CPChain: Characteristic, Differentiation, and Vison

Recap of Dr. Long’s Video Interview with DaPao (English Sub)

This interview was conducted by Dapao Rating in January 2018. Mr. Cannon, interview host of Dapao Rating, welcomed Dr. Andrew Long, Founder & CEO of CPChain, to his 18th edition of the Cannon interview series.

Dapao Rating Background:
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Link to video of the interview with English subtitles:
Dapao Interview with Dr. Long Chengnian

Interview Subtitle

Dapao: Hello everyone, this is the 18th edition of the “Dapao Interview”. Today’s guest is Dr. Andrew Long, founder, chief scientist and CEO of CPChain. Dr. Long is a well-known university professor and doctoral tutor. He is also an IEEE senior member and ACM member. Readers with academic background should know that these memberships are very high-level. Dr. Long is the premier senior expert and the academic authority in the field of Internet of Things in China. Today’s interview takes place in the Shared Finance interview room. So, let’s start the interview. Could you first give a brief introduction of CPChain, including where did the project come from and what CPChain is trying to accomplish?

Dr. Long: We are simply referred to as CPChain and our full English name is Cyber Physical Chain. We are actually trying to build a physical trust network. It is a combination of blockchain and Internet of Things technology to realize the integration of information and physical systems in a decentralized network.

Dapao: Just now we mentioned that there are very few academic authorities like Dr. Long. You are both a professor and doctoral tutor of a well-known university, and a member of the domestic blockchain Internet of Things. Can you give us a brief introduction?

Dr. Long: I personally have been engaged in research on the Internet of Things industry, including basic research and applied research in a number of applications. I have worked as a postdoctoral fellow at the Hong Kong University of Science and Technology and at the University of Alberta, Canada. I returned to China to teach in 2009. This is a brief summary of my past academic activities.

Dapao: Can you give a brief introduction of the core team of Cyber Physical Chain and tell us a little bit more about each of them?

Dr. Long: Our core team is composed of three parts. The first part is myself, the team lead, I am mainly engaged in the research and development of the deep integration of the Internet of Things and blockchain technology, mainly to do technical research. In addition, I also have two co-founders who are responsible for development and operations. One of the founders, Dr. Zhao Bin, has also been engaged in the research of the Internet of Things for a long time. He worked as a chief engineer of the Internet of Things at Shanghai Bell, participated in major projects of the Internet of Things, and promoted international and domestic Internet of Things. He also has many patents on the Internet of Things. He has also worked as a chief research and development expert at a technology company. Another co-founder, Mr. Shi Qingwei, has deep accumulation of blockchain media operations.

Dapao: Dr. Long, you just mentioned that another founder, Dr. Zhao Bin, once worked at Shanghai Bell. I would like to briefly introduce the listeners to Bell Laboratories. Some audience may don’t understand the significance of this company. Bell Labs is one of the few companies in the world that specializes in basic scientific research created by companies. As far as I know, it should be the largest number of corporate laboratories born outside of colleges and universities, with a total of 8 Nobel Prize awards. Many of the bases of computer science theories are derived from Bell Labs.

Dr. Long, can you simply help us introduce the current development status of the Internet of Things industry and future plans?

Dr. Long: We know that the concept of the Internet of Things has been proposed long ago. In general, the concept of the Internet of Things was first proposed by the MIT Media Lab in 1999. At that time, the concept of the Internet of Things was still based on RFID technology.

After more than 20 years of development, I can summarize the development of the Internet of Things by roughly dividing it into three stages: From RFID (1) to universal micro-sensor in Sensor Networks (2), these were the fundamental steps to the present IP networking (3). These three phases are mainly centralized and isolated IoT systems. There are several problems with such centralized and isolated IoT systems. The first is that the interconnection cost of equipment and systems is relatively high. Secondly, the privacy of data and the security of the system in the centralized system have great hidden dangers. The third is that centralized systems tend to confine data in an island; it is difficult to make full use of the value of data. This is also the most important issue. In general, we have just mentioned the high cost of equipment, privacy and security dangers, and data value is difficult to fully reflect. These three issues actually inhibited the Internet of Things from further innovation.

