Interview with Lyu Xinhao, co-founder of IoT Chain

This medium article is a summary of the latest interview with Lyu Xinhao, co-founder of IoT Chain.

Introduction to IoT Chain

• We think that blockchain is not only technically solving security problems, but it’s also changing the industry’s play.
• The development of IoT Chain, we want to be built by the community.
• We are going to return the data sovereignty to the users in the age of the Internet of things.
• That is to say, the problem of security is a cost game. By using the blockchain, we can significantly increase the cost of doing evil.
• All the giant companies should embrace the fact and give the user’s data sovereignty back to the users as soon as possible.
• A main chain based on DAG is basically two quarters ahead of the expected time.

Why does IoT Chain make use of DAG?

• For internet of things, which is of high maximum concurrencies, performance is the most important problem.
• Supervision is actually good, there is a supervision that the industry has been paid enough attention to, and it can also make the industry more healthy.
• If this industry is absorbing enough, we can recruit the best team members effortlessly.
• 2018 would witness the practice of blockchain.

Establishment of loT Chain

Interviewer: As we all know, ITC was founded in 2017, but your team have set up for a long time. Could you please give a brief introduction about your team?

• The CEO and founder of ITC, Mr. Xie Zhuopeng, has been engaged in loT field for five years.
• Before the establishment of ITC, Xie was deeply involved in smart lighting field. The company he worked before is the smart lighting architecture supplier for OPPLE, the best lighting company in the world.
• Xinhao (co-founder) was a member of Xiaomi’s team and took responsibility for the development of blockchain.
• We started to operate the project of ITC in the early 2017.

Why do you transfer your focus from the field of loT to the field of blockchain?

• Actually, we’d rather say that we try to combine the two industries, instead of saying that we transfer our focus.
• We figure out that there are some pain points in the field of loT, among which security issues tend to attract most people’s attention.
• One of the security issues is about the security of the equipment. It would be fatal if my equipment is controlled by someone else. Right?
• Take camera as an example. Recently I heard some news about a domestic leading company. The cameras it sold automatically open the function of live streaming and gain commercial interests without users’ consent.
• Another security issues is about users’ data. Some equipment will produce some meaningful behavioral data. For example, the smart lock will gain the data of when the user comes back home or goes out. It will be horrible if such data is misused.
• We found that technology of blockchain not merely can improve the performance of loT. We can explore this point in detail then.

How does ITC cover loT’s setup

Interviewer: As you said before, the first security problem is about the smart equipment itself. Another problem is that users of loT have no access to his or her own data. The data is stored in the corresponding companies. How can we solve these problems with the technology of blockchain?

• Yes, fortunately these problems could be solved by blockchain.
• In fact, there are still other challenge faced by loT. For instance, we found that the overall Internet of Things has been developed to a reasonable size. If you are an innovative company or start-ups team who aspire to make some progress in smart hardware in such a loT ecosystem, the first challenge for you is to take sides.
• You have to stand with either JD or Taobao. Or you choose Xiaomin and will be invested by Xiaomi. In the process of taking sides, most of your commercial interests will be deeply influenced by such big groups.
• Actually, in most of the cases, the potential of start-up teams can not be perfectly released.
• From our perspective, blockchain can not merely solve security problems in a technical level, but can also make the business model of industry more free and open.

Establishment of decentralized platform

Interviewer: So for a start-up team who wants to set foot in loT field with its unique technology, it has no access to a specific landing solution without the help of big companies such as JD or Alibaba. But the connection between start-up teams and big companies may lead to interests sacrifice for the young teams. How is ITC going to establish a decentralized platform to help young teams get out of the dilemma?

• Exactly! With blockchain technology, we will establish a decentralized communication network for Internet of Things.
• According to vision posed by CEO Xie, we will build a distributed loT light operating system based on the blockchain.
• All smart hardware suppliers in this ecosystem have free and easy access to our network. They have no need to rely on some giants as before.

How does ITC operate?

Interviewer: Would you please share, how can we realize this vision in detail?

• We will build a public blockchain for high performance and high concurrency scenes in loT.
• After entering the public blockchain, an equipment supplier can follow our technical documents such as API sample or SDK sample at a low cost and freely connect its equipment with our networks. This process enable equipment suppliers to directly fave its users and other equipment, creating some intelligent interaction.
• Through this process, not merely does its development cost decrease, market entry barriers is also lower. Apart from that, suppliers need a high server cost for a new project in the original ecosystem. They can save this part of cost as they enter a decentralized network.

