QTUM is a smart contract blockchain that’s currently being developed by a team based in Shanghai. At a high level, QTUM is a proof of stake blockchain that uses the Ethereum Virtual Machine (EVM) for its smart contract VM. The QTUM settlement layer, which manages transactions and calculates account balances, uses Bitcoin's UTXO (unspent transaction output) model.
QTUM's blockchain is live and currently has almost 7000 unique nodes around the world participating in proof of stake. Additionally, several companies, like Medibloc and Space Chain, are building dApps and contributing to the QTUM development ecosystem. QTUM's near-term roadmap includes an initiative to replace the EVM with an x86 VM; not only would this be more efficient, but it’ll also allow smart contracts to be developed in any language that supports the x86 assembly language (e.g. C, C++, Java).
The development team is led by Patrick Dai. Patrick is popular in the East, particularly in Taiwan and China, where he frequently appears on national state television. The lead engineers on QTUM are Jordan Earls and Neil Mahi who are both highly experienced blockchain developers.
A significant number of team members, include Patrick, Jordan, and Neil, hail from BitSE - a Chinese blockchain company which spawned other projects including VeChain and Fusion.
How does QTUM work?
QTUM is a layered blockchain that uses a proof of stake consensus algorithm and is capable of running EVM smart contracts.
QTUM is a layered blockchain
QTUM's blockchain consists of three layers. As previously mentioned, the settlement layer uses a Bitcoin-based UTXO model. The UTXO model is mathematically simple (which makes it easy to prove correctness) and enables parallelization in sending and receiving transactions. Another benefit of using Bitcoin's UTXO model is that QTUM can easily integrate Bitcoin upgrades. For example, QTUM has SegWit and is developing its own Lightning network.
To run smart contracts, QTUM has a smart contract VM layer. It uses the Ethereum Virtual Machine (EVM) as its smart contract VM. This means that almost any smart contract that can run on Ethereum can also run on QTUM.
However, there’s a catch that comes with combining the EVM and a UTXO settlement layer. The EVM assumes a settlement layer that uses the account model (which is what Ethereum uses). The EVM cannot work with a UTXO settlement layer right out-of-the-box. To solve this, QTUM has a layer in between its UTXO settlement layer and its EVM layer that's aptly called the Account Abstraction Layer (AAL).
The AAL abstracts away the settlement layer from QTUM's EVM and makes its UTXO settlement layer appear as an account-based settlement layer.
The benefits of the AAL go beyond making the EVM compatible with the UTXO settlement layer. The AAL allows QTUM to also plug and play different smart contract VMs - which is how the team will eventually be able to replace the EVM with an x86 smart contract VM.
QTUM's proof of stake algorithm
QTUM's proof of stake algorithm is based on Blackcoin's proof of stake 3.0 (PoS 3.0) algorithm. PoS 3.0 works with UTXO blockchains and is as accessible as Bitcoin and Ethereum's proof of work algorithm. Any node with a nonzero amount of QTUM can participate in PoS 3.0. There is no concept of a minimum stakeable amount or voting or delegation. Besides the amount of QTUM owned by a node, every node is treated as an equal in the network.
PoS 3.0 is live on QTUM's main net right now. Partly due to its accessibility, QTUM has almost 7000 unique nodes participating in the proof of stake process worldwide.
QTUM's x86 smart contract VM
As mentioned above, QTUM plans to replace the EVM with an x86 VM. The new VM will first launch on the QTUM test net. The launch event happened on May 23rd in Seoul, South Korea. The x86 VM is planned to be launched on the main net by the end of 2018.
QTUM's lead developer, Jordan Earls, gives a good introduction to the benefits that the x86 VM will bring in this blog post. To summarize, the benefits of the x86 VM include:
- support for more programming languages. In theory, any language with support for the x86 assembly language, such as C, C++, and Java, can be used to write smart contracts for this VM.
- providing a standard library for common programming utility functions. One of the common complaints about the EVM is a lack of a standard library.
- an optimized gas model. The x86 VM brings many new opportunities to optimize the EVM's existing gas model. For example, coupled with a standard library, QTUM's community can override the costs of standard library functions if they turn out to be much cheaper to run than the cost derived from the EVM's gas model.
- And many more benefits...
I highly recommend reading Jordan's blog post to find out more.
QTUM's on-chain governance
Besides tacking on a smart contract VM to Bitcoin's UTXO blockchain and changing the proof of work algorithm to a proof of stake algorithm, QTUM has also added an on-chain governance system. The team calls it DGP or Decentralized Governance Protocol. DGP allows QTUM users to vote on many different blockchain parameters such as block size, block time, which x86 standard library functions to include, etc.
By enabling stakeholders in the network to make key blockchain parameter decisions, DGP can hopefully help QTUM avoid controversial issues like the maximum block size debate between the Bitcoin and Bitcoin Cash communities.
The team behind QTUM
QTUM's founding team is led by Patrick Dai. Other co-founders are Neil Mahi and Jordan Earls. All three co-founders previously worked at BitSE, a Chinese company that provides blockchain-as-a-service solutions. Former executives at BitSE also moved on to build other blockchain projects including VeChain and Fusion. This connection between VeChain and QTUM is little known, yet is significant. In fact, Neil was one of the presenters at the first unveiling event for VeChain. According to LinkedIn, Patrick was once CTO of VeChain. Sometime in 2016, members of the VeChain team, including Patrick Dai, Neil Mahi, and Jordan Earls, left to create QTUM. The reasons for the split are unknown.
