What is Qtum (QTUM) and how does it work? A comprehensive guide to blockchain innovation

What is Qtum (QTUM)?

Qtum is a decentralized, open-source blockchain platform operating on a Proof of Stake consensus mechanism. It adopts Bitcoin's transaction model while incorporating the flexibility of smart contracts. Qtum supports blockchain and decentralized application (dApp) development through various resources and features a multi-wallet ecosystem.

The Qtum project collaborates extensively with global open-source talent and researchers from leading universities. It aims to bridge blockchain technology with real-world applications, offering a business-friendly development environment and tailored blockchain solutions for enterprises.

QTUM serves as the native token of the Qtum blockchain, used for executing smart contracts, staking to secure the network, and participating in platform governance. Qtum also supports QRC-20 tokens, its own token standard for dApps, where transactions require QTUM for gas fees.

How does Qtum work?

Qtum utilizes Bitcoin’s UTXO (Unspent Transaction Output) transaction model. UTXO refers to cryptocurrency amounts that remain unspent after a transaction, akin to change left from a physical cash transaction. These UTXOs are continuously managed and their records are stored on the blockchain ledger. Unlocking UTXOs requires a corresponding private key.

The Qtum platform integrates smart contract functionality and Ethereum compatibility using the x86 virtual machine. This virtual machine supports popular programming languages like Rust, C, C++, and Python, aiming to broaden the adoption of smart contracts.

To achieve compatibility with both Bitcoin's transaction model and Ethereum, Qtum utilizes the Account Abstraction Layer (AAL). This layer separates applications from the underlying protocol, abstracting individual UTXO transactions to provide a unified account balance. This enables seamless operation of smart contracts that utilize the Ethereum Virtual Machine (EVM) and allows for future expansion of smart contract capabilities.

Qtum's Decentralized Governance Protocol (DGP) further enhances flexibility by enabling the community to modify blockchain parameters such as block size and base gas fee without requiring a hard fork. This ensures that changes can be implemented smoothly without disrupting the ecosystem.

Who founded Qtum?

Qtum was established in 2016 by Patrick Dai, Jordan Earls, and Neil Mahi. Patrick Dai, who holds a master’s degree in computer science, previously served as CTO of VeChain and Bitse Group, a Chinese Bitcoin mining company, before assuming the role of chairman at Qtum Foundation. Jordan Earls, a seasoned software developer since adolescence, is also President of Earl Grey Tech and Co-chair of the Smart Contracts Alliance initiative. Neil Mahi, with an MBA and over two decades of software development experience, rounds out the trio.

The founders are supported by a diverse team with backgrounds from NASDAQ, Alibaba, Tencent, Baidu, and active involvement in the Bitcoin and Ethereum communities. Qtum has garnered support from venture capitalists, key figures in the blockchain industry, and executives from major technology firms in China.

In 2019, Qtum underwent its first hard fork with the launch of Qtum 2.0, which upgraded the consensus mechanism and introduced new features such as confidential assets, offline staking, and chain-cloud integration.

What sets Qtum apart from other blockchain platforms?

Qtum introduced the first Proof of Stake blockchain utilizing the UTXO transaction model with integrated smart contract capabilities. Its goal is to merge Bitcoin's security with Ethereum's functionality, employing the more efficient Proof of Stake consensus mechanism. This unique approach is made possible by the Decentralized Governance Protocol and Account Abstraction Layer technologies, providing performance advantages over other blockchains.

Unlike Bitcoin's transaction fee determination based solely on transaction size, Qtum finds Ethereum's gas model more versatile, allowing refunds of unspent gas post-transaction. Qtum adjusts this model to create a free-market fee structure, enabling both miners and users to optimize their operations efficiently.

What factors contribute to Qtum's value proposition?

The Qtum blockchain offers a valuable ecosystem for developers due to its blend of security, functionality, and efficiency. Its compatibility with Bitcoin and Ethereum, robust developer tools, and support for mainstream programming languages make it versatile for various applications.