Interviewer: Can we simply say that ITC is something like Android system where users can develop some applications?

• Yes, the comparison really makes sense, because Android system is free and open. I think the two system share similarities to some degree.

Interviewer: So we offer a platform for small companies so that they can develop many relevant applications on this platform?

• There are still some difference. Android system is operated by Google, so the main research domain is decided by Google.
• But the development and direction of ITC is decided by it’s community. Members of community explore things that cater for interests of everyone together. This may be one of the difference.

Specific Application Scenarios of IoT Chain

Interviewer: Can you give us a more precise application scenario, that is to say, after the popularity of the IoT Chain, what kind of specific material benefit can some small users get?

• Let me give you two examples to illustrate this. Because I have a few years of work experience in MIUI, I am familiar with its ecology.
• I think some MIUI products can create something valuable, such as its Rice Cooker, which has probably hundreds of thousands of users. And its users can set the cooking order according to their habits.
• The smart thing about MIUI is that they realized that after they collected the data of the Rice Cooker users, they could recommend different recipes and cooking habits to different users.
• When MIUI did this, it created its business value. And the users would also find that the recipes MIUI recommends to them are in accord with their habits. Thus they would keep using this product.
• Well, let’s think about the logic behind this. We generate the data, but it’s like MIUI has got all the benefits.
• In fact, since the data is created by the users, they should possess the value of the data.
• After using the IoT Chain, the users will be surprised to find that they will benefit from their using of the devices because they do create value. IoT Chain will return the data sovereignty to the users in the Internet age.
• Let me give you another example. Back to the camera. Why do we always find the camera open for no reason and our videos in it are uploaded to the Internet?
• Because of a centralized architecture, the right of control of all these devices belongs to 360, and the videos are on its server. For the vendor itself, if it wants to do something to these videos, the user can’t stop it.
• Even if the vendor itself is trustworthy and will not do evil, once the center node or the central server are breached, all the devices will be breached.
• Then how things would go in the IoT Chain? Actually, all of the device sovereignty is on the client side, so if one device is breached, it would affect this device only and have no influence on thousands of other devices.
• How about the way I mentioned before? In a previous way, as long as the center server is breached, tens of millions of devices connected to this server would be immediately exposed to the hackers as broilers to make DDOS attacks.
• That is to say, the problem of security is a cost game. We are continually increasing the cost of hackers to do evil, which is to improve users security.
• By using the blockchain, we can significantly increase the cost of doing evil.

Interviewer: Well, actually I feel like, among the examples you just gave, the first one is more attractive to me. Because as you said the data sovereignty is mine, right? I should have the right to use it and right to earnings. Is it true that we can realize our data values after we apply the IoT Chain in the future?

• Yes, that’s right. In fact, back to data sovereignty, I’d like to say a little bit more about it. Let me give you another example.
• Let’s look at Ant Financial’s annual bill for this year. It has made it clear that Ant Financial can call all of your data without your authorization.
• All users of Ant Financial have their credit scores. Do you know how the credit score is profitable?
• For instance, a loan company may want to offer loans to those who have good risk control ability. Thus it will call users’ credit score, and the price of one call is, say, 1 RMB.
• If Ant Financial has 1 billion users, that will be 1 billion RMB, if the company call the data for 10 times, it will be 10 billion.
• In fact, this usage of data, which is known as the credit investigation industry, is only a small fraction in the whole data market.
• So let’s think about how the credit score of Ant Financial comes out.
• Actually, it sums up my internet usage behavior, the ID information that I uploaded, my educational background information, my online consumption record and my loan record.
• After putting these information together, Ant Financial can calculate a score for me. And finally, the giant company Ant Financial completely enjoys the value of those data.
• But actually, the data is generated by its users, by me. This is about the concept of data sovereignty
• We are going to return the data sovereignty to the users in the age of the Internet of things. There are at least two things of data sovereignty. One is called the ownership of the data, and the other is the right to earnings of the data.
• If you want to use my data, you have to tell me and have my authorization. After that, OK, you have generated some value, and you have to share the value of my data with me.
• Well, that’s what we’re going to do in the IoT Chain.

How would IoT Chain affect existing giants?

Interviewer: So in the future, when the IoT Chain come into use, what impact will it have on the current giants like JDcom or Alibaba?

