responsible for the daily operation
and maintenance of the blockchain system, including the log library,
monitoring library, management library, and extension library. In the
unified architecture, the mainstream platforms are different according to
their own demand and positioning. The choices of storage modules, data
models, data structures, coding languages, and sandbox environments in
the blockchain system are also different (see Table 6). These variations
bring great challenges to operation and maintenance of blockchain
platforms.

Table 6: Blockchain technology system architectures comparison

Platform Hyperledger
Layer Bitcoin Ethereum R3 Corda
difference Fabric
Bitcoin Dapp/ Enterprise Class CorDapp
Application Ether Distributed
Ledger
Development Script Solidity/ Go/Java Java/Kotlin
Smart Language Serpent
Contract Sandbox EVM Docker JVM
environment
Consensus PoW PoW/ PBFT/SBFT/Ka Raft
（ Data PoS fka
Access）

Data Merkle Merkle Merkle Bucket No Block

Structure Tree/Blo Patricia Tree/ Tree/ Block- connection
Ledger
ck-chain Block-chain chain list Transaction
list list
18 Blockchain White Paper（2018）

Data Asset- Account- Account-based Asset-based

Modeling based based
Block Docume LevelDB LevelDB/Couch Relational
storage nt DB Database
storage

Utility TCP ， TCP，P2P HTTP2 AMQP(TLS)

Layer P2P P2P P2P

2.2 Blockchain technology development trend

2.2.1 From prospective of architecture, the integration of Public

Blockchain and Consortium Blockchain evolution is continuing

The consortium blockchain is an important application to land blockchain

technology at the current stage, but the consortium blockchain does not
have the scalability, anonymity and community incentives that the public
blockchain has. As the application scenarios increase their complexity, the
architectural models of the public blockchain and the consortium
blockchain begin to merge, and the hybrid architecture model in which the
public blockchain is offered to the public at the bottom level and the
consortium blockchain is offered to the enterprise at the upper level to form
a technology ecosystem with integration of wallets and exchange markets.
For example, when selecting a verification node in the public blockchain,
there are problems such as high uncertainty under PoS, significant resource
consumption under PoW, and incapability of supporting a large number of
nodes to make consensus under PBFT. The Algorand algorithm9 selects a
small number of nodes from a large number of nodes by cryptography, and
then use the PBFT algorithm to reach a consensus among a small number
of nodes, provides a possibility for a hybrid architecture of the public
blockchain and consortium blockchain.

9
The Algorand consensus algorithm was proposed by the Turing Award winner, Professor Silvio Micali.
19 Blockchain White Paper（2018）

2.2.2 From prospective of deployment, blockchain-as-a-service

are accelerating applications to land

The combination of blockchain and cloud computing will effectively

reduce the cost of blockchain deployment. On the one hand, pre-configured
networks, common distributed ledger architecture, similar identity
management, distributed bottom business monitoring system logic, similar
node connection logic, etc. are modularized and abstracted as the
blockchain services to support the upper application layer with different
clients. Quick construction of blockchain services with cloud computing
can conduct quick verification of concepts and model feasibility. On the
other hand, cloud computing charged by usage make use of fundamental
infrastructure services or adjust to meet the actual requirement to accelerate
application development process, reduce deployment costs, and meet the
service request of start-ups, academic institutions, open source
communities, alliances and financial institutions in the future blockchain
ecosystem.

Based on the three types of services currently provided by cloud computing

(IaaS, PaaS, SaaS), blockchain combined with cloud computing to develop
BaaS (Blockchain as a Service). BaaS service providers aim to provide
users with better blockchain services, so BaaS service providers pay more
attention to the vertical industries connection than the blockchain
infrastructure technology providers to deliver reasonable smart contract
templates, suitable account system management and resource management
tools and customized data analysis and reporting systems.
20 Blockchain White Paper（2018）

Figure 3. BaaS Architecture, Source: CAICT, August 2018

At this stage, BaaS service providers support the background data storage,
application data analysis, mobile terminals, application launching, and
information identification. Relying on the cloud computing platform,
blockchain developers can focus on applying blockchain technology to
different business scenarios, helping users build blockchain services with
low entry barriers and high efficiency, while promoting the transformation
and upgrading of their own industries to create new products, business and
business models for our customers.

2.2.3 From performance prospective, the demand for Cross-

chain and high performance is highlighted

One of the growing demands of blockchain is to conduct direct circulation

of values across blockchains. Inter-chain technology constructs the
connection of blockchains in different industries with complex scenarios
to achieve digital asset transfer between multiple blockchains, such as
financial pledge and asset securitization. Current mainstream Inter-chain
technologies include Notary schemes, Sidechains/relays, and Hash-locking.

