Xu Jizhe: Newton Has the Same Goals as Pinduoduo, Led by NewMall as a Prototype Project

“Tomorrow’s Stars,” following the video interview program “Face-to-face with Giants,” and the in-depth online interactive interview program “Bull-bear Enlightenment,” has been created by Qianba together with well-known media such as Odaily, Jinse.com, Alpaca Blockchain, and Ourea Distributed Community. It will investigate the stars of tomorrow, with great potential in the blockchain sector, from the perspective of entrepreneurship and investment. Witness the rise of the industry through the eyes of new stars!

Special Guest:

Xu Jizhe, founder and CEO of Newton

Host:

Fan Yuanyuan, Partner of Qianba

Interview:

Qianba: People say “a day in currencies is like a year in the outside world.” Over the past year, blockchain and digital currencies has seen countless hot spots. Markets have also moved from greed to fear, and many have even left the market entirely. What achievements and progress has Newton made since its establishment and construction of the team? What milestones would you like to share?

Xu: Over the past year, the entire market has uniformly lost value. Industry participants, including exchanges, projects, and investors, have all faced great pressure.

Newton was created in just this market. It was born in January 2018; the first draft of the White Paper took shape in March; the first (cornerstone) token exchange was completed in March and April; and the second in July. Meanwhile, the technology was developed concurrently, followed by development of the main network NewChain and the wallet NewPay. NewChain was launched on December 18, 2018, simultaneous with NewPay. Along the way, we also developed the first Newton DApp, NewMall, which can also be called the Amazon or Alibaba of Newton. Moving into 2019, our largest recent milestone event has been our April 16 launch on the Huobi Prime select project list.

All in all, Newton is a typical project launched in the cold winter of the bear market. In my personal experience, bear market projects are always difficult. The challenges of community positioning, project promotion, and community maintenance and development become that much larger.

Projects growing in the bear market are tested severely in terms of the core team, partners, and token exchange participation from both individuals and institutions. Projects which pass such tests become more rugged and risk-proof, creating better prospects for future growth.

Many people have indeed asked similar questions. From the perspective of entrepreneurship, the bear market is a great opportunity for excellent projects and teams. It scares away the speculators and the weaker competitors, so it’s not a bad thing overall.

I feel that there will be more projects like Newton in the future. Blockchain projects which create true intrinsic value will inevitably emerge, and the industry as a whole will eventually thaw out.

Qianba: As one of the earliest Bitcoin miners and holders, and having founded Elastos (ELA), you left at the end of 2017 to start the Newton Project. What has your psychological journey over the past year or so looked like? What are the most impressive things that have happened?

Xu: As early as 2011, I learned about Bitcoin through the Free Software Foundation website. Later on, I got some mining experience. These are mostly technical people interested in Bitcoin, far from industrial scale, but it later proved to be an important entry point for me into blockchain.

Around the end of 2016, I began doing research with some friends on what we might be able do in the blockchain industry. By early 2017, I was working on the outlines of a project with Chen Rong and Han Feng. The project later became Elastos.

In fact, I have been getting constant questions over better half of the past year, particularly the most recent month or two, over the relationship between Newton and myself, and Elastos. Some reports have even completely distorted the facts. I have not responded publicly to this matter before, so today I am using the Qianba platform to formally respond for the first time.

Simply put, since Elastos was founded in July 2017, and up until now, the project itself, or at least the team, has indeed had a lot of problems.

But from the start of the project in July 2017, the team made concerted efforts to work together. By the end of the year, I and one of the core team members had increasingly divergent and irreconcilable ideas. I finally quit in December, but no media announcement was made at the time. An open letter was simply sent to the 500-member community announcing my formal withdrawal.

After leaving the project, I began to conceive of the current Newton Project, at the time simply called the “decentralized E-commerce protocol.”

Some have noticed that certain portraits on the Newton website correspond to those on the Elastos website. In fact, some members of the Newton community indeed come from there, including myself. The original and present Elastos community has maintained a very harmonious relationship with the Newton community.

For example, I am good friends with Han Feng, apart from the Elastos project. We try to help each other as much as possible. In January 2018, I told him that I was going to start the Newton Project. At the time, Elastos was on an obvious upward trend. I told him that if he was interested, he could also participate, and he readily agreed, becoming an angel investor in Newton. This is an objective fact.

This is not to say that Newton and Elastos are the same team. They are two different projects from front to back.

So you can see that my relationship with Elastos is completely open. Also, I understand that some members of the Elastos community are planning to issue an open letter in the near future to further clarify this issue.

Qianba: Newton has completed three token exchanges. Investors include well-known institutions like JLAB, Consensus Labs, Genesis Capital, and BlockVC. Almost 4,000 BTC have been exchanged. How did Newton earn the graces of so many big names?

