QTUM: Best of the Best
There is a memorable scene in the classic 1966 western The Good, the Bad and the Ugly in which the character Tuco assembles a revolver from parts of the best guns available. Anyone who wants to understand QTUM (pronounced “quantum”) should keep this scene in mind. The team at QTUM is taking the same approach to building what they hope to be the definitive blockchain for business applications.
However, just as a gunsmith has a better understanding of what Tuco is doing than the average moviegoer, evaluating the approach QTUM has adopted requires an understanding of the parts they are putting together. This involves some complicated concepts, such as traditional Byzantine fault tolerance research, but the learning curve is not so steep that it is insurmountable.
How to Buy QTUM?
To buy QTUM it will be necessary to establish a QTUM wallet that will hold the cryptocurrency, and to create an account at a cryptocurrency exchange. Once these two accounts are established, the basic process is to buy or transfer Bitcoin or Ethereum (preferably ETH as it decreases the time of transfer and the cost of fees) to the exchange, exchange the Bitcoin or Ethereum for QTUM, and then transfer the QTUM cryptocurrency back to the new wallet.
Step 1 – Create a QTUM Wallet
Download the wallet by selecting the type of wallet that works on your computer (Linux, Windows or Mac) under the section labeled “Quickstart”. There is an extensive line of wallets, and some computer proficiency is necessary to select one. This poor interface is a characteristic of QTUM and one of the problems management needs to solve.
After the download is complete, unzip the file and find the folder named “Bin”. In this folder is a file named “qtum-qt”. Open this file to install the wallet. It will need internet access and will pop up a box on the status of the download and installation.
Once the download is complete choose “Settings” and “Encrypt Wallet”. Choose a difficult but memorable passphrase. Press “OK” and read the warning that appears, and then press “Yes”. The program will encrypt your wallet and close.
Reopen your wallet and select “File” and “Backup Wallet”. Give the file a memorable name, and save it onto a secure device like a USB or cryptocurrency stick. After saving a copy, select “Receive” and “Request Payment”. Copy down the long list of letters and numbers correctly.
Step 2 – Purchase Bitcoin or Ethereum
You now need to buy some Bitcoin/Ethereum to exchange for QTUM. At the time of this writing, no exchange supports buying QTUM for national fiat currency, but the market is extremely fluid, and this may have changed. If so, it will still be necessary to establish an account at that exchange.
There are many exchanges that allow the purchase of Bitcoin/Ethereum for national currencies. They offer a variety of features, including ease of use and security. In addition, the cost of purchasing Bitcoin/Ethereum changes frequently, so it is impossible to identify a “best” option for this step. Coinbase is a popular option, and this guide will describe the process of creating an account to purchase Bitcoin. If you already own Bitcoin or Ethereum, this step is unnecessary. You can move forward to the next section.
After using the link to go to Coinbase, select “Sign up” and enter your personal information. Coinbase treats client identification very seriously, so be sure to verify your account by supplying a phone number, uploading an image of your photo ID and verifying a credit/debit card or bank account.
After completing these steps, select “Buy/Sell” at the top menu. Select “Bitcoin” and enter either the number of coins or the amount you want to spend. Bitcoin can be purchased in fractional units and the system will do the math for set amounts of local currency. Verify the information you have entered and “Buy”, and then “Confirm buy.”
If you are located in a country that Coinbase services are not available, you can purchase Bitcoin in other exchanges such as CEX.IO or Coinmama.
Step 3 – Exchange Bitcoin for QTUM
Now go to an exchange such as Binance to exchange your Bitcoin for QTUM.
First, enter Binance and open an account, verify the account in the email you received. Then, you need to fund your account with BTC or ETH that you have purchased before at one of the exchanges above. In order to do that, click the “Funds” tab and search for BTC or ETH, choose “deposit”, copy the BTC or ETH deposit address and paste it to the exchange that you withdraw the money from. The process might take up to one hour (vary according to different exchanges).
Now, after completing these steps, you have Bitcoin or Ethereum in your Binance account. Click the “exchanges” and search for QTUM/BTC, enter the amount and click “Buy QTUM”.
It helps to start with the basics because everything that QTUM hopes to accomplish address core issues of blockchain technology. Blockchain stores information on identical copies of a ledger stored on different computers that are connected through the Internet. Sophisticated systems check each new entry against the existing copies to make sure the new entry is correct before adding it to the chain.
There are two basic methods to check the existing copies. They are called Proof of Work (PoW) and Proof of Stake (PoS). Each has its advantages and shortcomings. PoW was used initially because it allows anyone with a computer to participate in the blockchain. One problem with PoW is that it requires a significant amount of electricity to run the blockchain because powerful computers have to do complicated math.
Proof of Stake (PoS) overcomes this by allowing anyone with a financial stake in the accuracy of the calculation – commonly called ‘skin in the game’ – to participate in the verification process. This avoids the complicated math, but effectively allows participants to “buy votes.” A blockchain participant who has more money committed to the system has more votes in the verification process. This is fundamentally undemocratic and a problem for some blockchain advocates.
