QTUM

What is Qtum (QTUM)?

Qtum is an open-source blockchain that attempts to marry the best qualities of Bitcoin and Ethereum.

Based on Bitcoin’s UTXO transaction model, Qtum also uses proof-of-stake (PoS) consensus and supports smart contracts and decentralized applications (dApps).

In fact, Qtum was the first UTXO-based smart contract platform and is capable of higher theoretical transaction throughput than Bitcoin and Ethereum. Qtum also uses a form of decentralized governance, making it both a performative and battle-tested option for developers.

When Was Qtum Launched?

Qtum garnered significant attention following its founding in 2016 and conducted what was, at the time, the 4th most valuable ICO, raising $15.6 million.

This ICO saw 51% of the initial 100 million QTUM supply sold to the public in March 2017. Revenue from this sale was used to fund the operation of the Qtum Chain Foundation.

The foundation was established in November 2016, immediately after the completion of Qtum’s blockchain prototype. Qtum went to the mainnet in September 2017, following testnet releases in previous months.

Who are the Founders of Qtum?

Qtum was founded by Patrick Dai, who also serves as the chairman of the Qtum Foundation.

Dai, a computer science graduate of Draper University, is a blockchain veteran and has worked on several other crypto projects aside from Qtum. He was the CTO of VeChain and mining company Bitse Group and served Factom as a technical advisor.

Dai was also a product manager at Alibaba and, after founding Qtum, was named to the Chinese edition of Forbes magazine’s “30-under-30” list of young entrepreneurs.

How Does Qtum Work?

Qtum, like Bitcoin and Ethereum, is a public distributed ledger or blockchain. Each “block” is made up of a collection of transactions published by nodes and a hash of the previous block.

These cryptographic hashes are what make the blockchain immutable because if you attempt to change a transaction in an older block, the hash of the block changes too. That breaks the chain.

Qtum borrows from Bitcoin’s UTXO (Unspent Transaction Output) model but makes it compatible with Ethereum’s virtual machine to enable smart contracts.

UTXO, a critical element in preventing “double-spend attacks,” is essentially how Bitcoin and Qtum handle accounting in their ledgers.

A BTC or QTUM holder, when viewing their wallet’s balance, sees a single number of coins. However, this number is actually composed of several unspent transactions or UTXOs. When a new transaction is made, the network takes existing UTXOs from the address totaling more than the amount to be spent, and produces change.

For example, let’s say you had a wallet balance of 20 QTUM, which is made up, behind the scenes, of two UTXOs of 10 QTUM each. If you want to spend 8 QTUM on something, the network would have to take one of the 10 QTUM UTXOs from your wallet and split it into two new UTXOs of 8 and 2. You’d get the latter back, while the former is spent as desired.

What Makes Qtum Unique?

One of Qtum’s main innovations is its Account Abstraction Layer (AAL), which integrates its UTXO model and smart contract account model used by virtual machines.

This AAL abstracts all of the individual transactions run by UTXO into a single account balance that the virtual machine and smart contract developers can handle easily.

In addition to Ethereum Virtual Machine integration, Qtum can implement multiple virtual machines running in parallel thanks to AAL.

To further this capability, Qtum is developing its own Qtum x86 virtual machine, initially supporting the Rust language. The x86 virtual machine will also provide developers with more standard libraries.

How is the Qtum Network Secured?

The Qtum network is secured by a mutualized proof-of-stake (MPoS) consensus engine, and a full node can be deployed on almost any computer.

PoS assures network consensus by implementing incentives and disincentives for validators. This is especially important since the requirements for becoming a Qtum validator are extremely easy to fulfill, and the process is permissionless.

Validators who behave according to the protocol have a chance of winning the block reward in a process called “PoS mining.” This incentivizes validation and provides a return on investment.

It is possible to stake any amount of QTUM while running a full node because, unlike many other chains, including Ethereum, there is no minimum stake.

However, a higher stake also means a higher possibility of winning the block reward. These block rewards are given out in a random process weighted by the number of coins in each wallet versus the total amount of QTUM staked on the network.

Qtum’s MPoS protects against “junk contract” attacks by dividing the block reward between the block-producing miner and the 9 previous miners. This results in block payments being split and delayed, making them harder to predict and attack.

The block reward for Qtum is currently 0.5 QTUM, but it has a halving schedule of four years. This means that, following the next halving in December 2025, the Qtum block reward will drop to 0.25 QTUM for around four years. Then, in 2029, it will halve again to 0.125 QTUM.

What is the Use of QTUM?

The QTUM coin is a store of value on the Qtum network and is also used for network security via staking as well as on-chain governance.