Xu: Excellent question. Considering the market situation in 2018, 4,000 BTC is indeed a significant achievement.

As for why so much support from these institutions, I think the main reason is the uniqueness of this project.

We know that most projects on the market are purely technology-driven –positioned as new technologies.

But I believe that looking at the whole technology industry, including blockchain as well as previously computers, Internet, and even electricity and the steam engine before that, all technological innovation proceeds along two stages: first technological exploration, and then commercialization, only after the technology has reached a certain level of maturity.

Only if a technology is applied to our lives does it create value and hold significance; otherwise, lacking practical value, it will eventually be eliminated. Blockchain is currently undergoing a quick transition from technological exploration to commercialization. The window has already arrived.

Newton is positioned as infrastructure for the community economy, aiming to upgrade the current corporate economy to a community economy, from an incentive model where “many contribute and few benefit” to one where “everyone contributes and everyone benefits.” In this context, we certainly make use of blockchain technology, but it alone is not enough to create applications and products with true commercial value. To form a complete technology stack, we also need decentralized storage, blockchain IoT devices, etc. Newton has a full stack including a basic technology layer, middle layer, and top-layer DApps.

This positioning is rarely seen in the market, and may even be ahead of its time. We believe this represents the development trend of the sector. Sooner or later, any technology (including blockchain) must be applied to real problems.

Imagine if in five or ten years, we were still looking at the blockchain industry and talking about the encryption algorithm or scalability of whatever project. What we need to looking at is how a project or a product can help us. Only in this way can the sector progress.

To summarize, what the ordinary user needs isn’t blockchain itself, but a better life. We must think more seriously about using blockchain thinking and technology to serve society and create value. Industry insiders can talk all day about the blockchain concept, but they must be able to talk about its value propositions to users — such as lower cost, higher profits, and better data protection — if they are to have any hope meeting them on their level.

Finally, I would like to take this opportunity to thank these institutions and communities in particular for their support. Good positioning and vision also require the support of the whole community and all sorts of partners, without which Newton could not succeed. Thank you again.

Qianba: In the recently released batch of posters, Newton’s “friends circle” includes many heavyweight B2C E-commerce founders, such as Okbuy.com founder Li Shubin, Meilishuo founder Xu Yirong, Lightinthebox co-founder Liu Jun, Kela founder Guo Feng, and mbaobao.com founder Ye Haifeng. Newton also loudly promoted an “Avenger’s Alliance.” What’s being “avenged” here, and what stories can you share about them? Also, what shortcomings in terms of the “friends circle” or resources still need to be filled in Newton’s development plans?

Xu: The “E-commerce Avenger’s Alliance” borrows the name of the Marvel movie, and it also makes an interesting metaphor. These founders and CEOs in the B2C vertical are all good friends of Li Shubin and myself. We have known each other for a long time. They are all successful entrepreneurs. Their companies have raised a combined sum of more than $5 million.

In the fierce competition in E-commerce around 2011, these were well-known figures in China and even the world. At the time, I was still at Okbuy, and many of its advertisements could be found in the Beijing subway.

From another point of views, these E-commerce moguls are not satisfied with the status quo. For many years, they have been thinking about how to improve their technology, user experience, and business models to create breakthroughs for the retail sector.

Over the previous few years, I had been thinking from time to time about the impact blockchain would have on the retail and E-commerce sectors. When I embarked on my new project in January 2018, I did not hesitate to consider combining blockchain with retail as an entry point. We found that retail, represented by Amazon and Alibaba is in fact a microcosm of the corporate system, and with the Newton project, we positioned it as infrastructure for the community economy. We hoped to create an application with a broad user base to open up the market, rather than just provide a pure technological framework. Therefore, we launched the first Newton DApp ourselves: NewMall. In summary, we hope not only to contribute to society, but also to return benefits, data, and governance rights back to contributors, including the myriads of consumers and delivery couriers, and so on.

Qianba: Newton has launched NewChain, NewPay, NewID, and NewMall, its first commercial application. Where is NewMall’s value for the Newton blockchain economy manifested? The number of users has reached 130,000. Does the team have any upcoming ‘small targets?’

Xu: Because the thinking and technology behind blockchain is so new, many people have no conception of it at all. We hope to use NewMall as a “model project” to let demonstrate how the token economy can be used to transform traditional commerce. Just as when the mobile Internet first emerged, apps needed a model at the time, DApps on the blockchain are the same.

NewMall’s benchmark is retail. We all know that retail is the largest, or one of the largest industries in the world. Newton has rich experience in retail, particularly online. Through a DApp like NewMall, we hope to inject a steady stream of fiat currency into the Newton economy.

