An Unofficial Introduction to

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 Table of Contents

Table of Contents 2
Project Background 3
The Team 5
Planned Stages of Development 6
Token Basics 7
Risks 8
Conclusion 10
References 12
Author Notes 13

Introduction
CPChain is yet another blockchain-based project coming out of China. With the

many cultural barriers created by differences in both language and business etiquette, it

is often difficult for western investors to separate the promising projects from the scams.

Yet it would be foolish to ignore all Chinese projects, as the enormity of their industries,

as well as their highly-collectivist population that has a high percentage of people

focused on long-term oriented investments1 makes China an ideal place for

revolutionary technology to take root. This paper contains observations and notes based

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on personal research of the project and team in both Chinese and English, as an

attempt to bridge the two. The aim is not to be overly technical, with the intention of

making it understandable for the common investor, and to be free from bias.

DISCLAIMER: While I do own CPC tokens, it is at present not a large investment, and I have

not been approached by the team to write this, nor did I compile this with the intention of

being compensated for it. My research was for personal use only, and I don’t intend this to

be financial advice.

Project Background

According to the whitepaper2, CPChain attempts to integrate the blockchain with

Internet of Things to create a fully decentralized and trustless distributed system. They

attempt to do this by separating into three layers:

Fig 1: Separation of three technologies (Source: cpchain.io)

This separation allows for the project to achieve the desired outcome of any

effective blockchain: highly-scalable, without compromising on speed, security or

decentralization. The bottom layer, the main chain, allows for a trustless and

decentralized 3rd-generation blockchain.

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 The second layer allows for different industries to build industry-specific dApps

(decentralized apps) and side chains, so that it can be adapted and adopted for

enterprises to use. Two industries they appear focused on are the medical industry,

where they’ve reached a partnership with Hunan-based Zhichao Medical Technology3,

and the auto industry, where they have recently announced a partnership with the

Mobility Open Blockchain Initiative (MOBI), a non-profit group that works with

companies like BMW, Ford, Bosch, Renault, and GM4. While we are yet to see these

partnerships produce anything of substance, as they are both relatively new and details

remain under non-disclosure agreements, there is no denying the size and potential of

the Chinese IoT market, should CPC manage to follow through with their claims. CPC’s

inclusion in MOBI as well as the Trusted IoT Alliance5 are strong indicators that the

underlying technology is capable of doing just that, and in my opinion, are enough to

eliminate any fear of the project being a scam. TIOTA combines massive industry

leaders such as QTUM, IOTA, Vechain, Ledger, and Bitse, with enterprises such as Bosch,

Cisco, and US Bank. This is a major endorsement for the CPC project, and one of the

main factors in my subsequent research on the project.

The third layer represents distributed data, in a layer known as PDash. Currently

released in it’s first phase, this layer allows users to submit, search, and authorize their

data to be shared with other users (or enterprises). By separating the data from the other

chains, it gives added levels of security and user-control, and also reduces the

bottleneck of data on the main blockchain. An example of this in a real-world

application would be automated driving records compiled by car sensors, which the

user could authorize via smart contract to be shared with insurance companies or

authorized repair shops, to qualify for discounts and enhanced service. Because all data

is distributed and stored, users would be unable to alter the data, creating trust. More

importantly, CPC claims that their PDash solution is compliant with stringent EU GDPR

regulations regarding authorization control and identity verification6, further increasing

the likelihood of enterprise adoption. There are countless real-world examples of how

this technology could increase savings and trust for both enterprises and customers,

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thus PDash provides a strong case for why CPC may eventually gain widespread

adoption as a project.

The Team
One of the biggest challenges for western investors is evaluating the

qualifications and capabilities of teams comprised entirely of non-native speakers.

Chinese universities, projects, and corporations function quite differently from their

western counterparts, so it is easy to be duped or underwhelmed by an employee

profile.

Fig 2: (left to right) Dr. Long Chengnian, Dr. Zhao Bin, Shi Qingwei (Source: cpchain.io)

The team is led by Dr. Long Chengnian, who is listed as a professor in the

Department of Automation at Shanghai Jiaotong University7, which Forbes ranked as

the 7th best Chinese University (188th in the world) in 20188. He is also listed as a

receiving a Ph. D. in electrical engineering from Yanshan University, before attending the

University of Alberta where he received a Killam Scholarship Award. He appears in over

80 peer-reviewed research papers. His research covered many fields, such as queue

management, wireless networks, streaming media protocols, networked control

systems9, and mobile sensor networks10. While researching Dr. Long’s background, it’s

easy to quickly sense his knowledge and passion for the technology, and his credibility

in the Chinese scientific community is also quite evident.

