What is Qtum [QTUM]? (A Beginner’s Guide) 18346
Analysis
Chandna P
Jul 14, 2018 at 3:00 AM

Most people trying to dip their toes in crypto waters are encouraged to do so due to the historic rise of Bitcoin in 2017. The largest cryptocurrency made several overnight millionaires throughout the world and attracted millions of new traders and investors to the crypto market. People who were a little savvy and started following crypto news in a bid to find the next Bitcoin were introduced to a few new currencies like Ethereum which was creating a lot of hype as a better version of Bitcoin and a better investment option.

While Bitcoin and Ethereum are both cryptocurrencies and use blockchain as their underlying technology, they are driven by significantly different purposes. While Bitcoin is only a digital currency, Ethereum is a blockchain platform for smart contracts and dApps. Ether the native currency of the Ethereum network is used as fuel for transactions on the blockchain.

While several crypto projects have tried to create a better version of Bitcoin and Ethereum and some of them have even succeeded, these two are still the largest and most popular cryptocurrencies. Founded in 2016, Qtum (pronounced as Quantum) is a smart contract platform and cryptocurrency which has combined the best of Bitcoin and Ethereum to create an improved blockchain solution for businesses.

To be specific, the project makes use of an inter-changeable EVM (Ethereum Virtual Machine) and has modified the infrastructure of Bitcoin core to provide businesses with a combination of Bitcoin blockchain’s reliability and limitlessness of the Ethereum’s smart contracts. 

Currently the 20th largest cryptocurrency as per CoinMarketCap, Qtum was available for $4.25 in June 2017 but made a high of $100 in January this year. Is Qtum a good investment at its current price? Is the project reliable? Read this beginner’s guide on Qtum and by the end of it, you’ll have your answers.

What is Qtum [QTUM]?

Qtum is an open-source blockchain project which is developed and maintained by the Qtum Foundation. It is made up of a blockchain platform for developing smart contracts and dApps like Ethereum and a digital currency like Bitcoin.

It is based on Bitcoin’s core code but the developers have changed the PoW algorithm of Bitcoin to PoS for Qtum before implementing the Ethereum EVM. Bitcoin’s code has been retained by the team due to its powerful UTXO model for accounting which they believe would help them incorporate a host of improvement proposals of Bitcoin. Similarly, Ethereum’s EVM has been used as more businesses prefer the PoS consensus over PoW.

How Does Qtum [QTUM] Work?

Qtum uses something known as AAL (Account Abstraction Layer) in their software stack for seamless communication between the UTXO accounting model of Bitcoin and EVM of Ethereum. The use of AAL is one of the biggest achievements for the Qtum project as it allows them to execute dApps and smart contracts at scales which are still unattainable by other crypto projects.

With the help of UTXO model, Qtum too is able to use SPV (Simplified Payment Verification) on mobile clients just like Bitcoin. Satoshi Nakamoto, the inventor of Bitcoin, has created SPV and it is still considered as the most secure method for clients to check their balances without the need for downloading blocks. With the help of this feature, Qtum users can quickly and securely check their balances on any device. Many of the crypto projects lack this functionality and even most of the Bitcoin wallets do not use this feature.

The next important reason for using the existing core code of Bitcoin is better adoption. Just like other blockchain projects, Qtum too would face scaling problems if it actually meets its target market of companies throughout the world. As a result, Qtum will implement Lightning Network on its blockchain in future. The implementation would also allow them to perform atomic swaps between different blockchains of other cryptocurrencies.

Modularity and familiarity are other important reasons for using two of the most established blockchain projects to create Qtum. For instance, Ethereum contracts can run on Qtum without any modification. Any of the crypto exchanges, wallets, and other services that allow Bitcoin payments and transactions should not face any issues in implementing Qtum. Moreover, developers who can write Ethereum contracts or create tools for Bitcoin can easily switch to Qtum development.

PwC is Supporting Qtum’s Blockchain Efforts

Governance is an important aspect of open source crypto projects. The scaling debate of Bitcoin is an excellent example of what a blockchain project might have to go through without a solid governance strategy in place. To avoid such outcomes, many blockchain projects have developed innovative governance structures.

In March 2017, Qtum announced a strategic alliance with PwC, a major blockchain service provider to handle its governance. It is with the help of PwC that the Qtum Foundation was able to implement a solid governance model, risk management, and project management.

Their whitepaper on their official website suggests that the governance model adopted by Qtum is made up of directors and committees that are assigned specific tasks for managing the governance in a transparent manner. Factors like sustainability, effectiveness, and security have been taken into consideration for creating the governance model for Qtum.