Furthermore, it is used to power transactions on the network as well as smart contract calls. The QTUM token is an essential part of the Qtum network, and you’ll need some QTUM if you want to use, stake, or vote on Qtum.

Who Controls Qtum?

Qtum is governed on-chain via the DGP (Decentralized Governance Protocol), a protocol that allows QTUM holders to participate in voting on the upgrade and iteration of the blockchain. It also allows developers, community representatives, stakers, and others to propose and vote for on-chain governance proposals.

Off-chain governance is taken care of by the Qtum Chain Foundation, a non-profit registered in Singapore in November 2016. The foundation helps to manage the general development and construction of the Qtum blockchain and promotes governance transparency.

The Qtum Chain Foundation has three co-founders, holding the positions of CEO, CTO, and Lead Developer. These three roles are responsible for overall strategic planning, design and technical management, and security audits.

They also oversee the development of key components, supervise overall progress, and jointly determine the direction of the foundation’s development.

How Much QTUM is In Circulation?

The QTUM supply was 100 million QTUM at genesis, with a maximum supply of 107.8 million in 30 years. Currently, annual inflation stands at 0.47%, with stakers receiving rewards of 6-8%.

Beyond the 51% of the initial QTUM supply that was sold to the public in the ICO, 20% was allocated to founders, investors, and development teams. A further 29% was earmarked for commercial and community development, research, education, and market expansion.

In terms of distribution, only one QTUM address outside of the top 10 on the QTUM “rich list” holds more than 1% of the token supply. However, one address does stand out, as it owns over 34 million QTUM or 32% of the current supply.

How Do You Buy QTUM?

QTUM is a relatively seasoned blockchain project, and its token is available on a lot of reputed cryptocurrency exchanges. QTUM is most often paired with stablecoins like USDT and BUSD, but cryptocurrency pairs like QTUM/BTC and QTUM/ETH are also very common.

Is It Possible to Buy QTUM Instantly?

You can buy QTUM instantly from almost every cryptocurrency exchange, but that doesn’t mean much. Most crypto exchanges operate in a custodial manner, giving you a trading account where you’ll see your trades reflected.

However, this trading account isn’t actually a wallet. If the exchanges go offline, or worse, your QTUM coins are very much at risk of disappearing too.

If you want to take custody of your own coins, you’ll have to withdraw them into your own wallet after buying them. This likely won’t be instant because many exchanges process transactions in batches to save on fees. They also might have to run KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures before releasing your QTUM coins to you on-chain.

Once this happens, though, you’re practically home free. You can track the transaction using the Qtum explorer, and it won’t be much more than a couple of minutes before your tokens settle. Qtum has a block time of 32 seconds, so finality doesn’t take very long at all.

How Do You Store QTUM?

To control your own QTUM coins, you’ll need your own private or non-custodial QTUM wallet. Luckily, there are a lot of wallets to choose from.

Many popular multi-chain wallets, such as Trust Wallet, Guarda Wallet, Atomic Wallet, and others, support Qtum. Qtum also has a native wallet for Android devices available on the Google Play store, but if you prefer browser extensions, then the Qtum web wallet is a great option.

If you’re an advanced user and would like to run a full node, you can also run Qtum Core after downloading it from the Qtum website. Qtum Core wallets can be set up as super stakers.

These super stakers can then accept the delegation of staked QTUM from other wallets. These other wallets can then go offline, but they retain control of their QTUM coins. The super stakers, like network validators on other PoS blockchains, are, however, expected to stay online and participate in network consensus.

Qtum Energy Consumption

Keeping true to its vision of being the best of both Bitcoin and Ethereum, Qtum uses an energy-efficient consensus mechanism like Ethereum.

Far from needing specialized, powerful machines to run nodes, even a Raspberry Pi device can run a full Qtum node. This ensures that, even though there may be a lot of nodes on the network, energy consumption stays very low.

In fact, Qtum is able to match decentralization with low power consumption in a way that not many other blockchains can. Many PoS chains have a small number of validators, but anyone with a Pi, the right software, and 1 QTUM coin can be a validator on Qtum.

Is QTUM a Good Investment?

QTUM may be an appealing investment for blockchain purists because of what it does and how it does it.

The success of Bitcoin and Ethereum cannot be overstated, and Qtum doesn’t stray far from their respective formulas. The proven model of UTXO meeting the real-world utility of smart contracts is a heady concoction.

Qtum is also more decentralized than many other blockchains, which makes it an appealing alternative.

Ultimately, though, it remains a competitor to the likes of Ethereum, and so its long-term future may come down to network effect. If it can provide enough differentiation and thereby grow its ecosystem to a critical mass, QTUM will take some stopping.