Table 7: Inter-chain Technology Comparison

21 Blockchain White Paper（2018）

Classification Notary Sidechain/relays Hash-Locking

Inter- Bi-directional Bi-directional/Uni- Bi-directional
Blockchain directional
Asset Support Support Support
Exchange
Asset Transfer Support Support No Support
Trust Require the third- No require No require
party
Type Protocol Technology Algorithm
Architecture
Difficulty Average Hard Easy
Use Case Ripple BTC relay Lightning network
Poldadot
COSMOS

In order to improve the throughput of the blockchain system, blockchain

technology and academic experts have proposed a variety of high-
performance solutions, as shown in Table 8 below.

Table 8: High performance Schemes comparison

Type DAG Parallel Reduction of node

number
Optimizing Topology Framework Consensus
Layer
Security High High May reduce
Resource Low Low Low
consumption
Scalability Well Well Average
Difficulty Relatively Hard Average Security Assurance
Scheme is relatively
hard
22 Blockchain White Paper（2018）

Performance High High Average

Examples IOTA Ethereum Algorand
Byteball （Sharding） BitcoinNG
Hashgraph TrustSQL PoS
（Subchain）
Fabric
（Multichannel）

The first type of high-performance solution is to change the blockchain

topology to a transaction-based Directed Acyclic Graph (DAG). Under this
topology, after the transaction request is initiated, the entire network is
confirmed by the broadcast to form a transaction network. There is no
packaging process, and the transaction can be stripped from the network or
be merged back. DAG-based designs have no block concept, and
expansion is not limited by block size. The scalability depends on network
bandwidth, CPU processing speed, and storage capacity limitations10. This
topology addresses security issues, high concurrency issues, scalability
issues, and data growth issues and adapting to micropayment scenarios.

The second type of high-performance solution is to change the consensus

strategy to increase throughput by reducing the number of nodes
participating in the consensus. In this type of scheme, in order to improve
performance, the number of nodes participating in the consensus is reduced
as much as possible without affecting security, and the algorithm to control
a node participating in the consensus is not predicted in advance. Although
this solution can improve performance, the strategy to ensure security is
difficult to achieve now.

10
For the first time in the IOTA white paper, the Tangle blockchain is a directed acyclic graph (DAG), but its
architecture is not only a double-spending risk, but also a risk of forging digital signatures. In order to solve
the double-spending problem, Byteball proposed the concept of the Mainchain based on the DAG of IOTA
and realized the mainchain selection algorithm through the witness method, effectively solving the DAG
double-spending problem.
23 Blockchain White Paper（2018）

The third type of high-performance solution is to improve the overall

throughput of the system by improving the horizontal expansion capability
of the system, representing technologies such as fragmentation, sub-
blockchain, and multi-channel. For this type of technology, data
synchronization is required within the intra-slice, sub-blockchain, and
channel, and the slice interval, sub-blockchain, and channel are
asynchronous. Sharding is to divide the nodes in the entire P2P network
into several relatively independent areas to achieve system level expansion.
In the case of sharding, by directing the transaction to different nodes,
multiple network segments share the work of verifying the transaction in
parallel. Current fragmentation strategies include Network Sharding,
Transaction Sharding, and Computational Sharding. The sub-chain
technology is a blockchain with independent functions derived from the
mainchain. The sub-chains depend on the mainchain and can define their
own consensus mode and execution module. By defining different sub-
chains, the system's scalability, availability, and performance are improved.
Multi-channel technology is a system in which multiple nodes form a
channel. Each node can also be added to different channels. The channels
are isolated from each other and communicate with each other through
anchor nodes. Multi-channel technology eliminates network bottlenecks
and increases system scalability.

2.2.4 From the consensus prospective, the consensus mechanism

evolved from a single to a mixed approach

The consensus mechanism plays an important role in the blockchain, which

determines who has the right to book, and the selection process and reasons
for the bookkeeping rights. Therefore, it has always been the focus of
blockchain technology research. Common consensus mechanisms include
PoW, PoS, DPoS, Byzantine fault tolerance, etc., depending on the
applicable scenario, also present different advantages and disadvantages.
The single consensus mechanism has its own drawbacks. For example, PoS
24 Blockchain White Paper（2018）

relies on tokens and its security is fragile, while PoW is non-final and
energy consumption is high. In order to improve efficiency, trade-offs
should be made among safety, reliability, and openness. The blockchain is
showing the trend of switching the consensus mechanism according to the
scenario and will evolve from a single consensus mechanism to a multi-
class hybrid consensus mechanism. The support consensus mechanism is
dynamically configurable during the running process, or the system
automatically selects the consistent consensus according to the current
situation.
Table 9: Consensus Mechanism of Scenarios

