TL;DR
QTUM seeks to bridge the best of both Ethereum and Bitcoin. It leverages Ethereum’s smart contract capabilities with Bitcoin's UTXO transaction model to create the QTUM blockchain. Talk about finding the best qualities and combining them to create a super chain.
Nevertheless, it achieves this through a technology called Account Abstraction Layer (AAL) and Decentralized Governance Protocol (DGP). AAL gives Qtum the ability to implement updates from Bitcoin and Ethereum. On the other hand, DGP allows smart contracts to change core parameters in the network such as gas fees and block size without having to hard fork the blockchain. This latter gives Qtum an edge as it evolves further.
Miners, which include stakers, developers, and Qtum holders are involved with the governance of this project through voting. This project is self-sustaining, and the blockchain can realize upgrades.
Qtum is completely decentralized, meaning there is no permission needed to validate transactions. Nodes are at the center of this blockchain. Anyone can run a node using a computer device and connection to the internet. Further, Qtum uses a proof of stake mechanism, where users stake their holders in exchange for rewards.
You can purchase Qtum at Binance, OKX, and DigiFinex, among others.
Introduction
We have moved a long way since the beginning of Bitcoin’s protocol. Since then, many projects have sought to improve Bitcoin’s protocol, making them more efficient. However, Qtum has opted to take the best of both worlds. Utilizing the Bitcoin UTXO transaction model and Ethereum’s smart contract capabilities gives it a unique blockchain makeup. Luckily for you, here at minute crypto, we go over the specifics of each project.
What is Qtum?
Qtum (pronounced “quantum”) was founded by Patrick Dai in 2016. He studied computer science at Draper University and then dropped out of his Ph.D. program. He has vast experience working in blockchain projects including Vechain(VET). The project ran an Initial Coin Offering (ICO) back in 2017, raising $15.6 million in funds. The other two co-founders are Neil Mahl and Jordan Earls. The bread and butter of this network are to combine the best features of Bitcoin and Ethereum, namely Bitcoin’s UTXO transaction model and Ethereum's smart contracts, thus leveraging this onto their blockchain.
How does Qtum work
These are the primary aspects of the network:
A UTXO model for accounting
A Solidity smart contract platform
An Account Abstraction layer
Proof of stake consensus mechanism
Decentralized Governance Protocol
To create this mix, Qtum uses a Bitcoin core client software coupled with an Ethereum Virtual Machine (EVM) compatibility. Further, Qtum uses solidity as its coding language. Talk about taking a one-off from the opponent's playbook.
The Bitcoin core client software allows Qtum to complete transactions on the network. In a similar vein, the EVM allows developers to bring Defi projects from Ethereum to Qtum. Talk about ease of use.
One sidenote, its stake-of-proof mechanism has been the target of security issues.
Explaining UTXO
UTXO might seem complicated but it really is not. Unspent Transaction Output (UTXO) is the leftover cryptocurrency change that you receive after each transaction. This system is made up of outputs and inputs. It is a form of accounting on Bitcoin. You may be wondering what is all this gibberish, not to worry. We will break it down with an example.
Let’s suppose you have a balance of 100 BTC. You view the balance as 100 but it is actually split over several UTXO. For instance, it could be split over 4 UTXO with 25 BTC each or split into 4 UTXO comprising 25, 33, 36, and 6 respectively. The specific amounts aren’t that important however, they must add up to your balance number, 100.
Bucking the Lambo stereotype, let's suppose you want to buy one. The Lambo costs 30 BTC. However, you have only a 25, 33, 36, and 6 UTXO, none of which is 34 exactly. It’s impossible to split the UTXO, so what occurs instate is that you spend the 36 UTXO. As a result, the network mints two new UTXOs, one valued at 34 and the other at 2. The car dealership will receive the UTXO with 34 BTC and you will receive the one with 2 BTC as change. Seems less complicated, right?
So what are the benefits of this system? This account system may seem foreign but it has two benefits:
It guards against double-spending
A network can process transactions in parallel as every transaction has an independent output.