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 Dr. Zhao Bin claims more than 12 years of research and development, citing

communication, IoT, and FinTech as his strengths. Shi Qingwei remains a key figure in

the Chinese cryptocurrency scene, as he is an advisor to the Banyan Network11, and

worked alongside other blockchain projects. Dr. Long believes the team complements

each other well, as his personal strengths are in academic research and technological

innovation, whereas Zhao excels at technological application. Shi Qingwei completes

the team by bringing his experience in business operations, allowing each of the three

members to combine their individual specializations and talents12.

One area CPChain needs to show improvement is in public relations. The team

(currently 17 core members shown on the website) remains entirely Chinese, and until

recently have remained largely unknown on a global scale. The team has recently

committed to increasing their PR presence, by announcing they are partnering with

Russian PR agency MarziPR13. In recent weeks, there has been a flurry of press releases,

indicating that the team is taking the need for positive public relations seriously.

Planned Stages of Development

Fig 3: CPChain Developmental Roadmap (Source: cpchain.io)

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 CPC’s roadmap is both ambitious and well-organized. The three layers (main

chain, industry side chains, and PDash) are scheduled to progress until they are united

into a consolidated system in Q3 of 2020. Throughout this roadmap, multiple iterations

of each layer will be revised and upgraded, allowing investors to gauge the step-by-step

progress, as value is added to the project in each segment. Key dates include the Q4

2018 mainnet release, which will see the CPC tokens swap from their ERC-20 format on

the ethereum chain to the official CPC blockchain. This will be a major milestone for the

project, as will the Q2-2019 side chain token model (investors will be curious as to how

they will be compensated on side chains) and the launch of the PDash 3 decentralized

marketplace. There is a high degree of transparency with the project’s objectives, and

the organization of the roadmap appears to be representative of the academic and

logical progression a leader like Dr. Long brings to a project.

Token Basics
In a world overrun by ICO’s, identifying which projects have solid token

fundamentals is highly important. Many people are still waiting to see the proposed

masternode and token model which will be announced in August of 2018. There is a lot

of speculation surrounding how the token will be used, and it’s reward structure, but at

this point I choose not to comment on them. According to the whitepaper, CPC will be

the fuel used to fund transfers and smart contracts. The consumed CPC will then be

recycled and served as a reward to masternode holders (p. 29). At the time of writing,

one CPC token is trading for slightly less than $.08 on exchanges such as Kucoin, Bibox,

and IDEX. This represents an opportunity to accumulate before the masternode

announcements potentially cause people to rush and meet masternode requirements. It

is currently the 227th ranked coin on coinmarketcap.com, and with a marketcap of only

$28.5 million, the potential growth is noteworthy. There is a total supply of 1 billion

tokens, with a circulating supply of 377 million tokens.

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 Risks
While cryptocurrencies remain such a volatile, unregulated asset, it goes without

saying that small marketcap projects such as CPC carry an extremely high risk to any

investor. Listed below are a number of issues that stand in the way of CPC being

adopted on a large scale.

A. Lack of clarity by the Chinese government on regulation: CPC has made clear their

interest in expanding to other countries, and have already made progress in Korea

and Russia. But without the support of the Chinese government, blockchain

innovation will be severely stifled. This is, however, a double-edged sword, as

positive clarity by the government would likely add incredible momentum to the

project. For now, we have nothing to go on except President Xi Jinping’s recent

praise of blockchain technology and IoT14, as well as the Chinese IT Ministry taking

steps towards creating official blockchain standards15, as indications that the country

isn’t planning on stifling innovation completely. With the current competitive nature

of the major world economies, China has a lot to gain by embracing technology

sooner rather than later, and establishing itself as a leader for both financial and

political reasons.

B. Decentralization and Security: These two elements, along with speed at high volume,

make up the three core elements of any blockchain project. Many projects are

capable of achieving two out of the three, but in my opinion, as of today there hasn’t

been a definitive solution to all three. CPChain uses a hybrid consensus protocol

based around two-layer, committee-based consensus. Prior to each round (block) an

electoral algorithm determines which nodes will be part of the committee. These

nodes, if consensus is met, will then broadcast the block information to a second

randomly-elected committee, which will then confirm the consensus reached by the

first committee. In this manner, they protect the blockchain from attacks or double-

spends. The electoral algorithm is based partly on randomness, but also has a credit-

system factored in, to filter out malicious nodes. For more details on the algorithm

and consensus models, please refer to page 18 of the white paper. It’s worth noting

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 that this information may become outdated in August, when the new masternode

information is released.

C. Competitors: The field of IoT is progressing at a fantastic rate, and CPC is far from the

only game in town. Domestically, Vechain, Waltonchain, and several other projects

have established themselves as legitimate IoT projects, with each of them garnering

large-scale and even national level partnerships. Internationally, projects like IOTA

and Ambrosus have numerous high-profile partnerships, while existing enterprises

like IBM and Alibaba are already developing their own centralized solutions for IoT.