Scenarios Consensus Algorithm

Examples
Untrusted environment, Equity PoW，PoS，DPoS
unknown number of nodes
Untrusted environment, Byzantine PBFT
certain number of nodes
Trusted environment, Non-Byzantine Raft
unknown number of nodes
Trusted environment, Message Kafka
certain number of nodes distributed
Mechanism

2.2.5 From smart contracts prospective, pluggability, usability

and security have become the focus of blockchain development.

Richness of smart contracts applications depends on the ability of the smart

contract itself and the blockchain to support the smart contract application,
and the development and execution efficiency of the smart contract
depends on the programming language and execution of the virtual
machine. In the current ecosystem, the programming language of smart
contracts is not standardized. In order to adapt to smart contracts, new
languages for contract need to be created with more formal specifications
25 Blockchain White Paper（2018）

and verification. Smart contracts will enable quick start time and high
execution efficiency in a lightweight execution environment.

The development direction of smart contracts includes the following points:

1) Pluggable execution environment architecture: The default execution
environment should not provide persistent storage, so that the contract
default is a stateless function similar to microservices to conduct
concurrent processing. 2) Explicit call relationship: that is, only the
function of static call is provided, so that the call relationship of the
program can be clarified before running it. 3) Contract code that can be
stored off-blockchain: the storage space is expanded by storing hash values
in the blockchain and storing the contract code outside the blockchain. 4)
Low coupling design: reduce the contract language, execution environment,
coupling between blockchains, and improve the versatility of smart
contract systems; 5) secure protection system improvement in fields of:
Verification and inspection of code shaping and release, dynamic
verification of nodes in execution contracts, rationality judgment of
contract execution completion, complaint mechanism of relevant
stakeholders and automatic judgment technology.

3 The Current Situation of Blockchain

3.1 Various countries are competing to lay out Blockchain and
occupy the commanding height in industry.

Blockchain is being recognized by many countries which are exploring

technology popularization and application in many fields. On January 22,
2018, a staff in Innovate UK said that the UK would invest 19 million to
support new products or services in nascent technology fields such as
Blockchain. On February14, 2018, U.S. House of Representatives held the
second Blockchain hearing and reached a consensus on the idea “These
Innovations Should be Fostered Not Smothered”. The Bank of Korea
encourages Blockchain technology, and Korea Exchange (KRX), South
Korea's only stock exchange, has announced the development of a trading
26 Blockchain White Paper（2018）

platform based on Blockchain technology as well. Australia is actively

exploring Blockchain technology in various fields. And Australian Post has
already applied Blockchain technology to identity recognition. Dubai has
established the Global Blockchain Committee and a coalition of more than
30 members, including Cisco, Blockchain Start-ups and the Dubai
government.

China laid out the frontier of the Blockchain industry and explored the
various applications in advance. In 2016, the Blockchain was first put into
"13th Five-Year" National Informatization Plan which issued by the State
Council of China. In June 2018, the Ministry of Industry and Information
Technology issued Action Plans for Industrial Internet Development
(2018-2020). It encouraged to promote the application and research of edge
computing, Deep learning, Blockchain and other nascent but cutting-edge
technologies in the industrial Internet. On May 28, 2018, President Xi
Jinping pointed out in his speech at the Congress of the Chinese Academy
of Sciences (CAS) and the Congress of the Chinese Academy of
Engineering (CAE) that, “The new generation of information technology
represented by artificial intelligence, quantum information, mobile
communication, internet of things, and Blockchain accelerate the
breakthrough in application”.

Hence, various regions have launched incentive policies and Blockchain

projects. By the end of May 2018, 24 provinces, cities or regions, including
Beijing, Shanghai, Guangdong, Hebei (Xiong'an), Jiangsu, Shandong,
Guizhou, Gansu and Hainan, had issued policies and guidance on
Blockchain. Besides, several provinces listed Blockchain in the 13th Five-
Year Plan of the province, and carried out the industrial chain layout of the
Blockchain. With the continuous expansion of Blockchain technology in
the application layer, regions have introduced incentive policies of
Blockchain, and more and more Blockchain technology enterprises choose
to settle in preferential areas for development.
27 Blockchain White Paper（2018）

3.2 The Integration of Blockchain and Real Economy Proves

to Be the Theme.

