Abstract

The Qtum blockchain network was founded in 2016 through a technology that combines Ethereum’s smart contract functionality with Bitcoin’s UTXO accounting system. This technology is the technology that enables the account abstraction layer, allowing Qtum to implement updates to both Bitcoin and Ethereum at the same time.

Qtum is a decentralized network, so no permissions are required to verify transactions. Anyone can run a node with just a device and an internet connection. Qtum uses a reciprocal proof-of-stake consensus mechanism to resist spam contract attacks. Rewards will be distributed to multiple successful validators. If 500 blocks are reached, part of the rewards will be delayed.  

Qtum natively supports token standards such as QRC-20, QRC-1155 and QRC-721. The QTUM cryptocurrency is the native token of the network and can be used to pay transaction fees, staking (even offline staking), and governance. You can buy QTUM on Binance using a credit or debit card, or exchange the token for other cryptocurrencies.

Qtum is headquartered in Singapore, with offices in Miami and Stockholm.

Introduction

Blockchain technology has developed significantly since Bitcoin. Most of the new layer 1 platforms use innovative technologies that go far beyond the original Bitcoin model. But Qtum draws desirable elements from Ethereum and Bitcoin. This combination makes Qtum a particularly attractive project due to its unique architecture. If you want to know what makes Qtum so special, follow Binance Academy to learn what makes it unique.

What is Qtum ?

Qtum (pronounced Quantum) was founded in 2016 by Ashley Houston, Neil Mahl, and Patrick Dai. The project held an ICO (initial coin offering) in 2017 and raised $15.6 million in September of the same year before launching its mainnet. The main concept of the Qtum network is to combine aspects of the Ethereum (ETH) and Bitcoin (BTC) networks. The team took Bitcoin’s unspent transaction output (UTXO) model and combined it with Ethereum’s smart contract functionality while leveraging the upstream strengths of both chains.

How does Qtum work?

The Qtum network has four major features:

1. UTXO model for accounting.

2. Solid and reliable smart contract platform.

3. Account abstraction layer.

4. Proof of Stake consensus mechanism.

To combine these features, Qtum uses a modified Bitcoin Core client software to build the transaction foundation of its network. The network is also compatible with the Ethereum Virtual Machine (EVM) and uses Solidity as its coding language.

This means users can easily port code and DeFi (decentralized finance) projects from Ethereum to Qtum. Additionally, its custom Proof-of-Stake (PoS) consensus mechanism is built with critical security concerns in mind.

What is UTXO?

UTXO refers to unspent transaction output and is a common concept in the cryptocurrency world. Cryptocurrency transactions in some networks consist of outputs and inputs. For example, sending 1 Bitcoin requires using a UTXO as the input and then "sending" it as the output. These UTXO will then be marked as spent and the outputs will become new UTXOs.

Suppose you want to send 0.6 Bitcoins. The 0.6 Bitcoins are actually made up of the 0.4 Bitcoins plus the 0.2 Bitcoins output in the previous transaction. But if you want to send 0.3 Bitcoins, you need to divide the 0.4 Bitcoin UTXOs into two parts, 0.3 to your friend and 0.1 to yourself. This perfectly spent 0.4 Bitcoins and got two new UTXOs (0.3 and 0.1).

This accounting system may seem strange, but it has its benefits:

1. You can see whether the output has been spent, so it is easier to deal with double-spending problems.

2. Each transaction contains independent outputs, so the network can process transactions in parallel.

Ethereum, on the other hand, uses an account transaction model similar to a bank account. This special model maintains the global state of all balances on the network.

What is the account abstraction layer?

Due to technical reasons, blockchains with smart contract functions usually do not use the UTXO accounting system. Qtum's solution to this problem is to use the Account Abstraction Layer (AAL). As the name suggests, Ethereum's account system is abstracted from its technical implementation.

