Qtum Mixing Bitcoin & Ethereum Launching ‘Proof-Of-Stake’ Smart Contracts Platform
Blockchain, bitcoin and cryptocurrency concept. (Image: Shutterstock).
Purporting to have a host of tech innovations in the pipeline and influential partners, the architects of the Qtum blockchain – Qtum Foundation – have gained a prominent group of Angel investors and signed up a top four accountancy firm for project governance and risk control. The founder of Kuaidi, a major Chinese car-hailing service that merged with DiDi, and a big global bitcoin holder are amongst the backers.
It was through this network that US$1m was raised last year to kickstart that the Singapore-based project, which has the ambitious goal of becoming the ‘Blockchain of China’ no less.
Having previously announced plans to meld the Bitcoin protocol with Ethereum technology, they are now launching the first ‘Proof-of-Stake’ smart contracts platform. It is all part of what the developers behind the project hope “can disrupt entire business models” by spawning a series of ideas and engagement with enthusiasts.
A group of ten major backers have provided their financial support and opened up their network of connections to help accelerate development of the Qtum technology and infrastructure around it. However, the identity of the top accountancy firm helping with the project’s governance structure remains undisclosed for now.
“All of our investors are strategic backers as well as financial backers,” explained Patrick Dai, the 27-year co-founder of Qtum (pronounced ‘Quantum’). It is the Qtum Foundation, established last November and headquartered in Singapore, that is the decision-making body driving the project’s development.
By any measure we are talking to some big hitters on the investment scene when looking down the list of the protagonists supporting Qtum’s endeavours.
As well as Chen Weixing, the billionaire founder of Kuaidi being in the fold, there is Anthony Di Iorio, Ethereum founder and CEO of JaxxWallet; Jeremy Gardner, co-founder of Augur and EIR at Blockchain Capital; David Lee Cuo Chuen, founder of Left Coast, Libai, and DLEE Capital Management.
Then there is Bo Shen, General Partner at Fenbushi Capital; Jehan Chu, Managing Partner at Jen Advisors; Qingzhong Gao, director of Huawei Strategic Cooperation; Xu Star, OKCoin CEO; Lihua Yi; and, Partner of ZhongWo Investment. Add to that Xiaolai Li, one of biggest bitcoin holders in the world and a Blockchain Angel backer.
Dai, a Computer Science PhD candidate at the Chinese Academy of Sciences, commenting on the level of investment attracted said: “We raised more than we originally intended to get the project started.”
He added: “But since these backers were able to provide a great deal of technical and strategic support, we saw it as very beneficial to the project. This has enabled us to hit a few major milestones before our crowdsale.”
A former Alibaba senior product manager, Dai told Forbes that funds from this crowdsale will be used to develop the technology and “enhance the usability of the platform”.
He asserted: “Qtum is committed to creating a globally influential open source community by co-operating with other blockchain communities, third-party developers and technological innovations.” Their ultimate goal is to bring blockchain technology into industries spanning finance, social, mobile, the Internet of Things (IoT) as well as other sectors.
While they clearly want to the community to be involved in helping develop this platform, Qtum has yet to decide on a date for its crowdsale.
As a combination of Bitcoin Core, Proof-of-Stake (PoS) and the Ethereum Virtual Machine (EVM), the end product of Qtum Blockchain is Qtum Core, which will allow smart contracts to execute on a PoS consensus model.
A major Qtum goal is to build a so-called Value Transfer Protocol, which along with decentralized applications (dapps) can be used to support and enhance various industries. Another goal is to maintain compatibility with existing processes from Bitcoin and Ethereum, to be as secure as possible and to be used not just in the finance industry.
While Qtum can in theory be used just like Bitcoin to send and receive digital currency – except for the PoS modifications – the real power of Qtum centres on the Smart Contract system.
What’s The Interest?
Many consider Qtum to be the top team coming out of China given their industry expertise and enterprise interest. “Our backers like the fact that we have taken into consideration what has and has not worked for blockchain technology…and they see us building from there,” he said. And, the pioneers and the backers aim to make this technology extremely usable going forward.
Dai added: “There is high demand for China to have its own blockchain and our objective is to be the blockchain of China and gradually advance from there to be one of the top technology platforms in the world.”
The team at Qtum alongside Dai includes Jordan Earls, Qtum Core developer, and Neil Mahi, Qtum Blockchain Architect. Earls, who has been developing software since he was thirteen, reviewed over 100 altcoins and identified multiple exploits in coins.
Mahi, who has Master’s degree in Business Administration from ISCAE but specialized later on in computer science, has around twenty years’ experience developing software and four years’ experience in the blockchain space. There are also former employees from some China’s biggest companies including Alibaba, Baidu and Tencent in the team.
Bitcoin Core Protocol
From a technical perspective, Qtum is an open-source value transfer protocol and decentralized application platform, which is boldly touted as an “elegant new paradigm” combining the stability of the Bitcoin Core protocol with an enhanced version of the EVM called the Qtum Virtual Machine (QVM).
Some have expressed the view that it is basically just another bitcoin fork with extension to the bitcoin scripting language and a new altcoin platform. The founders counter those claims.
While the Bitcoin Core is the most thoroughly tested blockchain code in the world, with billions of dollars of trust within the network and millions of dollars spent each year for the developers to maintain and enhance it, “unfortunately bitcoin is limited in what it can do with its simple script language” according to Dai.