• Very interesting topic. Every time we talk about the concept of data sovereignty to some insiders, they are probably making the data-related or directional AI-related things.
• Now big data analysis is also very popular, people are excited about it. I think it’s disruptive.
• All the giant companies should embrace the fact and give the user’s data sovereignty back to the users as soon as possible so that they won’t be eliminated.
• That is why I think it will be disruptive. The market is bound to be disrupted. So they need to embrace the change as soon as possible.
• But I also talk to some listed companies, including some domestic giants. In fact, it is tough for them to share the cake actively after they have gain profits from that. I guess this is a way of transformation that they are going to face.

What are the characteristics of IoT Chain compared to similar projects?

Interviewer: So after discussing the IoT Chain itself, let’s make a horizontal comparison between the IoT Chain and some other blockchain + Internet of Things projects on the market, such as IOTA or Ruff. Does the IoT Chain have anything special?

• In fact, I think both IOTA and Ruff are excellent projects.
• We have something different, but in the community, do you know, especially in the foreign community, people often take us and IOTA to do a comparison. And we think that such comparison makes little sense.
• The market itself is big enough, we are established in China and is also expanding the foreign market actively.
• So go back to IOTA, I don’t know if you know IOTA before. If you want to start an IOTA node, what are you going to do? It’s interesting. In the past, if you’re going to make an application based on a kind of technology, you just need to look at the technical documentation, right?
• In IOTA, you need to find a node that can help you start the node. If you want to have this node, first you need to have a friend who is doing the same thing.
• It seems like in IOTA, programmers need to know some new friends first. This is a very interesting thing.
• We will make the technology threshold very low. Things will be much easier than in some big companies like Alibaba where you have to follow the API.
• We will also make the user’s participation cost more friendly. In fact, there is some problem with IOTA’s performance. I don’t know if you have experienced the IOTA. If so, you’ll find its inefficiency and also other problems. Of course, it has a set of optimization scheme. IoT Chain now has done all the things, better than the performance of IOTA.
• We have good news. That is our main chain based on DAG will be launched two quarters ahead of expected time.
• We will also launch our main net soon and open source it on the Github. We are an entirely open source. This would be a different thing from IOTA because some things in IOTA are not open source.

Why the use of DAG technology?

Interviewer: IoT Chain doesn’t use Consensus mechanisms like DPOS or POW. Is there any particular reason for that?

• Actually, foreign community would call the blockchain industry the distributed ledger technology industry. From a technical point of view, the blockchain is just the first implementation of the decentralized and distributed protocol, which is based on the concept of ‘block’. The blockchain is a chain of blocks. It’s about Bitcoin and Ethereum.
• I think the most important thing is such decentralized and distributed consensus protocol, rather than the data structure of the blockchain,
• With the upgrading of technology, I think the blockchain is just the first attempt of distributed protocol implementation.
• No matter POW, DPOS or POS, they are all based on the concept of ‘block.’
• We can be Byzantine-Fault-Tolerant in fact, but we’ve completely abandoned the concept of ‘block.’ What we use, you may have heard before, is a DAG technology architecture, where all transactions do not need to go through a process of creating a block.
• Why is transaction so slow now? Because to get a transaction confirmed in the whole network, you need to wait for a block to be created. This time maybe 10 minutes for Bitcoin, and about 10 seconds for Ethernet. And for the DPOS and EOS, there is also a time gap.
• In these ways, you always have to wait until a block created then you can trade, and your transaction can be confirmed.
• This is a performance bottleneck in current projects which is based on the ‘block.’
• But in a project based on DAG, all transactions will enter into a consensus between transaction and transaction and can be confirmed immediately.
• In this case, we use DAG mainly considering its performance. Well, we also think that DAG should be a development direction of the whole distributed ledger technology.
• For technology and mathematics, DAG is a traditional term.
• It can be applied to navigation, for the shortest path and the best solution. In traditional industry, this data structure has been widely used.
• But the combination of DAG and the blockchain has been realized in 2014, if I remember correctly, in foreign community. At that time, DAG was a side chain, technologically.
• To be simplified, why does bitcoin operate so slow? Because you have only one chain. Then what if you have several chains at the same time? But would he consider consensus? Right. If we have several chains at the same time, these chains could construe a tree, a dendrogram.
• When the idea of combining DAG and blockchain has just been raised, it was still a concept of side chain, a block.
• Including IOTA that you just mentioned and Byteball which is popular, from then on, the combination of DAG and blockchain has got rid of the concept of “block”.
• We can reach consensus directly, thus making a great improvement.
• For ITC, we don’t have “block”, either. We can reach consensus directly. In that way, technologically, it is hard to put it into practice?
• Actually, if a technology is safe, of high quality, and of high maximum concurrencies, it’s not objective.
• We do hold that DAG is to improve performance, whose development is to solve the performance problem.
• Then why do we choose DAG? For internet of things, which is of high maximum concurrencies, performance is the most important problem. There are also some problems about DAG.
• Some people may hold that IOTA have the problems about decentralization, about open source.
• For ITC, we have our own solution, and we can use BFT (Byzantine Failure Tolerance).
• What does that mean? Under the precondition that we have to assure the performance, we can also guarantee the safety. It is a decentralized structure.

