What is Qtum (QTUM)?
What is Qtum? Usually pronounced “Quantum,” and with the ticker code QTUM, the cryptocurrency is best described as a hybrid between Bitcoin and Ethereum. Bitcoin is known as a secure and reliable store of value and Ethereum is known for its programmable flexibility, so bringing these positive attributes together in single crypto, Qtum, makes a lot of sense.
Bitcoin and Ethereum are the two most popular and valuable cryptos, so the Singapore-based Qtum project was wise to combine them. Qtum features Bitcoin’s “UTXO” transaction model – which is shared by most altcoins given its proven reliability – but melds it with Ethereum’s ability to execute custom and complex smart contracts by incorporating Ethereum’s Virtual Machine.
Qtum’s design also ensures code compatibility with both Bitcoin and Ethereum. Again, this is wise as Bitcoin and Ethereum have the largest groups of arguably the most talented programmers. The coin is therefore well-positioned to integrate any future developments introduced by either of these two crypto heavyweights.
The History of Qtum
Qtum was launched as an ICO, which ran from mid-March to mid-April of 2017. 100 million tokens were released, with 51% sold to the public to raise an estimated $15.6 million. 20% of tokens were retained by project members, with the remaining 29% going to a development fund. The coin attracted investment to the tune of a further $1 million from crypto angel investors, such as Roger Ver.
On the 17th of October of 2018, the Qtum project pulled off quite a coup when it partnered with Amazon Web Services to provide blockchain solutions to developers and enterprises within China. This deal reflects its focus on catering to the business world.
Qtum’s team is composed of skilled individuals from the Bitcoin and Ethereum projects, as well as leading companies like Alibaba, Tencent, and Baidu. Its co-founder is Patrick Dai, a graduate of Draper University who previously worked for the Chinese e-commerce giant, Alibaba.
How Qtum Differs from Bitcoin and Ethereum
Whereas Bitcoin (BTC) and Ethereum (ETH) are both Proof of Work coins, meaning that miners perform electrically-intensive computational work in order to process and record transactions, Qtum differs in that it uses a Proof of Stake model. In other words, it’s not mineable through a graphics card or ASIC miner. Instead, transactions are processed and new QTUM is “minted” into existence by the wallets of Qtum holders. All that’s required is an internet connection and a quantity of QTUM.
This model is called “Proof of Stake” as the likelihood of a user successfully processing a new block (and so earning more QTUM) is directly proportional to the amount of QTUM they hold. Users are thus incentivized to process transactions honestly, as any fraud would soon be discovered and cause the price to drop, thus damaging the value of their holdings. Proof of Stake (often abbreviated to PoS) is the same model which Ethereum plans to convert to in future, as it saves a lot of energy expenditure and has some further benefits for decentralized applications.
Qtum currently has the largest Proof of Stake network in existence. In fact, the number of full nodes in the Qtum network (4432 at the time of writing) is eclipsed only by Bitcoin (~9511) and Ethereum (~8066).
How Qtum Works
As for how Qtum brings together Bitcoin and Ethereum, here is where things get a little technical…
These two cryptocurrencies differ in how they record user balances. Ethereum uses an Account Model but Bitcoin uses an Unspent Transaction Output (UTXO) set (UTXO). Whereas Ethereum’s blockchain assigns each user wallet a specific account, which records their ETH balance and other data, Bitcoin’s blockchain only records transactions.
Each user’s Bitcoin wallet queries the blockchain for transactions which relate to addresses controlled by that particular wallet’s private keys, then sums up the final amount to give a combined user wallet. One advantage of using the UTXO model is that Qtum light wallets are easy to implement, meaning it can be run on mobile devices. However, the Account Model is necessary to run smart contracts the way Ethereum does. To maintain compatibility with existing Ethereum code – by far the most prevalent way to write smart contracts – it was necessary to bridge the gap between these two models.
To successfully merge Bitcoin’s transaction model with Ethereum’s ability to run custom smart contracts, Qtum uses Bitcoin’s UTXO model in combination with its own Account Abstraction Layer (AAL). The AAL translates Qtum’s version of the UTXO set into something comparable to Ethereum’s Account Model. This automatic interpretation means that both models can be used simultaneously in Qtum.
As an example of Qtum’s ability to adopt tech, it’s currently working on integrating Bitcoin’s Lightning Network technology, which allows for near-instant and feeless transactions.
Qtum is also developing its own meaningful tech however, such as the Qtum x86 Virtual Machine upgrade to the Ethereum Virtual Machine (EVM). The x86 VM allows for a sandboxed environment in which to run smart contracts written in 4 different and widely-used programming languages, whereas the EVM only allows for its own custom language, Solidity.
Quantum also introduces another exciting innovation, the Decentralized Governance Protocol (DGP). This allows the extensive Qtum community to vote on important aspects of the protocol, such as block size and gas costs (which are the prices paid to run smart contracts). Currently, Qtum has a 2 megabyte block size with blocks produced on average every 2.4 minutes (versus BTC’s 10 minute target and ETH’s 13.5 second average).
The Qtum Price
During the crypto mania of late 2017 and early 2018, the Qtum price reached a spectacular peak over $80 on many exchanges. However, as with all record crypto prices set during that bubble phase, reality quickly reasserted itself and prices returned to more realistic levels during the subsequent months of 2018 and 2019.
Currently, the Qtum price is averaging around the $3 mark. While this is relatively low compared to the all-time high, it should be noted that the Qtum price has doubled since its low of $1.50, which was set in December of 2018.
The daily Qtum price in USD since mid-2017, courtesy of TradingView.
The chart alone doesn’t give any definite signal to buy Qtum or not. There was clearly great demand for it in the past, as during the bullish phase many speculated on its potential to usurp Ethereum’s role as the leading smart contract platform. The ability to easily port over existing Ethereum code to Qtum’s platform, and benefit from compatibility with Bitcoin’s SegWit and Lightning Network functionality for rapid and cheap transactions, is a strong advantage which led many to buy Qtum.
During the so-called “crypto winter,” the market’s focus shifted from future potential to current value. Qtum has some strong partnerships but as yet not to the same level as Ethereum, with its impressive roster of Ethereum Enterprise Alliance partners. Qtum also does not have the widespread support of Ethereum, which remains the go-to smart contract platform.
However, it must be said that Ethereum is currently experiencing some serious growing pains, as it struggles to scale its weighty blockchain and transition to Proof of Stake. Qtum is well-positioned to take over if Ethereum stumbles or stalls, although it does have competition in this regard from the likes of Cardano (ADA).