PCHAIN CEO, Dr Jeff Cao: “The Chinese Government is in fact one of the biggest advocates of blockchain technology in the world right now.”
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PCHAIN is one of the most ambitious blockchain projects in the world. It is a multichain smart contract platform, the first to support Ethereum Virtual Machine, which uses cutting edge technological innovations — such as sharding, sidechains and cross-chain interoperability — to enable large scale blockchain applications.
It completed a sell-out token sale in May and has been moving at a wild pace ever since. We sat down with their CEO, Dr. Jeff Cao, who has been referred to as “The Godfather of Chinese Technology”, to understand what they have been doing since the ICO, their plans for the future and the status of blockchain in China.
Jeff was one of the first people to get involved with blockchain in China. He holds multiple patents, created the first financial transaction on the blockchain in China, sat on the Patent Review Board for IBM China and co-founded Finchain, one of China’s first blockchain companies, as well as the China Federation of Logistics and Purchasing Blockchain Community, which he is now working with for PCHAIN’s supply chain initiatives. He is connected with the highest levels of the blockchain, regulatory and financial ecosystems in China, most recently hosting private round tables with the Chief Information Officers of one quarter of China’s big banks.
In the interview below, you will learn:
· How PCHAIN has already achieved major technological breakthroughts to enable unprecedented levels of efficiency and scalability without sacrificing decentralization
· The huge partnerships PCHAIN is forging with big banks, Chinese cities, financial services business, education technology companies, the supply chain industry and more
· Why “the Chinese government is in fact one of the biggest advocates of blockchain technology in the world”
· How PCHAIN is approaching tier one cryptocurrency exchanges
· What Jeff is bringing to PCHAIN from his experience on the Patent Review Board for IBM China, creating the first financial transaction on the blockchain in China and co-founding the China Federation of Logistics and Purchasing Blockchain Community, as well as Finchain, one of China’s first blockchain companies
Torque (T): What have you been focused on since the ICO? How will you be using what you’ve raised?
Dr. Jeff Cao: Following the ICO, my main focus is twofold. The first is technical development and the second is business exploration.
Let’s talk about technical breakthrough we achieved. If you remember, we released an MVP/prototype with 32 validators last month, just before the ICO. Three weeks have passed since then. In the last week, our test net has been extended to 72 validating nodes and it can run smoothly and generate blocks successfully. It’s a huge improvement, allowing for double the number of validators. We then further extended the test net into 100 validating nodes. It’s a huge improvement from a technical point of view.
It is hard to appreciate how fast this is. In fact, we know that traditional PBFT can only support around 20 nodes. That means that if the number of validators is larger than 20, the traditional PBFT can hardly achieve consensus. We already achieved a breakthrough by supporting 32 validators in our MVP/prototype, so extending that even further is a big challenge. With regards to scalability and decentralization, whenever you want to double the number of validators, you need a huge effort to achieve this. More validators means more consensus. More consensus means more communication cost, but it also means more decentralization. I think that is the cover value of blockchain.
Some other blockchain projects have only 20 or 10 validators that are master node or super node, which sacrifices decentralisation to achieve efficiency. By using our new PDBFT algorithm, we can achieve a better balance of efficiency and decentralization. In the long run, we hope to achieve much better efficiency than POW, but with a similar degree of decentralisation. This is definitely a breakthrough in terms of consensus algorithms. This is what we have achieved on the technical side.
T: And how about from the business side?
JC: From the business side, we have explored a lot of scenarios and potential collaborations within different domains. For example, we are exploring partnerships with respect to both financial applications and supply chain. We are also working on a collaboration with a city in China. From the money we raised, we hope to put as much as possible of that into development, so that most of the fund will be used to develop the latest and advanced blockchain technology. It’s not just for PCHAIN but for the whole blockchain ecosystem. This includes general problems we have observed in existing blockchain, especially with respect to smart contracts, such as scalability and the open loop problem. In general, we want PCHAIN to be a better smart contract platform that makes large-scale blockchain applications possible. It can be adopted in many areas, such as finance, supply chain, education, and so on.
T: You have been called “The Godfather of Chinese Blockchain” and “The Chinese Vitalik”. Please can you talk about your early activities in blockchain.