From the respective of the industry development, the Blockchain

technology is moving towards integration, which make the Blockchain
industry subdivided gradually. According to the upstream and downstream
structure of the Blockchain industry, it can be divided into four categories
from bottom to top: development of underlying infrastructure and platform,
technology expansion and general services, industry applications, and
industry services. The corresponding product can be further divided into
different types, such as Blockchain itself, client and application. Following
Blockchain 1.0 represented by Digital Currency, Blockchain 2.0 with smart
contract and other related technical foundations has the ability to support
applications and general application development in some vertical
industries.

With the innovation and upgrade of Blockchain, its deep integration and
innovation with cloud computing, big data and other cutting-edge
technologies will promote the commercial exploration and application of
Blockchain technology in medical, judicial, industrial, media, games and
other sub-areas. It’s obvious that it will transform Blockchain from
fictitious to real. So far. the eco-industrial chain has taken shape initially,
which is providing help for the high-quality development of the real
economy in many fields.
28 Blockchain White Paper（2018）

Figure 4. Blockchain Applications Development Time, Source: Blockchain

for Social Impact: Moving Beyond the Hype, J Stanford Graduate School
of Business, July 2018

From the perspective of Blockchain enterprises, we have the second largest

number after the US. According to the survey conducted by China
Academy of Information and Communications Technology, 1242
companies have been actively involved in the Blockchain industry all over
the world, as shown in Figure 5. The number of Blockchain enterprises in
the US, China and the UK is in the top three. In terms of industry
classification, the number of companies which are engaged in
Cryptocurrency-related technology and services (467, 37.60%) is the
largest, followed by Blockchain technology companies and companies that
researches and develops software platform (201, 16.18%), as shown in
Figure7. According to public information, As of June 2018, the top five
cities in China have the number of blockchain enterprises: Beijing,
Shanghai, Shenzhen, Hangzhou, Guangzhou, of which Beijing ranks first
with 175 blockchain companies, See Figure 6 for details. It is noteworthy
that, a number of new forces in Southeast Asia (Singapore, Vietnam,
Thailand, etc.) have emerged in the era of Blockchain 2.0 by the support
29 Blockchain White Paper（2018）

of governments and community collaboration. Under the innovation model

of regulatory sandbox, a series of interoperability systems of Blockchain,
which are mainly based on crosschain and multichain-subchain
technologies, have been incubated, which may occupy the blockchain ' s
commanding point in the future.
500 455
450
400
350 298
300
250
200
150 97
100 48
15 15 16 18 20 24 30 32
50 11 11 13
0

Figure 5. Number of blockchain companies in countries around the world

Data sorted by CAICT, June 2018

200
175
180
160
140
120
95
100
80
56
60
32
40
15 13
20 8 4 4 3
0

Figure 6. China's blockchain enterprise distribution, Data sorted by

CAICT, July 2018
30 Blockchain White Paper（2018）

Figure 7. Number of blockchain companies in various industries,

Source：Cbinsight & CrunchBase, July 2018

From the perspective of investment and financing, financing in global

Blockchain industry has accelerated, and the domestic regulatory policy is
stricter. On the one hand, financing in Blockchain start-ups (non-ICO
financing) reached $4.81 billion in total from 2009 to 2018, as shown in
Figure 8. In terms of areal distribution, the United States has a total of
$2.542 billion in financing, China ranks the second with $602 million and
Canada ranks the third with $247 million. On the other hand, ICO has
become a new financing channel, and the rising trend in 2018 remains. From
2014 to 2018, ICO's cumulative financing amounted to $18.09 billion, far
exceeding the amount of traditional financing in the same period. Among
them, Blockchain start-up EOS financed $4.2 billion on June 1, 2018,
making it the largest ICO financing as yet. A few months after China's
regulators banned ICO and closed the domestic virtual currency exchange
on September 4, 2017, ICO went back in the way of "Exportable goods put
on the domestic market" or other patterns in early 2018. And it organized
relevant fund-raising activities through agents and middlemen. In this case,
People’s Bank of China, National Internet Finance Association of China
and other institutions prohibited frequently, and more domestic regulatory
31 Blockchain White Paper（2018）

measures were introduced. On August 24, 2018, China Bank Insurance

Regulatory Commission and the Ministry of Public Security and other five
ministries and commissions issued ‘Warnings Regarding Prevention of
Illegal Fundraising in the Name of “virtual currency” and “blockchain “‘.”
Regulate cryptocurrency and encourage Blockchain technology" is the
theme of the development of China's Blockchain.