In fact, in the area of the Internet of Things, I have always come across these three issues whether I am doing research on technical theory or practical integration with actual industry systems. When I contacted Ethereum and the blockchain technology behind it at the end of 2014, I discovered that the blockchain and IoT are actually very good combinations. Therefore, at the end of the 2014 and early 2015, I took five doctoral students and ten graduate students and

began to experiment with the combination of these two technologies and we did some in-depth research and development work.

Dapao: Dr. Long, you just mentioned some of the problems that exist in a centralized IoT system. Can you further explain how the blockchain technology and Internet of Things will be deeply integrated to solve these problems?

Dr. Long: We know that one of the main purpose of blockchain is to actually establish a decentralized trust system, which can realize and transfer monetary value and especially data value. We can use blockchain technology to open the before mentioned barriers of the Internet of Things. At this level, it means that the value of data can be fully realized.

First of all, we can construct a device-to-system interconnection language through blockchain, which greatly reduces the cost of device interconnection. Second, in terms of privacy and security, the blockchain actually has some cryptographic algorithms and security considerations built into it. With a specific encryption security, coupled with the security technology of the Internet of Things, we can fully protect data privacy and improve the security of the system. The third is the biggest point of the combination of the blockchain and the Internet of Things that we are talking about. We can build a shared platform inside, and bring the value of data aggregation and real- time flow into full play. In fact, the combination of the blockchain and the Internet of Things mainly responds to the three fragile points I just talked about, so this is a very good combination.

Dapao: I have read your whitepaper. In the whitepaper, you proposed a parallel distributed architecture. In your design, the mainchain only retains the label position of the data, thus greatly reducing the space burden on the mainchain. In fact, it is trying to solve the problem that actually Bitcoin is facing. Can you give a brief introduction to this technical architecture?

Dr. Long: Before I introduce the technology of this architecture, let me talk about my understanding. We now see some scalability problems in the blockchain, especially the scalability of the consensus protocol. I personally understand that this is mainly because of the scalability of data transactions. In fact, we know that the data currently being traded is actually very small. The mainstream blockchains such as Bitcoin and Ethereum are now getting slower and slower. In retrospect, I installed Ethereum full node in 2015 and I could fix it in a few hours. But now if I have to install the entire Ethereum node I would have to spend four or five days to synchronize the node. So its scalability is very problematic.

In addition to the scalability issues of the transaction, the Internet of Things and blockchain integration have another layer of issues. Just now I also said that the core of the Internet of Things lies in the value of its data flow. It generates large-scale data all the time. If these large- scale data are in a chain, then the system will soon collapse. From this perspective, the combination of the Internet of Things and blockchain is not just a matter of scalability of data transactions, but also of data storage and computing scalability issues. The original purpose of the decentralized system is to reach a consensus, but this is a price to pay. The cost is that at each node it has to perform the same storage and calculations. This is a typical “wood barrel effect”. Slow nodes are the bottleneck of the system.

The distributed system we have been doing for a long time is actually using the cooperation of nodes to complete the calculation and storage tasks. In order to solve the scalability issues of the data transactions, we propose this parallel distributed architecture. Decentralized systems and distributed storage systems work together to solve the scalability issues. This is where our CPChain shines.

Dapao: Dr. Long you mentioned that using your technology can really solve some problems and make the space more scalable, but it also brings another problem. We know that although Bitcoins’ nodes have its drawbacks, such as a large number of redundant calculations and a large amount of space occupancy, it also has its own benefits. That is, every node of the Bitcoin can have data of the entire network. Loss or control of the node will not have any impact on the entire network, but in your architecture, the data is stripped from the main chain, then I would like to know where your data is stored?

Dr. Long: In fact, our data is placed in a distributed cloud storage system through an encryption method. We can use IPFS or some current decentralized database systems. Maybe you are worried that this is centralized, but in fact it is a completely decentralized system, and the benefit of this is that the authorization and control of data is completely controlled by the data source, and no other entity other than the data source can control the use of this data.

Dapao: Dr. Long, this means that your data will also be stored in a number of decentralized distributed storage structures, not like classic cloud storage or massive redundant hard disks. Is that correct?