However, data suggests that with IoT-connected devices likely to increase from 11.1

billion devices in 2018 to 20.4 billion devices in 202016, the digital economy and

amount of corporations using devices to harvest data are likely to continue

skyrocketing.

Fig 4: The Internet of Things (Source: The-Block.io Medium)

This is an indicator that there will not just be one champion of the industry, rather, a

multitude of projects that will experience fantastic growth over the next few decades.

With data provided from CPC itself, we see that China is certain to be a focal point of

IoT growth. Previous experience would teach us that foreign tech companies have a

hard time succeeding in China, so it’s likely that protectionist policies would ensure

that a Chinese IoT company provides the bulk of the Chinese IoT solutions. This

grants companies like Waltonchain, Vechain, and CPC a major in-road into the
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 industry. It’s worth noting at this point that Vechain has already invested financially in

CPC, lending it credibility, and decreasing the likelihood that Vechain would see

itself as a direct competitor.

Fig 5: IoT growth within China (Source: CPChain Medium)

Fig 5: Expected IoT growth in China (Source: CPChain Medium)

D. Failure to Meet Expectations: This project, like any other tech-related project, bears

the inherent risk that they will fail in their mission to provide a service that industries

and consumers find beneficial. Poor technological designs, bugs, and bad decisions

can hamper a company. My belief is that investors, including Vechain and Torque

Capital17, as well as valuable partners such as HPB, TIOTA, and MOBI have all done

their due diligence and arrived at the conclusion that they are capable of becoming

a leader in IoT technology. In addition, these partners will provide guidance and

open doors within the industry, allowing CPChain to further the vision laid out by Dr.

Long and his team.

Conclusion
To summarize, I believe that CPChain offers people a chance to become early

investors in a company positioning itself to be a leader in a trillion dollar IoT industry.

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 Fig 6: Opportunities in the IoT industry (Source: CPChain Medium)

What I like: The digital economy of China (and the world) is ready to be developed and

properly monetized. Dr. Long and his team seem to be competent and capable, and

they have a decent vision. They have surrounded themselves with alliances and

partnerships that will help support them, as well as legitimizing the project. As a long

term investment, this project seems to be worthy of hanging onto.

What I’m not convinced of: The ambition and scope of the project is large, it’s

impossible to completely determine at this point if they are capable of following

through with it. The PR and communication (at least as far as the western community) still

have a few growing pains to deal with. They would strongly benefit from a well-spoken

executive that could be the face of the project. As a short-term investment, China’s rocky

relationship makes it a bit of a wildcard.

There is no shortage of risks in this fledgling industry, but when considering the

credibility that the recently announced partnerships bring to the project, as well as the

experience and guidance that Dr. Long and his team provide, I believe that CPChain has

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a solid chance of success. If they can adhere to their proposed roadmap, their place in

the Chinese and global IoT markets could be significant.

References
1. https://www.hofstede-insights.com/

2. https://www.cpchain.io/CPChain_Whitepaper_English.pdf

3. https://medium.com/@eazycrypto/cpchain-partners-with-zhichao-medical-

technology-company-to-use-medical-data-with-iot-and-2a70690e8ab6

4. https://medium.com/@cpchain/cpchain-announces-partnership-with-mobility-open-

blockchain-initiative-mobi-ce87d1d7e0a

5. https://www.trusted-iot.org/

6. https://medium.com/@cpchain/cpchain-the-integration-of-digital-economy-and-

trust-machine-2165766cae0b

7. https://baike.baidu.com/item/%E9%BE%99%E6%89%BF%E5%BF%B5/7906169?

fr=aladdin

8. https://www.timeshighereducation.com/student/best-universities/best-universities-

china

9. https://www.sciencedirect.com/science/article/pii/S1874102908600956 https://

doi.org/10.1016/S1874-1029(08)60095-6

10. https://ieeexplore.ieee.org/document/7420940/

11. https://www.banyanbbt.org/#teams

12. https://baijiahao.baidu.com/s?id=1606754852109349559&wfr=spider&for=pc

13. https://medium.com/@cpchain/cpchain-partners-with-pr-agency-travels-to-korea-

and-announces-technical-ama-8f88ad0c6c2

14. https://www.cnbc.com/2018/05/30/chinese-president-xi-jinping-calls-blockchain-a-

breakthrough-technology.html

15. https://www.coindesk.com/chinas-it-ministry-moves-to-create-national-blockchain-

standards/

16. https://www.gartner.com/newsroom/id/3598917

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17. https://cryptosumer.com/2018/03/04/torque-capital-partners-announces-

blockchain-partnerships-matrix-ai-network-cpchain-zebi/

Author Notes

This is not financial advice. For comments or questions, you can find me at:

Twitter @BenYorke

Email: benyorkemedia@gmail.com

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