Patrick Dai graduated from Draper University and worked at Alibaba while pursuing a doctoral degree from the Chinese Academy of Sciences. He abandoned pursuing his doctoral degree to work in the blockchain industry and has been involved with blockchain technology for a few years now. In 2014, he was an investor in the BitBay project and helped with fundraising and marketing in China. He has since been accused of being a scammer by David Zimbeck, BitBay's lead developer. I elaborate further in the Project Concerns section but to summarize, he's accused of scamming the BitBay team and then changing his name from Steven to Patrick. Patrick has since refuted the accusations and publicized his side of the story.
BitBay scammer or not (for what it's worth, there's little evidence substantiating the claim), Patrick is very popular in Asia, especially in China, Taiwan, and South Korea. In fact, Patrick has occasionally appeared on Chinese national state television to talk about blockchain and he made the 2017 Forbes 30-under-30 list (Chinese edition).
Neil has a Master’s degree in Business Administration from ISCAE but later specialized in computer science. He has 20 years of software development experience and 4 years of blockchain technology experience. Neil is not only a proficient software developer with significant blockchain experience, he was once a professional poker player and speaks 4 languages.
Jordan is a self-taught programmer and has been developing software since he was 13. He is a well-known and trusted member in the cryptocurrency community, having reviewed 100 altcoins and identified multiple exploits in a few coins. Earls maintains a blog where he often goes incredibly in depth into blockchain technology. He's also active on Twitter and QTUM's Slack group.
The investors in QTUM
- Anthony Di Iorio - Co-founder of Ethereum
- Chen Weixing - Founder of Didi Chuxing (they beat Uber in China), billionaire
- David Lee Cuo Chuen - Co-founder of Left Coast and Libai
- Bo Shen - General Partner at Fenbushi Capital
- Jehan Chu - Managing Partner at Jen Advisor
- Qingzhong Gao - Director of HuaWei SC
- Xu Star - CEO of OKCoin
- Lihua Yi - Partner at ZhongWo Investment
- Xiaolai Li - Bitcoin Startup Investor
- Roger Ver - Bitcoin Startup Investor
- Charles Xue - Billionaire angel investor
- Jeremy Gardner - Co-founder of Augur, Co-founder and managing partner of Ausum Ventures
Is Patrick Dai a scammer?
A few months ago, Patrick was often accused on social media as a scammer. The accusations revolve around Patrick's involvement with the 2014 BitBay scandal. Patrick was an investor in the BitBay project and helped with fundraising and marketing in China. For reasons unknown, there was a fallout between him and David Zimbeck, the lead developer for BitBay. Zimbeck accused Steven (which was the name Patrick went by then) of manipulating BitBay's price by faking volume and then dumping his share of BitBay coins.
As this Smith and Crown article concludes, there is no other evidence substantiating the allegation outside of besides Zimbeck's claim.
A few months ago, Patrick, who has stayed quiet about the accusations, openly discussed his involvement with BitBay and presented his side of the story.
Lack of exposure in the West
If you follow Western social media channels like Reddit and Twitter, you’ll notice that QTUM flies under the radar. There’s a distinct lack of reporting done on QTUM in the Western world. Widespread awareness is the precursor to widespread adoption, which drives a cryptocurrency's value. In order for QTUM to become one of the top smart contract platforms, the team needs to focus on growth and adoption in western countries.
Fortunately, QTUM has a strong support base in the East and is often discussed in South Korean, Chinese, and Taiwanese social media. There are many Chinese (and a couple Western) projects building on QTUM including Bodhi (prediction market live on QTUM), Vevue (P2P incentivised video network), QBao (decentralized social media), Vanywhere (P2P skill-sharing platform), and many more. QTUM has also secured several high profile partnerships with large Chinese firms including Baofeng and Qihoo 360.
Breaking Ethereum's network effects is hard
Being a smart contract platform, QTUM is competing with Ethereum. However, Ethereum's network effects are tremendous. Ethereum has orders of magnitude more users and developers. The developer tooling for the Ethereum ecosystem is also much more mature and useable, with Metamask, Web3.js, Truffle, Infura, etc.
Fortunately, with QTUM using the EVM, it has a slight leg up in this competition given that Ethereum smart contracts and tooling can quickly be ported over to QTUM. Nevertheless, it's still a steep mountain. Large network effects are incredibly hard to break.
QTUM is a smart contract platform that merges technology from several projects. It's UTXO settlement layer comes from Bitcoin. It's smart contact VM comes from Ethereum. It's proof of stake consensus algorithm comes from Blackcoin. All three components are deftly engineered together to create a new blockchain. In many ways, QTUM, being a proof of stake smart contract platform with an easily swappable smart contract VM, is technologically an improvement over each of the platforms it's based on.
The project has a very strong team. Patrick is popular and reputable as a blockchain expert in Asia and Jordan and Neil are excellent engineers. The project sees significant support in Asia but has yet to find strong footing in the West.
If QTUM wants to compete with Ethereum, it has a steep hill to climb to break into the latter's large network effects. Fortunately, it has a strong platform and a strong team to take it there.