An Introduction to Qtum [QTUM] PoS Mining

It is through mining that crypto projects are able to implement security on their blockchain. As Qtum is more focused on being a commercial solution, the team spoke to several large industries to understand their needs. PoW and it's high energy requirements were two of the main concerns among several industries.

As a result, Qtum went ahead with an improved version of proof-of-staking algorithm known as PoS 3.0. Unlike previous PoS models, the new model is more egalitarian and provides every Qtum token a right to vote irrespective of its age. While it was possible to game the PoS algorithm by staking a large number of tokens with earlier models, the new version significantly reduces this possibility.

To stake Qtum, you need to store them in an address for about 17 hours (500 blocks) before running the full node software from a computer which will remain connected to the network 24x7. While PoS 3.0 is not the most energy-efficient model, it is far better than any of the PoW algorithm. As per the QtumExplorer rewards calculator, you can earn a return of up to 5.98% with Qtum staking.

Qtum [QTUM] Team

Qtum was founded in 2016 by the Qtum Foundation, a Singapore-based blockchain company. The team is made up of 18 main members from Bitcoin and Ethereum communities and other members outside the crypto landscape from companies like Nasdaq, Alibaba, Tencent, and more.

The project is backed by a lot of prominent people and VCs, making it a highly reliable project. As per the Qtum website, Patrick Dai, Neil Mahi, and Jordan Earls are co-founders of the project. Overall, the Qtum team despite being young are highly experienced and have a strong sense of technology.

Total Supply, Market Cap and Price Fluctuations of Qtum [QTUM]

A crowdsale was organized for Qtum last year between March and April. The total supply of Qtum tokens is 100 million and out of this 51% of the tokens were available for purchase during the crowdsale. 20% of the tokens are distributed among the early backers, development team and founders of the project and the remaining 29% is allocated to the company initiatives, academic research, market expansion, and education.

According to CoinMarketCap, the cost of 1 Qtum at the time of writing this post was $7.68 with a 24-hour volume of $95,524,300. The 22nd largest cryptocurrency has a market cap of $681,338,040 with a circulating supply of 88.6 million coins.

While Qtum reached $100 in January this year, it has fallen significantly along with the entire crypto markets. But as the project is still being developed and is only 2 years old, the team has already done an impressive job with the developments. More and more exchanges have started listing Qtum and the foundation is partnering with several companies to reach its goal of commercial adoption.

Qtum released their mainnet in September last year which was a huge achievement for a project that was only 1-year old. Recently, Baofeng, a popular video company from China, partnered with Qtum. This partnership would increase the blockchain nodes of Qtum to 50,000. It is worth noting that Ethereum only has 20,000 nodes and Bitcoin has about 10,000 nodes. BitClave, Bodhi, and Spacechain are some of the dApps that have been already developed on the Qtum blockchain.

The team has solid future plans to increase Qtum adoption among industries. As more and more industries start using Qtum, the price of the Qtum token is expected to rise again.

Should You Buy Qtum?

Qtum is a hybrid cryptocurrency which has taken the best of Bitcoin and Ethereum to create an even better blockchain solution. They have a young and energetic team which has been very transparent about all the developments. In just about 2 years, the team has been able to achieve way more than many other older crypto projects.

If you are looking for a solid cryptocurrency with a reliable team, Qtum can surely be an excellent option. At its current price, it is an excellent investment opportunity. Apart from buying and holding, you can also stake your Qtum from a standard desktop computer or laptop to earn returns of up to 5.98% as per the current network difficulty and rewards.

Where to Buy Qtum?

Qtum is currently one of the hottest cryptocurrencies and many top exchanges have already listed it. If you are looking to buy Qtum, you can do so on exchanges like-

  • ZB.com
  • LBank
  • Allcoin
  • Bithumb
  • Binance
  • BCEX
  • OKEx
  • Huobi
  • Bitfinex
  • Bittrex

Visit the “Wallets” section on Qtum’s website to download mobile, desktop, or web wallet for storing your coins. If you are looking for a hardware wallet, you can find them on the website as well.

Conclusion

With more and more people now interested in dApps and smart contracts, projects like Qtum are expected to have great future. People have started realizing its potential which is evident from the rising market cap of the Qtum cryptocurrency. In less than two years, the team has been able to build a very solid foundation for their project.

The tools and technology of the project are well-thought and well-designed and businesses can experience a host of significant benefits with Qtum implementation. If this momentum and quality continue, they might actually achieve their goal of mass commercial adoption.

As an investor, this can be the right time to invest in Qtum as most of the crypto-millionaires were able to generate huge returns by sticking to the crypto projects from their initial days. As Qtum is still fairly new when compared to other top currencies, it does hold a lot of potential. But as nothing is guaranteed in the crypto world, one should avoid overexposing themselves to a particular currency no matter how promising it looks.

Image via Qtum Blog

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