Dr. Long: We need to differentiate the concepts. Cloud storage has both centralized and distributed implementations. We use a decentralized implementation.

Dapao: I know, I just had to ask because I had feared there could be such a problem. Because we know that in a decentralized project, the reason why we want to decentralize is actually to make the whole system avoid the risk of centralization. Assuming your data is stored in a company, although the entire chain may be decentralized, your data is centralized. In fact, the decentralization would not have too much significance. I was worried about such a problem.

Dr. Long: This worry is not necessary.

Dapao: Your consensus mechanism is conceptually more innovative. Your approach is based on the credibility of the double consensus assessment model and dynamic election commission. Can you briefly introduce this?

Dr. Long: Well, this is the scalability issue of the consensus protocol in the main chain. The mainstream main chain consensus protocols now include PoW, PoS, DPoS, PoX, etc. Now, whether in the academic world or in the industry where the blockchain is a consensus protocol, they consider hybrid as a consensus protocol. It is the mainstream development trend in the future. We are standing at the forefront of this issue and have to consider several aspects.

Although we now propose this hybrid consensus agreement, there are many consensus agreements on this basic principle. Our idea is to create a committee within this large-scale node, and this committee has a quick consensus. This is its basic principle. No matter what kind of mechanism is used, it is very difficult for existing implementations to achieve the election of a dynamic committee, which is basically a kind of static committee.

In fact, this will also bring some problems of security and fairness. This is a pain point that we think may exist here in the future. Therefore, we also propose that we can combine the methods of distributed reputation systems in distributed P2P systems to establish a distributed consensus reputation system based on this reputation system to generate a dynamic committee election. This may be generated in conjunction with, for example, a locally based certifiable random function, ensuring its fairness and security.

Dapao: Dr. Long, as you said a consensus mechanism like DPoS does not have a very dynamic committee structure. Then you just mentioned that your key nodes are dynamically elected. Can you discuss whether there will be efficiency issues and ease of implementation?

Dr. Long: The main point I want to emphasize here is that the election of this committee is completely dynamic. There is a credibility mechanism, and I need to emphasize on the credibility mechanism, because now either DPoS or PoX is basically based on an authoritative authorization, which is actually the power behind it. And the source of this power is money. This is relatively static and unfair. And with more money and more allocated rights, there is a danger of centralization.

Our idea is that, of course, there must be an authorized mechanism here, but this mechanism will saturate its weight after a certain degree. At the same time, we must promote performance increase of the network participants, for example in a sophisticated node network or P2P network. The performance, its throughput, the degree of authenticity of its certified transactions, etc., all these can be added to achieve a relatively fair election. At the same time, the addition of such factors will actually bring a dynamic effect, because our election is related to the dynamics of the network, and therefore it will bring more good randomness and fairness. This is a basic aspect of our ideas.

Dapao: Before I ask the next question, I would like to introduce a project that is IOTA. The reason why I mention this is because IOTA or some other well-known blockchain projects related to the Internet of Things are actually based on the technology of DAG. DAG is also a directed acyclic graph, which is a computer basic data structure. Compared to Bitcoin or Ethereum, DAG technology is not a blockchain, but a detour. Many of the well-known blockchain projects of the Internet of Things are in fact based on DAG technology. DAG technology as a whole should be more suitable for such a large number of IOT projects. Then I would like to ask you, Dr. Long. Why did you not choose to use DAG technology for this project?

Dr. Long: You may have a slight deviation in your understanding. In fact, if you notice, we have an overall framework for deep integration of the IoT and blockchain. This framework is just the main chain, plus we have side chain mechanism and distributed cloud storage. The side chains are very different, they are built individually for each industry and application. In this industry chain, we can combine this DAG technology.

I would like to share my understanding of IOTA. IOTA is seen as a flagship project in the area where IoT and blockchain are combined. We all know that the Internet of Things is actually a communication between machines and machines. It is a high-frequency communication, small- grained data transaction at the transaction level. Therefore, everyone wants it to be fast enough and free of charge. IOTA is one response to these needs. The IOTA technology we have just talked about is a directed acyclic graph. Its characteristic is that it can achieve a concurrency. For example, after a transaction is created, it can be connected to the DAG immediately, and there is no need to wait for the blockchain first. To say it very simple, blocks are generated in one entire block, which is its advantage.