JC: In fact, I don’t think I’m “The Chinese Vitalik,” although I did meet Vitalik many times when he was just starting Ethereum. We had a good discussions and talks. Anyway, I was certainly a very early contributor to blockchain, especially in China. I was a blockchain technical leader and also on the patent review board for IBM Research China. I have been part of the blockchain community since a very early stage. In fact, the starting point was a collaboration between IBM and Samsung in 2015. I was also the first Chinese man or even Asian man to see the open chain core code, because I’m the technical leader in this area. After that, everybody knows about Hyperledger. Even in 2015, nobody knew where blockchain would go, even in IBM. So at the end of 2015, IBM collected the technical leaders from one research lab together in Shanghai and had three days of closed-door discussions. The result was for IBM to set blockchain as part of its global strategy.
That is the background of my blockchain experience. After that, I decided to launch a startup. That’s why I left IBM and start up two blockchain companies in China. The first is Finchain — its full name is Shenzhen Blockchain Financial Service Company. That was one of the earliest blockchain companies in China. We achieved many firsts in China. First we released the first financial prototype in China in time for the Big Data Expo, which was the highest financial forum in this area in 2014. After that, we accomplished the first financial blockchain transaction in a real scenario, which was also the first asset-earning transfer in the world. At that stage, especially in 2014, blockchain was not that popular. When we had meetings, I would ask who knew about or have heard of blockchain and very few people would raise their hands. Only a small group of people knew about blockchain. Fortunately, more and more people joined this group and more and more people got to know about blockchain, especially in 2017 and 2018. Now, everybody is talking about blockchain.
But I think blockchain is still in very early stage and still blockchain technology need to be further improved to make large-scale blockchain possible. Another very important thing for me, in the early stage of blockchain, is that after the financial prototype and financial transactions, I had this kind of mission: I believed, “Blockchain is the future. Everybody needs blockchain and every industry needs blockchain.” After working in the financial sector, I wondered what the next industry was for blockchain applications. After some consideration, I thought it should be a logistics and supply chain. That’s why I came to China Federation of Logistics and Purchasing’s blockchain community, which is the highest official organization in logistics and supply chain. A convinced their leader and their officers to start up China Federation of Logistics and Purchasing clockchain community. I’m the co-founder of this community and chief scientist of this community, which was founded in December 2016.
Even at this stage, some people were saying we were crazy, because it can’t happen. Two years later, in March of 2018, we had two conferences, The CFLA Blockchain Summit, and almost all the big supply chain and logistics company in China and the world came to this summit. Everybody is very excited to adopt blockchain in their domain and we had very good discussions. I’m very proud of it because that’s exactly what we wanted to happen. We want to get the blockchain adopted in as many promising industry as possible.
T: We understand that you are developing partnerships with commodities, equity and financial asset exchanges. What is the status of these partnerships? Please could you explain, in much detail as possible, how PCHAIN will work with these businesses?
JC: Yes, we are very actively developing partnerships with financial assets exchanges, but it still on-going. I think it’s very important to have the blockchain to be connected with real assets and real financial exchanges instead of only being based on Bitcoin or Ethereum. However, it’s not that easy, because in order to collaborate with very traditional industries, you need time for discussions and finding exactly the right ways in which blockchain can contribute. Anyway, I think there are many financial forums or organizations that are very interested in blockchain technology. Just in the last week, our financial expert held a very small round table discussion with eight banks CIOs and in the next week, I will go to Beijing to have further discussions with the CIO from five central banks — that is one quarter of the big banks.
T: You are also talking to the China Federation of Logistics and Purchasing. What kind of work do you plan to do here?
Yes, I think I already mentioned this in answer to your earlier question. Generally, I think China Federation of Logistics and Purchasing is a very important partner of us. It’s a huge market. It is around a $2 billion market, just in China. Very often, the logistics and purchasing company have many needs in terms of information, so it’s a really good area to further explore through blockchain technology. I think we can definitely collaborate with them and define the relevant standards in this area. We can also to get some general platform to be adopted by many big companies who are members of China Federation of Logistics and Purchasing. I think that is an important application area for PCHAIN.
T: Who else are you talking to, in which industries?