The value of QTUM cryptocurrency stems from its utility. It is essential for paying fees related to smart contract execution and QRC-20 transactions, driving demand among developers. QTUM also plays a crucial role in the Proof of Stake consensus mechanism, allowing token holders to earn rewards through staking. Moreover, QTUM stakers gain voting rights in protocol governance, where their voting power corresponds to the amount of QTUM they stake.

How many QTUM coins are currently in circulation?

Currently, there are 105,211,713 QTUM coins in circulation out of a total supply that is not specified. The token was launched with an initial supply of 100 million QTUM, all minted at genesis. The circulating supply increases gradually due to a mining reward of 4 QTUM per block. Similar to Bitcoin, this reward halves roughly every four years. By 2045, this reward will drop to zero, capping the maximum supply of QTUM at 107,822,406 coins.

Additional technical information

In March 2017, 51% of the original QTUM supply was distributed to the public via an initial coin offering (ICO). An additional 8% was sold privately, 12% was allocated to the team with a four-year lock-up period, and the remainder was earmarked for the non-profit Qtum Foundation. These funds are intended for purposes such as promotion, business development, and academic research.

How to use Qtum?

Qtum's compatibility with Ethereum allows for seamless deployment of Ethereum dApps onto its network. Its support for various programming languages enables mainstream developers to utilize the project's technology stack. Designed with businesses in mind, its interoperability makes it suitable for supporting functions like production, logistics, planning, and external partner systems.

The QTUM token serves multiple purposes, including transferring value, staking, and paying fees for smart contract execution and QRC-20 transactions. QTUM holders also have the opportunity to participate in protocol governance.

How should one select a Qtum wallet?

Choosing a Qtum wallet involves considering various factors based on your needs and preferences. The official Qtum Core is available for desktop and mobile platforms and serves as one option for storing QTUM. Alternatively, there are numerous other wallet options available, depending on your intended use and the amount of QTUM you plan to store.

For the utmost security, hardware wallets like Ledger or Trezor offer offline storage and backup, making them ideal for storing larger amounts of QTUM. However, they require more technical knowledge and are generally more expensive.

Software wallets such as Qtum Electrum and Atomic provide a free and user-friendly option, available as desktop or smartphone apps. These wallets can be custodial (where the service provider manages and backs up private keys) or non-custodial (where private keys are stored securely on your device). They are convenient but considered less secure than hardware wallets.

Online wallets, accessible via web browsers like the one on the Qtum website, are another free and easy-to-use option but are considered hot wallets and may be less secure. Choosing a reputable provider with a strong security track record is crucial if opting for an online wallet.

Kriptomat offers a secure storage solution for QTUM, combining storage and trading capabilities with enterprise-grade security and user-friendly features. This option allows for easy buying, selling, or trading of QTUM and other cryptocurrencies with minimal hassle.

Ultimately, the choice of a Qtum wallet depends on your security preferences, technical proficiency, and intended use of the cryptocurrency.

Qtum proof of stake

Qtum utilizes a Mutualized Proof of Stake (MPoS) consensus mechanism, an enhancement of Proof of Stake 3.0. MPoS prevents double-spend attacks by incentivizing participants who stake their coins for longer periods rather than those who keep their wallets offline. It also guards against junk contract attacks by distributing block rewards among block-producing nodes and delaying payments. Participants who contribute to securing the Qtum network through staking receive rewards in the form of smart contract gas fees, QTUM transaction fees, and newly generated QTUM coins. While there is no minimum amount required to stake, larger quantities of staked coins increase the likelihood of earning block rewards.

In combining Bitcoin’s UTXO transaction model with the Ethereum virtual machine, Qtum aims to offer a blend of security and functionality from both worlds. The integration of a Proof of Stake consensus mechanism enhances efficiency and addresses deficiencies found in other platforms.

With its virtual machines, extensive development resources, and support for various programming languages, Qtum provides an ideal environment for diverse developers and applications. Targeting enterprise needs, Qtum has potential applications across sectors such as finance, internet of things, mobile technology, and decentralized finance (DeFi).

The QTUM cryptocurrency plays a crucial role within the ecosystem, necessary for staking, governance, and transaction fees. As the Qtum network expands and blockchain technology becomes more widely adopted, QTUM has the potential to accrue significant value.