“Primarily it’s used for sending value. On the other hand, ethereum allows for many use cases; but the source code is not as stable and secure as bitcoin’s source code,” he explained.
“The new paradigm of Qtum is where we bring the new industry-friendly consensus with a stable, safe and scalable platform. Qtum is combining the best parts of bitcoin and ethereum,” contended Dai.
As such it is claimed to be “consistent” with Bitcoin Improvement Proposals (BIPs), as it is based on Bitcoin’s unspent transaction output (UTXO) model, while allowing real-time interactions with the QVM.
Account Abstraction Layer
This is said to be accomplished by using Qtum’s Account Abstraction Layer, which allows the QVM to operate on a stable and proven platform – without the use of Ethereum’s account model. (Note: The open source project integrates the EVM with Bitcoin’s UTXO model and aims to provide smart contracts to businesses worldwide).
Dai pointed out: “Bringing a superior version of the EVM to the UTXO model does more than just allow the standard smart contracts you can perform on Ethereum. And, we plan to expand on this in the next few weeks.”
This Smart Contract and Decentralized Applications platform is further held up as allowing developers to “easily port” projects from the Ethereum blockchain to Qtum’s. But one might ask how exactly.
“All current ethereum projects can be easily ported to Qtum platform since the Qtum platform is compatible with EVM,” explained John Scianna at Qtum, who has worked for several startups included CoinPip and been following bitcoin since 2012. “The only thing a developer needs to do is to construct the states of contract and account based on the Qtum Account Abstraction Layer.”
He added: “We already have two community project. One is springemail (BiSMTP: Blockchain integrated SMTP), which we hope everyone will use their email as a wallet address, so people can send and receive cryptographic tokens through their email address. It aims aim to improve the usability of the blockchain industry.”
Likewise Qloha, is another project that will integrate into WeChat’s new mini app platform whereby people will be able to send and receive tokens through WeChat. Both these projects aim to improve the usability of the blockchain industry.
The startup has revealed that it is “constantly looking” to implement not just what designs they have now, but also to ensure that the designs they are building will be extensible and work well as a foundation to build on for their future activities.
While these are “in-flux designs”, some ideas currently being discussed include: better and faster interactions with smart contracts from SPV wallets, making data feeds a ‘first-class citizen’ on the blockchain with efficiency and usability improvements and Automatic/periodic contract execution, plus enhancing side-chain support with smart contracts.
They have also not limited themselves one particular industry, which is why they have talked to many different potential stakeholders so that they could build an “industry agnostic” platform and not be oblivious to actual business needs.
Embracing Blockchain Technology
Qtum is a compatible community that according to Dai “embraces much of the best Blockchain technology available.”
Through the use of Oracles and data feeds, Smart Contracts can be made that allow anyone to take part in a living economy. This decentralized economy model under Qtum will be fully open sourced, meaning that any developer is welcome to review the code base completely.
An Oracle is a particular agent (i.e. entity, node or address) that is trusted by the participants in the blockchain. An Oracle network can be used to implement a system for off-blockchain computations and (total or partial) contract code execution.
“Useful and exciting smart contracts operating on public blockchains may need or require to process certain data (e.g. financial, economic, business, meteorological, social) that is external to the blockchain (i.e. out-of-blockchain data),” Dai explained.
For example, the result of a smart contract execution could depend on external data such as exchange rates, the GDP of countries, temperatures in cities and sports scores amongst other data. The term data-feed refers to any system, procedure or technique used to fetch ‘off-blockchain’ data and feed it to a smart contract – or decentralized application – being executed on the blockchain.
“Platform approaches based on a blockchain with a built-in virtual machine have the limitation that every node must execute (run) all of the smart contracts in real time, leading to slower speeds and redundant processing,” Dai stated. “Then, it’s possible that smart contracts that are computationally expensive would consume (take) an enormous amount of resources when being run on the blockchain.”
Therefore, in such cases a full execution of the smart contract on the blockchain may not be the best choice. And, he indicated that it might be “better or even necessary” to run the contract or part of its source code off-blockchain, where computations can be done at a much lower cost.
Also, given the public nature of the blockchain – where data and computations are publicly visible – and the privacy requirements of many financial transactions, off-blockchain executions could be necessary to preserve the privacy of smart contracts data and transactions.
Blockchain Ecosystem Issues
As a promising ecosystem, Qtum Blockchain as well as combining the advantages of Bitcoin and Ethereum community it is said to address the “inherited problems” of existing blockchain systems.
These problems span the lack of business-oriented smart contracts in that the current smart contract platforms are mainly based on ‘Proof-of-Work’ (PoW). However, according to a recently published Qtum whitepaper the “consensus mechanism of Proof-of-Stake is more suited for business applications.”
There is also issue of compatibility between different blockchain technologies. Bitcoin’s UTXO model, for example, is not compatible with Ethereum’s account model.
One can also add the lack of flexibility consensus mechanisms because of different participants. Requirements of consensus mechanisms in the public chains and permissioned chain are different,
Then there is the lack of consideration for business compliance requirements (i.e. identity and KYC/AML requirements of the financial industry, which the current blockchain implementations cannot fully support).
Furthermore, current blockchain systems are not open enough, with most of the triggering criteria for smart contracts being set on the blockchain itself. And, there are no triggering criteria from ‘off-chain’ data sources, which can be used to build a connection with the real world.
As to when Qtum’s platform is expected to launch in 2017, the Foundation hopes to launch it this summer. The testnet is expected to be available in a few months’ time from now.
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