Because blockchain was initially envisioned as a way to move away from centralized control of the monetary system, PoW was used as the method of choosing those who would be allowed to validate the blockchain. Bitcoin and Ethereum use PoW, but the energy demands and other drawbacks make this approach difficult to continue.
QTUM – Choices, Choices, and More Choices
QTUM takes a very practical view of these matters. Their goal is to bring the potential financial benefits of blockchain technology into the real world of operating businesses. So, in deciding between PoW and PoS, they simply asked their target users – business owners and operators – which they preferred. The clear answer was the PoS approach.
Ethereum has made this same transition with the introduction of the Casper protocol. QTUM obviously believes that this is the right choice, but feels that the Ethereum blockchain still has fundamental disadvantages to the Bitcoin blockchain. However, the management team feels that certain features of Ethereum smart contracts are vastly superior to those available on the Bitcoin blockchain.
So, like the character in the movie, QTUM’s solution is to fit together the parts they like from each of the two blockchains. However, unlike the parts of different guns, parts of these two blockchains do not fit together at all. In fact, the Bitcoin and Ethereum blockchains use two different methods of actually processing a transaction. Bitcoin uses a complex methodology called unspent transaction outputs (“UTXOs”), while Ethereum uses the simple concept of account balances.
Like PoW and PoS, there are both practical and philosophical differences between these approaches. Each has its benefits and each has its shortcomings. The simple fact is that the two approaches are not compatible. The situation can be compared to a gasoline and a diesel engine. You cannot expect one type of engine to run on the other type of fuel.
Rather than the start of scratch with a new blockchain environment – an approach some competitors have taken – QTUM set out to engineer a solution. They have built a bridge called Account Abstraction Layer which exists on the Bitcoin blockchain but which operates in the Ethereum environment. This innovative solution is one of the core value propositions of QTUM. If it works and is accepted in the marketplace it will prove to be a key element in QTUM’s success.
Quantum Coin – Built for Business
QTUM’s success will be determined by business users. While there has been a great deal of analysis and speculation on the value of blockchain for business, the actual applications are few and far between. QTUM looks to change that by making blockchain accessible. This is why they met with operating businesses to decide the PoW / PoS issue.
However, meeting the needs of the business community is a tall order, particularly when the goal is to develop a broad-based platform rather than something tailored for a particular need or industry like Ripple. One of the problems that have to be addressed is the amount of information stored on existing systems.
This problem can’t be overstated. Computer programmers have a joke that asks how God could create the universe in 6 days. The answer is that “He started from scratch and did not have to deal with an existing user base.” The ubiquitous use of the “QWERTY” keyboard in spite of its obsolesce is a great example of this problem.
QTUM is addressing this problem with another software bridge. In this case, it is between the smart contracts and existing legacy data systems. The team refers to these as “oracles”. They can be considered a type of Application Programming Interface (API) which provides the business with the tools needed to customize their own connection to existing data systems.
QTUM oracles are intended to power the smart contracts built in the Ethereum environment. Smart contracts are self-executing arrangements, and any degree of automation that can be applied to them will undoubtedly provide significant cost savings and gain market acceptance. It is fair to say that this is one of the most potentially lucrative aspects of blockchain technology for businesses.
It makes sense to think of oracles as putting together parts of two different guns – data from old systems feeding into smart contracts on the blockchain. The same is true for QTUM’s focus on building out blockchain use for mobile devices. Business has incorporated the use of smartphones into Standard Operating Procedure (SOP) and QTUM is very focused on bringing the power of smart contracts to those devices.
The development team at QTUM is made up of individuals with impressive backgrounds in a wide variety of fields, as befits a company that is attempting to blend elements of different blockchains. They also benefit from capital supplied by angel investors with similarly confidence-inspiring resumes.
There is little doubt that QTUM knows the technology behind what they are trying to accomplish, and has taken a thoughtful, considered approach to bringing the core value of blockchain to a wide businesses audience. The idea of using proven technology and fitting it together is a great example of the value that can come from such an approach.
Of course, QTUM is not the only blockchain developer trying to enter the business mainstream, and it is uncertain how many providers can find a seat at this table. QTUM is a late entrant and may need to produce results fairly quickly in order to win business users. Getting computer programmers to develop the customize oracles that allow efficient use of smart contracts is a large hurdle the company has to overcome.
In addition, there is a strange, tone-deaf quality to QTUM’s public face on its website. English words break inappropriately, ignoring the rules of spelling and making the entire website very difficult to read. Although poor English grammar is a hallmark of the cryptocurrency sector, QTUM’s website takes this to another level. In the business world where “perception is reality”, this odd quirk may create a perception of incompetence.
QTUM is a relatively young entrant into an increasingly crowded field. They have an intelligent approach to problem-solving that should appeal to their target end-user. The unknown issue is if that business will invest in this blockchain solution or some other provider who comes close to meeting their core criteria of usability and reliability.