1200

1000

800

600

400

200

0
2010 2011 2012 2013 2014 2015 2016 2017 2018

E Round D Round C Round

B Round A Round Angel Investing
Seed Funding Incubation/ Acceleration

Figure 8. Distribution of financing rounds in each stage of the blockchain

Source：Cbinsigh t& CrunchBase, July 2018

From the perspective of talent supply, the growth rate of talents in

Blockchain cannot meet the market demand. According to the data shown
by business networking site LinkedIn in February 2018, the global demand
for talents in Blockchain has been increasing since 2015, and experienced
explosive growths during 2016 and 2017. However, it still takes a low
proportion of the total demand of the global talent market now. In recent
years, the fastest growing demand for Blockchain talent came from
computer and software industry, followed by the financial services and
insurance sector. From 2015 to 2017, candidates who had listed Blockchain
skills as a talent on the LinkedIn platform rose by nearly 19 times. However,
the total supply of Blockchain talents still remained small, equivalent to
32 Blockchain White Paper（2018）

just 2 percent of the total number of global artificial intelligence talents on

the LinkedIn platform. According to the current global distribution of
talents in Blockchain, the United States accounts for 25%, followed by
India with 7% and Britain with 6%. And most talents in the US are in
Greater New York (24%), San Francisco Bay (21%) and Greater Los
Angeles (10%). Now China's talents in Blockchain are relatively less,
They’re mainly in Beijing, Shanghai, Shenzhen and Hangzhou.

69 United States
125 181 99
United Kingdom
202
France
Germany
282
1999 The Russian Federation
269
India
383 Canada
Australia
652 China
693 Singapore
Japan and South Korea

Figure 9. Proportion of demand for blockchain talent in major countries

around the world, Source: LinkedIn, February 2018

3.3 The Innovation of Blockchain Technology Is Becoming

More and More Dynamic.

More and more foreign companies have been involved in the development
and contribution of Blockchain source code. According to the data on
GitHub, the proportion of Blockchain projects in 2010 was less than 1%，
but it ran up to 11% in 2017. And there were lots of open source platforms
or individual collaboration ecosystem coming into being, such as Bitcoin,
Ethereum, Hyperledger and Ripple. At the same time, a number of
international Blockchain industry alliances have emerged, such as the R3
33 Blockchain White Paper（2018）

Blockchain Alliance (Corda), Hyperledger Blockchain Alliance which

supported by the Linux Foundation, the Enterprise-level Ethernet Alliance
(EEA) and so on.

In terms of open source code, China's code contribution is only 1/3 of that
in the US. As a traditional technological highland, the United States is
leading the technology trend in the global open source community by
cross-chain technology, multi-party trusted computing, trusted oracle,
digital identity, privacy protection, smart contract language and other fields.
There are not many independent technology platforms in China, and over
90% of the Blockchain technology platforms use products or fork version
made by open source technology abroad, such as Hyperledger or Ethereum.

Unlike the growth in the number of patents, China's contribution to open

source declined significantly in 2017 compared with 2016, as shown in
Table 9. There were 2,538 open source projects in the United States in 2016
and 1,728 in 2017; while there were only 834 in China in 2016 and 527 in
2017, which were less than 1/3 of those in the United States. It can be seen
that the development of Blockchain in China pays more attention to the
application level, and there is still a significant gap in the open source and
core algorithm between the international leading level and ours.

Table 10. Comparison of the number of China-US blockchain projects

Country / Region 2014 2015 2016 2017

National 263 274 834 527
China Beijing 67 76 225 137
Shanghai 62 35 134 119
National 1906 1920 2538 1728
USA. San 389 318 227 150
Francisco
New York 150 161 208 147
34 Blockchain White Paper（2018）

In terms of patent application, the number of patent applications in the field

of Blockchain has ranked first in the world. According to the analysis data
of the platform Incopat, by July 2018, the number of global patents related
to Blockchain reached 3731, and it increased by 87% in 2017 compared
with 2016. As shown in Figure 10, China is currently the country with the
largest number of patent applications for Blockchain with the cumulative
number of 2002, and the US has 1076. At present, there are 376 patent
applications related to cryptocurrency and 286 patent applications for
smart contracts in global Blockchain patent applications. In several
consensus algorithms, the PoW algorithm is the earliest and the patent
applications are more than other algorithms. From the perspective of areal
distribution, the US has a large number of patent applications in the fields
of cryptocurrency, smart contracts and PoW algorithm. And China has the
highest number of patent applications in the field of smart contracts.