Ethereum, on the other hand, uses an account transaction system similar to that of bank accounts.
Account Abstraction Layer (AAL)
What is this and how does it work. Blockchains that utilize smart contracts don’t normally utilize UTXO. As a result, there needs to be some amending. Qtum’s answer to this is its Account Abstraction Layer. As the name suggests, it abstracts the accounting layer from the Ethereum account system.
In the accounts model, smart contracts work with an address or smart contract’s end balance. However, this is much different when using UTXO. A smart contract must decide which UTXOs to use, often across several public and private addresses.
AAL addresses these issues by using a UTXO transaction output and creating a smart contract. The way it works is that it sends a transaction to the contract account to trigger the contract’s execution. AAL then processes these results and updates them to the UTXO.
This has been a crucial component for Qtum. How crucial you may ask? To put things in perspective AAL has allowed Qtum to take advantage of both Ethereum and Bitcoin updates. As an example, when Ethereum added NFTs, Qtum was able to adopt them onto its blockchain quickly. It has allowed it to take in the best of both blockchains.
Proof of Stake
Qtum is a Proof-of-Stake consensus mechanism. To be a node one must stake a certain amount of Qtum. As validators, they will be rewarded however, the reward is delayed to prevent any attacks or attacks. The delays of rewards are crucial in order to prevent malicious attacks and prevent attackers from calculating the exact rewards. Talk about 5-star safety.
Offline Staking
Aside from becoming a validator by staking your Qtum, you can also become a staker by simply having Qtum in your wallet. Yes, it’s that easy. Let’s explain further. Qtum has developed a system where a user can provide their wallet address rather than give up custody of their tokens. Your coins remain in your wallet address and you can spend them or unstake them at any time.
Two summarize there exist two groups of stakers; Super Stakers (Validators), and Delegators (Wallet stakers).
So let’s break down the process:
Delegators send their wallet address via a smart contract to Validators
A fee that is agreed upon needs to be paid by the Delegator
A validator decides whether to accept the request
From this point on, the Validator can stake the Delegator’s UTXO
If the Validator wins a block reward it is shared with the Delegator
One advantage of this model is that the Delegator can still earn rewards while their wallet is offline. The delegator can passively earn Qtum.
The halving method is used by Qtum. In other words, the rewards are split in half similarly to how Bitcoin operates. Transaction fees are currently the method through which stakers earn earnings.
QTUM’s Tokenomics
Qtum currently sits at around $7. It has lost over 92% from its all-time high of $92. It currently has a circulating supply of 104 million tokens with a max supply of 107 million. What about the functionality of the coin you may ask? Not to worry, we got you covered. QTUM is the native token for the QTUM blockchain which can be used as the following:
To stake for rewards. As mentioned earlier, you can stake your holdings and become a validator. You can also stake it by holding it in your wallet and becoming a delegator.
Pay transactions fees, similar to the way Ethereum calculates its gas fees, Qtum uses a similar model.
Governance, holders can take part in the governance protocol and vote on proposals. These can conclude voting on block size or voting on gas fees.
How to buy QTUM
There are multiple exchanges you could go to in order to purchase Qtum, including Binance, crypto.com, among others.
Create an account
You can create an account on crypto.com by signing up and providing your info. They will ask for your id among other items.
Provide an account/debit/credit card
You can add a debit/credit card and account to fund your account.
Find Qtum and trade for it
Once you fund your account you can search for quantum on crypto.com search bar by typing in Qtum. It should look like something below.
You then can trad for Qtum by selecting the amount you would like to purchase.
Click on trade and you should have your nearly trading Qtum token in your account.
Closing thoughts
Qtum as a blockchain solution incorporated the best of Bitcoin and Ethereum. It improves coupons Bitcoin’s proof of stake model while adding smart contract capabilities and a Defi ecosystem. With so many altcoins popping up, Qtum does something which is to take the best of two existing blockchains and combine them. If you are looking to invest in this altcoin, you now are more informed about how this coin and project work. Until next time.
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