IoT Chain team

Interviewer: When it comes to the team, other than you Mr. Xie, who are there other partners?

• Our team, thanks to Zhuopeng, has a strong background of IOT.
• Our technology is also competitive. For my technology experience, we have absorbed some partners from BAT. They are excellent on technology.
• That’s interesting, if this industry is absorbing enough, we can recruit the best team members effortlessly, they would like to work together for the promising project.
• When we started this project, we saw the need for excellent talents. But later on, they came to us by themselves. If your project is worthy, the best talents would join you by themselves. Our team will announce some new members, who are more distinguished and more well-known. But I cannot announce the information now. You can follow our official media.

ITC’s plan on communities

• The technology of our team is competitive. For blockchain, especially, it involves the community, the process of community participation.
• On community participation, other than technology and talents, Two weeks ago, our three community partners, who had made overseas investments, visited us, one from Germany, one from Australia, and another from Vietnam. They made their acquittance on ITC community. They came to Shanghai together, to our company, especially. It means that we provided them this opportunity.
• They are professional in their own industry. They said that as they have invested in ITC, they would volunteer to help us promote ITC. They also gave us some advices. That means, blockchain, which is another topic, subverted our traditional way of working.
• The working way can be subverted and we will find that community is interesting and absorbing.

ITC’s plan of 2018

Interviewer: Apart from community, can you tell us your plan of this year? Other than main network do you have other key points?

• Right. With the process of our projects, we find that practice of the technology and cooperation has advanced at a faster pace than what we imagine.
• Our practice would be about AI, new energy, intelligent economy and intelligent hardware.
• For industries that I just mentioned, we have already had some partners. We have reached agreements and have signed the contracts with some.
• We have announced on our official website dozens of our partner companies, which are famous to some extent. You can see on our official website, we have some more influential partners, some are listed.
• As we cooperate with these listed companies, I cannot tell you about some secrecy agreement.

ITC and illumination industry

• Initially, it’s about illumination and as you mentioned just now, it will involve more industries.
• Why do we choose illumination? Zhuopeng have several-year experience in illumination industry. This industry is interesting. Actually, many people may ignore that fact that, for bulb, intelligent street lamp accounts for a large part.
• If ITC could solve the blockchain and IoT problem of illumination, then on performance or practice of the application, it means that we have some deep experience in this industry.
• If we can solve the illumination problem, it would be much easier when we work in other industries.

Blockchain technology development in 2018

Interviewer: As you mentioned, for your team, plan of this year is clear,. What’s your opinion about this year’s blockchain development? As you mentioned just now, you were in charge of blockchain-related department in Xiaomi. You are experienced, but what’s your opinion on this?

• It was in 2013 that I started to work about blockchain. It’s rather early, it’s since the second half of 2017, traditional institutions, I mean, institutional investors, crowded into this industry, IDG, Sequoia Capital, Zhou Hongyi, and others who would like to be anonymous. I don’t let their name known. They crowded in, for all industries, in my opinion, investing industry have the smartest people.
• They must have known the potential and prospect of this industry. After they crowding in, 2018 would witness the practice of blockchain. That means the competition would be fierce. Practice would be the key point, this is my prediction of this industry.
• As for law scheme of all countries, we are rational. Every industry must be regulated. During the initial period or the bubble period, some people would be irrational, when regulation is necessary. Actually, regulation is beneficiary. Regulation means much attention has been paid and regulation would guide the development of this industry.

Link of the full interview: https://t.co/K3BkxYDzAA