In terms of patent application, the number of patent applications in the field

of Blockchain has ranked first in the world. According to the analysis data
of the platform Incopat, by July 2018, the number of global patents related
to Blockchain reached 3731, and it increased by 87% in 2017 compared
with 2016. As shown in Figure 10, China is currently the country with the
largest number of patent applications for Blockchain with the cumulative
number of 2002, and the US has 1076. At present, there are 376 patent
applications related to cryptocurrency and 286 patent applications for
smart contracts in global Blockchain patent applications. In several
consensus algorithms, the PoW algorithm is the earliest and the patent
applications are more than other algorithms. From the perspective of areal
distribution, the US has a large number of patent applications in the fields
of cryptocurrency, smart contracts and PoW algorithm. And China has the
highest number of patent applications in the field of smart contracts.
35 Blockchain White Paper（2018）

36, 1% 44, 1%
42, 1%
75, 2% 56, 2%
105, 3%

1076, 32%
2002, 58%

China United States Taiwan, China Korea

United Kingdom Japan Australia India

Figure 10. Blockchain distribution in various countries. Source: Incopat,

July 2018
In scientific research, foreign research attaches more importance to
technological breakthroughs of core issues, while domestic research pays
more attention to the business scenarios of Blockchain applications.
According to the survey data of China Academy of Information and
Communications Technology in July 2008, global research institutes began
to pay more attention to the Blockchain from 2015. In 2017, the number of
SCI papers on the Blockchain collected by Web of Science reached 445, it
was an increase of 181.6% compared with 2016, as shown in Figure 11.
Institutes in France, Denmark, Portugal, Australia and the United Kingdom
are also actively engaged in research. By April 2018, 27 universities
worldwide, including the Massachusetts Institute of Technology (MIT), the
University of California, Berkeley and Imperial College of Technology,
have explicitly set up courses related to Blockchain or offered relevant
training courses to study Blockchain, as shown in Figure 12. A number of
academic institutions and project teams have sprung up in the mainstream
foreign universities from various perspectives, such as performance,
technology and application. The form of Industry-University-Research
Collaboration could cultivate talents in a positive way. Domestically, some
industry organizations carry out the Blockchain training camps,
36 Blockchain White Paper（2018）

Blockchain president classes with the theme of popularization and

application. Besides, colleges and universities are also making progress
gradually in the area of Blockchain. In July 2016, the Central University
of Finance and Economics established the first Blockchain laboratory in
China and offered relevant courses on Blockchain. In April 2018, Xi'an
University of Electronic Science and Technology offered the course of
"Block Chain Technology Principle and Development Practice", while the
School of Computer Science of Zhejiang University offered the
Blockchain Research Center. At present, there is still a lack of systematic
research on key technologies and core issues in China, and the Industry-
University-Research Collaboration has not yet formed.
500
445
450
400
350
300
250
200
158
150
85 158
100
39 45
50 13 25 20 25
11 11
0
2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 11. Number of Blockchain SCI papers published in each year.

Source: Web of Science, July 2018

University of California 22
Chinese Academy of Sciences 19
French National Research Center 16
Cornell University 15
Danish University of Science and… 13
Porto Institute of Technology, Portugal 13
University of California, Berkeley 12
Paris-Sacré University 12
University of New South Wales, Australia 11
University of London 11
Massachusetts Institute of Technology 11
Australian Commonwealth Scientific and… 11
0 5 10 15 20 25

Figure 12. The charts of Blockchain SCI papers publishing agency. Source:
37 Blockchain White Paper（2018）

Web of Science, July 2018

3.4 Speeding Up to Establish Blockchain Standard System

The World Economic Forum survey predicts that 10% of global GDP over
the next seven years will be preserve based on the Blockchain technology.
In order to promote the benign development of Blockchain industry, many
international organizations have actively explored the construction of
Blockchain standard system. The ITU-T Standardization Unit (ITU-T)
decided to launch the standard study of F.DLS (Distributed Accounts
Service Requirements) in February 2017. ITU-T FG DLT Focus Group was

established in May 2017, and a new research topic Q22 （Distributed

ledger technologies and e-services) was set up at the ITU-T SG16

Plenary Meeting in July 2018. China is the main contributor to the research
of ITU-T Blockchain Standards. Four international standards including
Blockchain Requirements, Reference Framework, Evaluation Benchmarks
have been set up by the Institute of Information and Communications of
China, and have received active support from all over the world. The
International Organization for Standardization (ISO) also established the
Blockchain and Distributed ledger Technical Committee (ISO/TC 307) in
September 2016.The main work is the development of international
standards in the field of Blockchain and Distributed ledger Technology,
and the study of problems related to the standardization of Blockchain and
Distributed ledger Technology in cooperation with other international
organizations. In addition, organizations such as the World Wide Web
Consortium (W3C), the Association of Electrical and Electronic Engineers
(IEEE) and the Internet Engineering Task Force (IETF) are also actively
focusing on the standardization of Blockchain.
38 Blockchain White Paper（2018）

