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What Is QTUM? Introduction to “Quantum”

What do you get when you cross the BTC blockchain with the Ethereum Virtual Machine?

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The above non-joke might be the simplest way to understand what QTUM is. It is the Ethereum system without the Ethereum blockchain — instead it uses the Bitcoin blockchain. The first benefit of this mix is that improvements to both Bitcoin and Ethereum can find their way into QTUM.

Any existing smart contract running on Ethereum can, through QTUM, be easily deployed on the Bitcoin blockchain as well. So things like Lightning Network and Raiden Network, where applicable, both benefit QTUM.

A side benefit of this is that smart contract products can try one blockchain on for size, and if adoption doesn’t pick up, they can try on the other. The savings cost in development shouldn’t be understated here. Rather than essentially having to build for another platform where adoption might be greater, developers are able to simply try another platform altogether.

Said aloud, QTUM is simply “quantum.” It bills itself as the all-important “business friendly” end of blockchain technology. All-important because it will be this sector which brings in both the most new money and the most enthusiastic new participants. The actual efficiency brought into business operations by blockchains is an extremely motivating factor in their adoption. Therefore, the more offerings that are geared toward businesses, the faster the whole of blockchain tech will grow.

Ethereum-Bitcoin Hybrid

One reason that smart contract developers might want to run on the Bitcoin blockchain is the Simple Payment Verification (SPV) protocol in Bitcoin, which enables “light” wallets to interact with the blockchain. QTUM extends this functionality to smart contracts and decentralized applications, making it a potentially more attractive manner of development.

Ethereum and Bitcoin use different methods of handling the change of a transaction, or what is left over after the recipient is paid in full. The Unspent Transaction Output (UTXO) model of Bitcoin would not be compatible with the Ethereum Virtual Machine if not for QTUM’s Account Abstract Layer, which essentially translates the functionality of the Ethereum accounts-based system to the UTXO blockchain design.

The QTUM

The standard Ethereum token QTUM was issued in the sum of 100 million during the initial coin offering, prior to the launch of mainnet, for funding purposes. This token is much like Ethereum — required to execute code and conduct transactions on the QTUM network. Similar to Ethereum, then, its value derives from overall demand to use the platform.

Inflationary Proof-of-Stake

QTUM uses proof-of-stake for consensus. Its network currently has no outside limit on the amount of tokens to be issued, so the rewards generated for finding new blocks will continue to be distributed indefinitely. This makes it a bit less attractive to those who appreciate the “store of value” and deflationary nature of Bitcoin and many other cryptocurrencies.

QTUM tokens being in great supply indefinitely hasn’t kept the price overly depressed. At time of writing, demand had lifted the price per token to almost $15 and almost 500,000 QTUM had been generated through proof-of-stake.

QTUM Already In Practice

Speaking of demand, a likely driver thereof with QTUM are other projects which have decided to build on the QTUM platform as opposed to Ethereum or NEO. Agrello is one such effort, a service which aims to create legally-binding smart contracts which are backed by artificial intelligence. They base their attraction to QTUM on the SPV factor earlier mentioned, saying:

Agrello users will not have to bother with setting up blockchain nodes or heavyweight environments, and the Qtum blockchain enables us to provide this plug-and-play user experience.

However you phrase it, there are definitive benefits to using the QTUM platform over simply building on Ethereum or one of its solutions such as Raiden. Over the long haul, QTUM will be but one of many platforms, and Agrello will be but one of many tokenized, business-facing decentralized applications hosted therein.

The Network Effect

QTUM is a demonstration of the often-made argument that anything other blockchains can do, Bitcoin can do better because of its network effect. Without getting too much into what the network effect is supposed to be, QTUM does make the case: it brings all the functionality of Ethereum tokens and decentralized applications with the added benefit of a larger mining network and therefore more potential nodes.

Yet, it also banishes itself to a land of tiny blocks, where transactions are increasingly rare and expensive. This being the case, its actual greatest offering is its versatility: developers can write apps for multiple platforms, and if conditions change in the future, they won’t be stuck with QTUM. In essence, it exposes itself to both scalability upgrades and limitations in Bitcoin.

In any case, Bitcoin is a network sure to be mined into the distant future. As such, using it gives a measure of trustability to tokens which thus decide to live in the QTUM ecosystem.

Summary

  • It is essentially the Ethereum Virtual Machine retooled to run on the Bitcoin blockchain.
  • It allows for apps designed for Ethereum to run on its blockchain, meaning essentially that entire decentralized applications could easily move over or replicate themselves on Bitcoin as easily as they could onto Ethereum Classic.
  • QTUM smart contracts work because of custom code designed by QTUM, without which the transactions necessary to execute smart contracts wouldn’t be possible.
  • QTUM’s first decentralized application was Agrello, a platform which seeks to make artificial intelligence-powered, legally enforceable smart contracts.
  • It benefits from upgrades to both Ethereum and Bitcoin in the long run. One of the recent developments in Bitcoin which might really boost QTUM is Lightning Network.

 

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