As more and more users enter the community through fiat transactions, these users will generate more and more transactions. Through these transactions, Newton will charge merchants decentralized E-commerce fees much lower than on traditional platforms. The fee will take the form of incentives. Rewards are distributed to the community through NewPay, meaning that the value of Newton and the size of its digital assets continuously increases. Rapidly growing asset volume will support the value of Newton tokens.

The Newton account management system NewID has reached 130,000 users. Our next small target is 500,000 token holders. We hope that this number will reach the millions in 2019. At that time, Newton will become a major economic community.

Supposing the annual purchasing power of each NewMall user is RMB 10,000, just based on transactions, the purchasing power of a million users would be enough to burst forth with tremendous power and change the world.

Qianba: In an interview with multiple media, including Qianba, last Friday, you said that Newton would become the Aliyun the blockchain era. Can you share the logic of that statement? Supposing that NewMall is Newton’s “prototype project,” what else can community members do within the ecosystem?

Xu: As blockchain technology continues to develop, the corporate economic model will gradually transition to a community-driven model.

Consider Bitcoin, the first successful blockchain application. There wasn’t any company called Bitcoin — it was completely organized by the community. When the market value of Bitcoin reached its peak, it reached hundreds of billions of dollars, 4–5 times that of Baidu.

In the future, everything from retail and travel to real estate will be upgraded from the corporate to the community economy. In this context, I think new entrepreneurs and young innovators use the community economy as an entry point for their businesses.

To do so, they will require infrastructure: blockchain to execute contracts and guarantee the rights and incentives of digital assets, and decentralized storage to store large amounts of data off-chain. The logistics industry, for instance, needs IoT, particularly blockchain IoT, for supply chain tracking, for instance.

Newton provides this infrastructure, allowing developers to easily upgrade industries using Newton. Therefore, besides the NewMall “prototype project,” Newton won’t create any more DApps. They will be left to the community, developers, and entrepreneurs.

Qianba: Speaking of the emerging E-commerce economy, we can’t leave out Pinduoduo. They exceeded Jingdong’s market share for a time, becoming China’s second-largest E-commerce player, second only to Alibaba. As an industry veteran, what lessons do Newton and you personally draw from the rise of Pinduoduo?

Xu: Over the past five years, Pinduoduo has become a highly successful company, and not only in E-commerce.

Newton has a different way of thinking about the retail business, and applies different technologies. We hope to reach the same ends, but I think Newton is more thorough.

In fact, Pinduoduo’s early model was similar to group purchasing. In essence, it manually aggregated purchasing power for a given SKU to substantially reduce costs, then increased the size for scaling effects.

The essence of Newton’s NewMall is to aggregate SKUs in the mall using blockchain, fully automating purchasing power. In terms of the model, NewMall can be understood as a fully automated version of Pinduoduo’s purchasing power aggregation. For transactions, it affirms users’ digital asset rights and gives incentives to contributors — both of which Pinduoduo lacks.

Qianba: Which aspects of your recent launch on Huobi Prime were expected, and which were unexpected? What was the most difficult choice?

Xu: The process of communication with Huobi Prime, both before and after the launch, has been very dynamic. The Prime model itself was a promotion along the lines of “Single’s Day.” This kind of promotion allows a project to quickly amass a large base of token holders within a short period, despite the background of a declining market overall.

One relatively difficult point has been negotiating a mutually agreeable sales price and scale on the Prime platform. But this is a process of continuous discussion, negotiation, and exchange.

It is difficult to come up with a reasonable, objective value (ratio of currency price to liquidity). Through continuous discussion and exchange, both sides must eventually reach an agreement, “seeking common ground while reserving differences.”

Qianba: After a blockchain project is launched on an exchange, its development will be affected by the secondary market to a greater or lesser extent. How does Newton see the double-edged sword of capital? Are you and the team ready?

Xu: The team is definitely ready. In my opinion, entering the exchange market allows tokens to circulate, so that more people can benefit, bringing new participants in — which is very important.

Undeniably, once on the exchange, the whole project will inevitably be affected by overall industry cycles and price fluctuations. I see this as a positive thing. It’s what we’ve been preparing for all this time.

Given the current bear market, the most important thing for us is to keep strengthening the project fundamentals: vigorously expanding the size of the community, the NewID base, and NewMall transaction quantity. This will allow more users to experience the benefits of the community economy, reduce their transaction costs, let them own their own data, and give them a change to participate in the governance of a new community economy.

That means that NewMall will create more revenue, which will be used for incentives to the whole community. In addition, we will also develop new markets, such as in Korea, Southeast Asia, Japan, and the US. Only in this way will the value of NEW be supported, manifested in its price.

Qianba: Returning to the project itself, what are Newton’s strategic development plans?

Xu: Newton must always keep a constant focus on the project itself.

Our subsequent focus will still be on strengthening project foundations — expanding the market, community, and user base. Then we will apply our DApp to upgrade more industries through our infrastructure.