Figure13. Blockchain standard SWOT analysis. Source: BSI & RAND

Europe, May 2017

Blockchain technical standards will be a breakthrough to accelerate the

development of the whole Blockchain industry. However, there is no
consensus on the Blockchain standard system as yet. Trusted security has
become a key element in the future development of Blockchain technology
standards, as described in the report “Distributed Ledger

Technologies/Blockchain：Challenges, opportunities and the prospects for

standards” published jointly by the British Standards Association and

Rand in 2017. Details are shown in Figure 13. At present, China is actively
promoting the transparency of Blockchain industry, and building a
standardization system including trusted Blockchain standards. After a
long-term tracking study, combined with ideas of the existing
standardization in cloud computing, big data and so on, the China Academy
of Information and Communication has proposed the first series of trusted
Blockchain standards in China. The China Communications
Standardization Association (CCSA) has launched two industry standards.
Three Trusted Blockchain evaluation criteria have been released and a
Trusted Bench Blockchain Benchmark tool is being developed. Trusted
Blockchain evaluation criteria includes 19 targets and 95 evaluation points,
covering functions, performance, security and other aspects. In April 2018,
39 Blockchain White Paper（2018）

the China Academy of Information and Communication jointly launched

the "Trusted Blockchain Promotion Plan" with 158 units to promote the
development and application of Blockchain technology and the benign
development of the industry.

4 Challenges Blockchain are facing

4.1 Hidden dangers at the mature level of Blockchain
technology

At present, the Blockchain technology is not mature in terms of system

stability, application security, business model and so on. There are five
main problems: the performance cannot meet the three requirements of
"high efficiency with low energy", "decentralization" and "security"
simultaneously. The transaction throughput that can be performed on the
Blockchain is not high, and it’s difficult to meet the needs of the high-
frequency service; From the perspective of energy consumption, the
consensus algorithm such as Proof of work have high energy consumption
and high cost, which makes the Blockchain waste a lot of network
computing power and resources; From ecological point of view, the current
Blockchain products are immature, it lacks of relevant development,
integration, operation and maintenance system, and it’s short of standards
as well. China doesn’t have too much right and influence on Blockchain
open source platform; As for the security , Blockchain is facing a grim
situation of platform security and application security which including
privacy protection, harmful information, smart contract vulnerabilities,
consensus mechanism and private key protection, 51% computational
attack, cryptographic algorithm security and so on; From the perspective

of the supervision，encryption technology has posed great challenges to

legal monitoring, customer identification, anti-money laundering and other

regulatory means. At the same time, multi-party collaborative governance
of Blockchain also puts higher requirements on supervision.
40 Blockchain White Paper（2018）

4.2 The application scenario model is unclear.

Along with the “Blockchain” turmoil, not only industrial technology

giants such as BAT have focused more on it, but more and more traditional
companies have also officially entered the Blockchain industry. At the
same time, because of the low cost and low investment threshold of starting
a business, a large number of start-ups are rushing to enter the market.
However, on the one hand, the immaturity of technology restricts the
commercial application. At present, although there are many kinds of
Blockchain core technologies such as privacy protection algorithm,
consensus mechanism, etc., they are not commercially available. On the
other hand, the application mode of Blockchain is still being explored, and
no real "killer" application has been found. The "irreplaceable" advantage
of Blockchain has not been reflected. Blockchain is not required and cannot
be applied to all fields. Its outstanding features make it more valuable for
risk-free, high-value and easy-to-implement scenarios.

4.3 Industry professionals are relatively scarce.

Blockchain technology is a multidisciplinary and cross-disciplinary

technology that includes operating system, network communication,
cryptography, mathematics, finance, production and so on. At present,
China still has some shortcomings in cross-disciplinary and
interdisciplinary fields. The research and development of Blockchain
technology mainly concentrated in programming languages like Go,
JavaScript, C and C++. The new smart contracts use Haskell, Ocaml,
Rholang and other new functional programming languages, so there is a
very big gap about technical talents who has relevant language and senior
R&D experience in the global talent market. Compared with R&D
technical talents, Blockchain underlying system architecture designers
have to master a number of interdisciplinary professional skills and have
an in-depth understanding of the underlying design principles of
41 Blockchain White Paper（2018）

Blockchain. Besides, they should have experience in system architecture

design, and understand the specific business logic of the application
scenario, which can be described as "it`s hard to find a general”. Although
some colleges and universities have set up interdisciplinary education and
special skills disciplines of Blockchain, professional talents are still scarce
in the market.