JC: I think a very important industry is around education. I think education is one of the most important spaces for blockchain adoption. Unlike other industries, education is completely for human beings, not just for machines. The human being is the most important thing. We often talk about education. We often talk about children. We often talk about young people. We often talk about the next generation. That’s the future of the human race. There are many important things to be done. In China, especially, from my perspective, education is a huge problem right now. The Chinese are very good at studying and learning. But I think that, currently, the number one killer of good education is examination-oriented education, where everyone learns just to get a better score. It’s totally wrong. It is a knowledge incentive problem.
Many people are working to solve this problem, to make education more fun, to generate more high quality content for education, especially online. But this means that a better decentralized system needs to be designed for the industry, and better content needs to be generated to attract more people and young men to this area. It’s very easy to see that we need better knowledge and content generation mechanisms, and this can definitely be helped by blockchain. We can have better evaluation based on real student data, so we can better evaluate performance instead of just through examinations.
We definitely hope to collaborate with some big and top universities, especially in China, to get a better system or mechanism to change this kind of situation. I think this problem may not just be for China, but for all of Asia and perhaps the world.
T: Since the rise of NEO, many cryptocurrency projects have emerged from Chinese entrepreneurs, although not all of these companies are operating from China. How do you see China’s relationship with cryptocurrency changing? In what ways do Chinese entrepreneurs approach cryptocurrency differently from people in other countries?
Jeff: I think more and more companies from China are playing a very important role in the cryptocurrency space. I think the Chinese government is showing a lot of promise, even though it has restricted ICOs. The Chinese government is in fact one of the biggest advocates of blockchain technology in the world. I think that many people don’t realise this. The Central Bank of China began to set up its cryptocurrency strategy in 2016. It’s quite advanced. The Chinese government also included blockchain in the five years plan in 2016. There is a great push of blockchain technology in China. That is the national plan. It’s a rare thing for Chinese to include a new technology in its national plan. We have big data, we have the internet, we have AI written into the national plan. But was after five years or even longer of the development of these technologies that the government decided to put them into the national plan. But blockchain technology made it into the plan after existing for only two years.
I also know that the Central Bank of China continues to invest in cryptocurrency and does not look to stop. I think that China will be a very good support of cryptocurrencies, even if we get some restrictions. For China’s entrepreneurs, I think we don’t want to cross the red line from the government, so we will follow all the rules. I believe China is a huge market and nobody can ignore it. I also think that more and more Chinese companies are working on blockchain and exploring various areas around it. I believe that the Chinese government also drive some changes, maybe they will have more positive regulations or some message to be shared later on. The Chinese government is also very actively investigating what blockchain is and what effect it can have in order to best regulate it. I think there is a lot of potential.
T: Can you talk about forthcoming applications that will be built on top of the PCHAIN blockchain?
Jeff: Yes. We have many on-going discussion with regards to the applications of the PCHAIN blockchain. For example, we are in discussion with a forecasting application. The application already exists, but they are interested in using the PCHAIN blockchain because of the scalability and the smart data (from a new Orcal mechanism) are very useful for forecasting applications. We are also exploring collaboration with an education blockchain company. As I mentioned earlier, this company will generate better education contents and have better evaluation. We may have more activities in this industry — it looks very promising. We are also working on more collaboration with the finance industries. They are very keen to adopt PCHAIN technology to build larger scale supply chain blockchain system.
VC: Beyond Bibox and IDEX, which exchanges are you talking to? What is your strategy for bringing the PAI token to new cryptocurrency exchanges?
Jeff: Beyond Bibox, we are talking with the tier one exchanges. Because of the NDA, we can’t say more, but for sure we are negotiating with the top exchanges in the world. They are definitely very interested in PCHAIN and already see the potential of PCHAIN. In fact, there are many new crypto exchanges that would like to actively list PCHAIN on their platform — we haven’t been putting so much effort in these ones yet. There have even been some new exchanges that just listed PAI without our permission. I think it’s open and that’s the spirit of blockchain, so we don’t stop them. We hope we can have a better collaboration with all the exchanges in the world, because we think PAI will become a fundamental token for many scenarios and applications. We welcome the world to collaborate and talk with us.
T: Jeff, thank you for taking the time to talk to us.
Jeff: My pleasure.