But IOTA actually has also its drawbacks. If we analyze it in depth, IOTA is essentially altruism. We know that there are two common types of reciprocity. One is the direct feedback I can give you to help me, and the other is the altruistic model, the IOTA model. For example, if you generate a transaction, then you first need to find a transaction that has already been applied for on this network, and help them to do the corresponding PoW certification. That means you must first help others before you can connect to this network. After connecting to this network, your transaction will have the opportunity to be confirmed by others. This is the basic model of IOTA.

We see that this kind of altruistic transmission mechanism still has some problems. The first is how its incentive mechanism should be done. IOTA is still at the initial stage of development. A second concern with IOTA is network security, it is easy to be attacked by DDOS because if a new transaction requires a data structure such as DAG, it must connect to new nodes that have not yet been confirmed on the DAG map. For the attacker it’s relatively easy to find these points to do some distributed denial of service attacks. We will have to see how they approach this issue. We believe that with the side chain consensus agreements on development, we will have the appropriate technologies to solve the problem. When I have personally cooperated with a teacher who developed the world’s first P2P network at the Hong Kong University of Science and Technology, we analyzed this altruistic cooperation model based on evolutionary game theory. Next we are continuing our in depth development and work of the side chain protocol and its consensus agreement.

Dapao: Dr. Long, you just made a comparison between your project and IOTA. In fact, there are several other IoT related projects in China, such as Waltonchain, IoT Chain and SDChain. Would you mind sharing a horizontal comparison of these projects?

Dr. Long: We can see that the combination of the Internet of Things and the blockchain is a big blue ocean and has many opportunities for development. Therefore, it is highly valued by the industry and has produced so many projects that combine the Internet of Things with blockchain. These projects and ideas actually have their own characteristics. Just now we talked about the characteristics of IOTA. I can share my thoughts on several other projects as well.

For example you just talked about Waltonchain. According to the Waltonchain analysis, I understand that it is mainly a deep integration with the traditional retail industry stores. This project is oriented towards the logistics field of the Internet of Things. It can be said to be a better combination. I think it is more distinctive in this respect. However, in terms of the overall level of the combination of the Internet of Things and the blockchain, I think there is a lot more potential. Nevertheless, their idea seems well-conceived. This is my view of the Waltonchain.

Dapao: Let’s mention IoT Chain. I will briefly introduce IoT Chain. Its entry point is intelligent lighting equipment. I asked their team the question if smart lighting devices need blockchain to solve any problems? Their answer is that the number of smart lighting devices in the current Internet of Things is the largest, most efficient in combination with blockchain, and they want to quickly pull out their nodes to form a huge smart lighting architecture network. I would like to ask you, Dr. Long. What is your idea for a rapid distribution of such a network?

Dr. Long: This may be a feature of them. My understanding is that the key to the combination of the Internet of Things with the blockchain technology is the value of the data in the IoT entity. The first is data aggregation. Data aggregation can generate some big data analysis, then generate some artificial intelligence decisions, and then feedback into this actual physical system. For example, in its lighting system, from the perspective of energy conservation, assuming that the current centralized system is not doing well enough, we pass some states related to the lighting equipment, such as its power consumption status, the environmental lighting infrastructure, usage conditions, and so on. All this information is put on the chain of things, and then through the data analysis to achieve some intelligent lighting. If its equipment, technology and application can achieve to efficiently reduce energy consumption, then I think this is valuable.

I have been deeply convinced that the combination of the Internet of Things and data should be able to achieve a trustful transmission of the value of the data in the physical system through the decentralized system of the blockchain, and at the same time, the efficiency of the physical system that transmits this feedback to the entity. In this way, we can say that these two are really organically combined.

