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When it comes to blockchain, Bitcoin and Ethereum are unbeatable. Bitcoin, the most popular and stable network, gave birth to a new decentralized digital currency form. Ethereum, on the other hand, brought smart contracts that are used to power tamper-proof financial contracts and decentralized applications (DApps).
In essence, Ether – Ethereum’s coin was meant to complement and not compete with Bitcoin – Bitcoin’s coin and the first cryptocurrency. In other words, the two networks can be combined to come up with a better, powerful blockchain-based platform. This combination is what Qtum is all about, as we see in the following article.
Qtum Technology: What is it?
QTUM (pronounced as “quantum” from quantum computing) is a Singapore-based global blockchain project that combines Bitcoin’s stable Blockchain and Ethereum’s smart contracts and uses proof of stake for verifications.
The platform is a great technology with the potential to transform the crypto space for the better. Today, Qtum ( the platform’s digital asset) has a market cap, at the time of writing, of more than $161,094,000, with a total supply of 102,553,680 QTUM. At the time of writing, a Qtum goes for USD 1.66 and is available in 86 exchanges, including major exchanges like Binance, Bitfinex, Bittrex, Kraken, and Huobi Global.
How It works
Essentially, the QTUM team forked Bitcoin’s code and altered its consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Bitcoin’s UTXO (Unspent Transaction Output) model allows high traceability of transactions, making Bitcoin a good pick for Qtum foundation. The developers then implemented the Ethereum Virtual Machine (EVM) over the modified Bitcoin codebase using the Account Abstraction Layer (AAL).
Qtum’s hybrid model blends features from the best of cryptos. Qtum takes advantage of Bitcoin features, including value-storing and reliability. From Ethereum, Qtum gets the best development team, smart contracts, and the capacity to run codes and DApps efficiently.
Qtum and Bitcoin UTXO Model
Qtum is built upon bitcoin’s UTXO model, the first blockchain model, and a fundamental part of the Bitcoin network. UTXOs are responsible for beginning and ending each bitcoin transaction. Understanding how transactions are structured in bitcoin will help grasp the UTXO model.
In essence, bitcoin transactions consist of two main parts:
- Transaction input – In Blockchain, this refers to the blockchain address from which the funds are sent.
- Transaction output – refers to the address to which the funds are sent.
Bitcoin’s UTXO model requires that a previous bitcoin transaction’s transaction output becomes a future transaction’s input. This way, only the UTXOs (Unspent Transaction Outputs) can be spent as an input in another future transaction. Spent outputs are already gone and can’t be spent again.
Unspent Transaction Output (UTXO) is responsible for initiating and ending a bitcoin transaction and processed continuously. The main reason why Qtum settled on this model is its stability and maturity since it had been in existence for nine years when Qtum was launched. Another benefit is perhaps UTXO’s role in Simple Payment Verification (SPV) implementation.
Qtum and Ethereum EVM
The main take in of Qtum from Ethereum is smart contracts. A smart contract is an agreement between buyer and seller in the form of lines of code executable on a computer. Smart contracts run on Ethereum Virtual Machine (EVM).
EVM’s model is account-based. For Bitcoin, the Unspent Transaction Outputs add up to become the user’s balance. The user’s private keys control this balance; Ethereum users’ available balance is stored in their account.
Other features of EVM includes:
Metering – EVM uses gas for metering network activities. Gas is the measure of computational power required to execute smart contracts in EVM. Complex contracts require more gas, therefore, a high fee (paid in ETH). The gas is EVMs way to prevent looping and malicious activities.
Security – EVM acts like a shield that secures the platform’s firewalls hence protecting users from hackers and DDoS Attacks that are prevalent in such systems.
Qtum: Combining UTXO and EVM
UTXO and account-based EVM are two completely different technologies with parallel use cases. It is not a walk in the park when combining the two. Qtum developers had to be smart enough to settle on the Account Abstraction Layer (AAL) protocol to achieve the noble task.
As the name suggests, Qtum achieves this magic by abstracting the concept of accounts in EVM and other virtual machines to allow them to run on the UTXO model.
Also, Qtum’s AAL added several operation codes (opcodes) to the Bitcoin opcodes to support smart contracts. Some of these opcodes are:
- OP_CREATE: For creating new smart contracts
- OP_CALL: For executing existing smart contracts codes
- OP_SPEND: For spending the value in a smart contract
Processing the opcodes starts with validator software parsing UTXO transaction and then converting it to EVM transaction. Validators then execute these EVM smart contract transactions into a spendable Qtum tx (digital asset). AAL then updates the network and adds the Qtum tx to a new block.
Qtum is an exciting project bound to transform how the world views blockchain technology entirely. The platform, which combines Bitcoin and Ethereum features, also uses the most vouched Proof-of-Stake as it’s consensus mechanism. By blending the two major blockchains, Qtum becomes one of the most secure, stable, and scalable platform.
UTXO model is used to ensure accountability in a blockchain. Not only is Qtum based on the UTXO model, but it also “magically combines” this with Ethereum’s EVM that stands out for its strong solidity developers team, it’s metering capability, and as a hacker-proof platform. Bringing these two different models together is a tough task. With a smart team, however, Qtum achieved this, thanks to AAL.