4.4 Relevant laws and regulations need to be improved

Although Bitcoin and Ethereum have become hot topics, there are still no
clear laws and regulations in this field. The governance, supervision and
standards of Blockchain technology are still not perfect, which mainly
reflects in two aspects: first, the legal subject is not clear. The body of
system maintenance and governance in the Blockchain is not clear. There
is no central organization responsible for the whole system in the
Blockchain system. The lack of centralized legal entities also makes it
difficult for the traditional legal rules to post-accumulate the distributed
ledger system. To carry out supervision, effective supervision must be
promoted with the technical rules in advance. Second, the rules on the
chain are not clear. In the context of Blockchain participants, code is "law",
but law is not code. Unlike the legal rights and obligations, the technical
rules of Blockchain directly determine the security and stability of
Blockchain system, and directly affect the rights and obligations of each
participant. Due to the ambiguity of the rules on the chain, a series of
problems will arise about smart contract vulnerabilities, token issuance
compliance, personal information protection and so on.
42 Blockchain White Paper（2018）

5 Some Measures and Suggestions for Development

5.1 Guide the public to learn Blockchain objectively and
rationally

We should actively guide the society and the public to view the value of
Blockchain objectively and rationally. On the one hand, we should fully
recognize the importance of Blockchain technology in building trust
mechanisms, transmit information and value. On the other hand, we should
avoid exaggerating the subversive influence of Blockchain technology on
traditional industries, and be aware of the expansion of bubbles. Attention
should be paid to the impact caused by Blockchain application to
traditional institutional management, business operations and other modes,
as well as operational pitfalls, technology monopoly and other potential
risks. And we should promote the related medias to radically reform their
statements and create a clean and positive atmosphere for the industry to
make an excellent communication environment for subversive
technologies like Blockchain.

5.2 Strengthen the research on core technology

We will accelerate the research and development of key technologies on

Blockchain, including consensus mechanism, cryptography algorithm,
cross-chain technology and privacy protection, and conduct product
development and integration testing. And we should support and foster
open source software, build an independent open source community, and
build an ecological system for the co-development of software and
hardware. We also need to comply with the actual needs of the technology
industry and appropriately promote the formulation of standards. Besides,
it’s also necessary to build innovative platforms for basic research and
interdisciplinary research and to train composite talents with
43 Blockchain White Paper（2018）

interdisciplinary, knowledge fusion and technology integration. What’s

more, we need to establish and improve the coordinated promotion
mechanism of universities, research institutions, industry associations and
think tanks, and strengthen the coordination and cooperation in tackling
key technical problems, breaking through bottlenecks and setting standards.

5.3 Promote deep integration with the real economy

To promote the deep integration of Blockchain technology and real

economy, first, we should explore and highlight the irreplaceable role of
Blockchain technology in building trust relationships, improving
collaboration efficiency, promoting data sharing and enhancing the
government's penetrating supervisory capacity. Second, we should explore
the innovation mode of digital economy, realize the supply and demand
docking, and serve the transformation and upgrading of the real economy.
Next, we have to select key areas, organize and carry out the concept
verification, test platform, pilot application demonstrations and
assessments of Blockchain applications to cultivate industry leaders who
will lead enterprises and industry ecosystems. Finally, combined with
good application case demonstrations, we should conduct Blockchain
technology and application training for industry organizations and
enterprises to popularize and apply landing experience, and avoid potential
application risks.

5.4 Improve the policy environment of Blockchain

development

Following the routine of technological development, we should make

systematic arrangements from the policy level. The impact of Blockchain
on personal information protection and cross-border data flow will be
studied in depth, and the regulatory issues of Blockchain in the underlying
core technology, middle-level application logic and upper-level
44 Blockchain White Paper（2018）

information management and control are discussed. And we will actively

promote the information disclosure of the participants in the Blockchain
system, build a compliance review and audit mechanism for smart
contracts, and promote industry self-discipline. At the same time, relevant
policies and laws and regulations of the Blockchain should be studied, and
the supervision mechanisms and certification systems for the technology
and application of the Blockchain should be explored to create a good
environment for the healthy development of the industry.