Dapao: I wanted to ask you also another question. In some analysis report I have read it is concluded that in the Internet of Things industry, the current huge Internet of Things devices are actually very easy to be hacked and may be controlled by hackers. Let me give you an example. For example, some video equipment and cameras are often invaded by hackers, and then they do illegal things. I would like to know whether a technology based on yours can solve the current access control problem of smart IoT devices, or do you have any relevant application scenarios for this?

Dr. Long: You are right. This problem is indeed very serious. For example, in the United States last year, incidents involving the invasion of camera devices have caused major problems to mainstream internet channels and its user base. For example Twitter was involved in such a case. For this problem, I think it is not just a blockchain technology that can solve it, but the deep integration of blockchain technology with the IoT is one important part of the solution. Blockchain technology solves the problem of data source, identity authentication and the flow of data. It is equivalent to a full track record.

If we can combine some hardware security technologies on the Internet of Things, then we can quickly capture these DDOS intrusion systems, so that it cannot be widely transmitted from the Internet to the Internet of Things, so that it is directly isolated, it can limit its impact to a very small extent.

Dapao: We all know that with blockchain we can make fast transactions, and it is also used for transfer of assets. What I wanted to ask is whether your project can realize rapid transfer of permissions between IoT devices? But I think this should be possible, because this is a basic application of the Internet of Things.

Dr. Long: This is about access control and authorization within a certain period of time. This is not a problem. We can engage the blockchain technology to realize that this is not a problem.

Dapao: There is another question I would like to ask. From the introduction of your whitepaper, we know that the academic background of your team is very strong and can be considered an academic venture project. But for a long time, because of some well-known cases, the entrepreneurial community has a view that a team with good academic background is usually good at publishing articles and proposing theories, but actual application-level entrepreneurship may not be grounded enough or the execution is not good enough. I don’t know Dr. Long, what do you think of this preconception? And have you ever thought about this view and what is CPChain’s answer to this?

Dr. Long: This may be a point where many people agree with you and raise questions. My response has two points. First of all, the current development of the blockchain is still in its infancy, and it is a technology driven industry. In fact, we speak about a specific type of industry: We can see the internet industry, big data industry, and artificial intelligence industry in recent years. A typical characteristic of this type of industry is specific knowledge-intensive needs and the demand of highly talented academics to advance. Therefore, in these three industries, if the team does not have a strong R&D team and does not have a leader with strong university ties, it is in fact very difficult to achieve breakthroughs in this field and it is difficult to occupy a place in this fierce market competition. This is my first point of view. It means that the blockchain is technology-driven and is still in a preliminary stage of development. It needs a team with a good academic background as a support point.

The second point is that our academic background is actually an advantage. For example, the things we are doing will pursue perfection. Whether we are writing a thesis or writing a report,

we all like to pursue perfection. But when we create real world applications with specific industries, we have to face a problem of perfection and speed. If the speed is slow, even if it is perfected, the opportunity may be lost. Of our three founders, I am partial academic. Dr. Zhao Bin applied technology at highly renowned companies and Shi Qingwei is experienced in business operations. We have actually a better and organic combination between us.

In the context of such a layout, we also hope to build a core team with the best R&D capabilities, technical public relations capabilities, and operational capabilities both at home and abroad. Because from the perspective of the blockchain itself, its philosophy is to achieve a democratic decision through an open and shared approach. I hope that our company will also be able to embody such a concept of blockchain in terms of governance.

Dapao: There is another problem. This is actually a question that everyone is very concerned about. I have seen that the date of your whitepaper’s inscription is December 2017. That is not long ago. Does this mean that the actual progress of your project is still in the stage of the whitepaper?

Dr. Long: Actually, I mentioned it already in the previous question. In fact, from the end of 2014, I have led my team to do a lot of in-depth research and development in the field of deep integration of IoT and blockchain technology, which has been accumulated for more than three years now. Although the installment of our whitepaper was December of last year, our technology accumulation phase has actually gone through a long period of time.

If we look closely at our whitepaper, we will know that we have a roadmap for R&D. The roadmap of the architecture we are going to build is clear. This is an accumulation of our long-term research. In the future, we will do our research according to such a clear route, so 2018 is an extremely critical year for our Cyber Physical Chain team. At present, our core algorithm has been developed, which is the parallel architecture. In order to achieve the secure sharing of encrypted data in this parallel architecture, we use symmetric, asymmetric, encryption and re-encryption technologies, and even in the future for some extremely privacy relevant data, we will adding some holomorphic encryption technologies and do in depth research and implementation in this area. In June we will publish and open source PDash, an important part of our algorithm construct.