If the account model is adopted, the smart contract can handle the final balance of an address or smart contract. But if UTXO is adopted, the smart contract must decide which UTXO to use, which often spans multiple public and private addresses. Internal transactions between contracts pose similar problems. UTXO The blockchain must record all transactions, making the process difficult.

AAL creates smart contracts by using the output of a UTXO transaction. The transaction is then sent to the contract account to trigger contract execution. AAL processes the result and adapts it to a UTXO.

AAL technology allows Qtum to take advantage of updates to Ethereum and Bitcoin. For example, when Ethereum added non-fungible token support, Qtum was able to adopt it quickly.  Notable Bitcoin updates are Segregated Witness (SegWit) and Taproot. Being UTXO-based also allows Qtum to benefit from the Lightning Network and other technologies.

What is proof of stake?

Reciprocal Proof of Stake is Qtum’s custom consensus mechanism. The Qtum team designed this mechanism to combat spam contract email attacks by increasing the attack cost. This mechanism can share block rewards among block-producing nodes and delay payment. Each reward will be divided equally between the successful validator and the nine previous successful validators. If 500 blocks are reached, some rewards will also be delayed. This system makes it difficult for an attacker to calculate the exact reward for launching an attack.

What is offline staking?

In August 2020, Qtum introduced a new offline staking mechanism for QTUM holders. There is no need to give up custody of your QTUM tokens, just provide your wallet address. The tokens held by the user are kept in the wallet and can be used or canceled at any time. There are two participants in this consensus mechanism: super stakers (validators) and delegators.

The delegator sends his wallet address to the super staker via a smart contract. After agreeing on the fee that the delegator will pay, the super staker can decide to accept the delegation. Super stakers can then stake the delegators’ UTXOs. If a super staker successfully validates a block, they share the reward with the delegators and collect fees.

After delegating a super pledger, the delegator will passively obtain QTUM. Instead of being locked into a smart contract, offline solutions such as hardware wallets can be used.

Super stakers can then win block rewards for delegators and collect staking fees. But the delegator’s wallet does not need to remain online after delegation. In other words, delegators can passively receive rewards.

What is QTUM ?

QTUM is Qtum’s native cryptocurrency and is distributed to users through the network’s consensus mechanism.  The uses of QTUM tokens include:

1. Pay transaction fees on the network. QTUM uses a similar model to Ethereum to calculate gas fees.

2. Participate in Qtum’s on-chain governance protocol by voting for proposals. Proposals could include changes to block sizes or network fees. Possible reductions in gas costs during periods of high usage, as well as increased block sizes to handle Layer 1 transactions up to 1,100 TPS.  If desired, this throughput can be increased using a layer 2 solution similar to the Lightning Network.

3. Stake as a delegator or super staker to verify the block.  Every time a new block is verified, delegators and super stakers will be rewarded. Qtum uses a method similar to Bitcoin halving to regularly halve rewards. With this mechanism in place, eventually the supply of QTUM will be limited, and this will take decades to achieve. At that time, stakers will only be rewarded with transaction fees.

Where can I buy QTUM?

Binance offers two ways to purchase QTUM. First, QTUM can be purchased via credit or debit card using selected fiat currencies. Visit Binance’s [Buy Coins with Debit/Credit Card] page, select the currency you want to pay in, and then select QTUM in the field below. Click [Continue] to confirm purchase details and follow further instructions.

You can also exchange a range of cryptocurrencies such as BUSD, BTC and ETH for QTUM. Go to Binance’s trading view and enter QTUM in the trading pair search field. This action will display all trading pairs offered by the platform. For more information on using Trading View, visit our How to use TradingView on Binance website guide.

Conclusion

Qtum as A solution that is unique in its own way. It eliminates the problems that arise in Proof of Work (PoW) by implementing an upgraded PoS system. It allows the use of smart contracts and decentralized applications (DApps) while also using the UTXO accounting system. While many blockchain platforms in the ecosystem are developing entirely new approaches, Qtum has distilled successful features from past approaches. So, if you were previously under the impression that Qtum was an altcoin, you can now make a more informed decision based on its use case.