In October, our mainchain will be officially going online. After the mainchain is up, we will develop our own side chains on the network. This is what we are going to do. During this process and while we develop, more applications will be able to grow within the network and form a good ecology. I think our plan is very clear and the path of R&D is well thought and structured, so it should be possible to advance quickly along the time we plan.

Dapao: Last question Dr. Long, let’s change the topic a little bit and talk about the industry in general. I am interested in your opinion on that topic. There are some controversial phenomena in the industry. One of them are blockchain forks and its sense and purpose. For example, in the last couple months there were several IFO’s such as from Bitcoin and Ethereum. And even Litecoin had a fork. Just to mention a few. Many investors get confused and ask about the legitimacy of such forks. People ask what is the intention and agenda behind forks. Dr. Long, can you talk about the recent Bitcoin forks or the perception of the overall fork phenomenon in this industry?

Dr. Long: I don’t have a positive or a negative view about forks. If you look at this issue, the essence of a fork is that the blockchain technology is constantly evolving and constantly innovating. Bitcoin or Ethereum, they have all achieved great success, but when dealing with some strategic development problems, sometimes people have different approaches to solutions, and also different interests. At this time, some people come out to do some forks. They mostly do this in the interest to further develop a new technology, because they have a different vision.

I think this is harmless. Whether it is the initial chain or the forked chain, the core questions is if the value and philosophy are reflected. There is no substantial technology without a good concept of value and philosophy. These two are the most important combinations. Pivotal.

Dapao: Dr. Long, do you mind to give us one more answer on this fork debate? Many people think that these forks are just made to generate money. Is this just an industry issue, or what is your opinion?

Dr. Long: You are good in following your script and chasing up my answers. In general, what you say may be true, but I have no influence. As far as I am concerned, I put my focus on the technology. And I am not very optimistic about such short term behavior. We need to see the big picture and focus on the fundamentals. The overall industry is evolving well. Bitcoin and Ethereum are the 2 flagships and well tested by the market. Whether they fork or not, we focus on our self. If you want to establish a project based on sustainability and foresight, you must be open and transparent. And that is what they do.

Having said that, I still hope that the people in our blockchain industry, whether it is miners, exchanges, core teams, and some people in our IoT industry system, don’t be so short-term oriented. We need to put our focus on a longer horizon and be more patient. Sure, we also want to see success now. But if we regard the blockchain as an upgrade or innovation of the Internet of Things, then we must know that this is not a matter of accomplishment. It may be that we can see its greater value twenty or thirty years later. For example, if I am 40 years old, I can make it to 60 years old. What a great career this will be! I hope that everyone can see this and put a long-term view on it. At present, everyone may think that this industry is a big chaos with up and downs, but these are just short-term views. Eventually there will succeed a group of people who are doing in-depth research in the field of blockchain technology, and put the value of the blockchain into the right business system. Then a new era will be formed.

Dapao: Our interview is basically over. Do you have some final words you would like to share with us?

Dr. Long: We can say that 2016 was the first year when blockchain became a more known concept by the general public. Bitcoin and later Ethereum became a known term. Then, 2017 was a year when blockchain became popular and we saw a hype at the end of the year. Even more so for China, 2017 was a very aggressive year. Things like Bitcoin and ICO’s have caused great controversy the last couple months. I hope that with the increasing global awareness and real world implementations we can enter a phase of substantial growth in 2018 and the coming years. Further, we need to focus more on the real values of blockchain technology, these are value of trust and value of data, and further develop the industry based on these core values. We will give our best to contribute and build a better blockchain ecosystem.

Dapao: Thank you everyone, this was the “Dapao Interview” with Dr. Long, the founder and chief scientist of CPChain. Thank you Dr. Long, we will see you next time.
(Summarized by CPChain Global Community Advisor: Steven/@mysterious )