Back in January, the attention of Western cryptocurrency enthusiasts grew and pushed Neo’s price to soaring heights above $180 USD. For good reason, NEO is a promising technology, albeit with flaws (NEO news reported the blockchain suffered a node failure in one of its current centralized seven nodes).
But is Neo the only crypto project worth looking at in the Far East?
My argument is no and that there are other projects still highly undervalued. I write this article to take a closer examination at Qtum, yet another project with roots in the PRC.
Get the FUD out of the way!
Qtum is a blockchain protocol complete with smart contract capability. Not only is Qtum a project with serious technology underneath the hood, but also a project backed by powerhouse investors such as Bo Shen (Fenbushi Capital) and love-him-or-hate-him Roger Ver (Bitcoin investor) and technology bigwigs such asAnthony Di Iorio (Ethereum co-founder, Chen Weixing founder of Uber’s competitor Didi Chuxing) . Some time back in 2014 Patrick Dai, Qtum’s founder, was embroiled in a scandal regarding his time at Bitbay where he was known as Steven Dai (an alias he used on Bitcointalk). With all that said, the boat has left the dock. His investors and technical advisors have rallied around Patrick and support Qtum. Logically, any serious investor performing due diligence would discuss these issues with him before investing any of their capital or time.
Ethereum, NEO are competitors and are equipped to destroy Qtum… true or false?
Yes and no. While Ethereum and NEO are competing protocols, I simply do not believe there is room for only one blockchain. The fact is we are in the early days of blockchains. Some argue we will move to an era of hundreds, thousands, or even millions of blockchains. It is very plausible that the “one blockchain to rule them all” is a highly unlikely scenario. If we move to an era of poly-blockchains then obviously middleware or integrations between different chains will need to exist. In fact, several projects are tackling this already (Ark – Smart Bridges, atomic swaps, etc.).
So if there is an argument for “more than one player” in the space, then can Ethereum and Neo actually halt Qtum or any other blockchain protocol from emerging. The answer is yes. But it’s not simply a matter of having superior tech. It’s a matter of taking away the best developers and entrepreneurs away from Qtum’s sphere of influence into their own. It also might play out the same way that Google stole all the ad revenue from its competition (AltaVista, Metacrawler) by offering superior economic incentives to its ecosystem. With Google, publishers and advertisers who saw even a small incremental gain in click through rates and ROI would shift as much budgeted advertising funds until incremental benefits declined to zero. The same could be said in blockchain. If industries who relied on superior performance saw greater performance with Ethereum and/or Neo they would make the rational choice to switch blockchains (if it was indeed easy port their infrastructure over). I do not see this happening any time soon as even Ethereum and Neo’s upper TPS limits are far from enterprise grade performance.
Is Neo the true Chinese Ethereum?
The mantle of “Chinese Ethereum” makes me wince. As groundbreaking as Ethereum is/was, it is far from its final evolutionary state. Just look at the number of projects trying to improve Ethereum’s scalability. Neo’s smart contract technology has barely been tested. As of this writing there are twenty four Smart Contracts deployed. I will not include the recent negative PR it’s received from Eric Wall’s tweet (included below), but it goes to show there are valid concerns with Neo’s current Smart Contract technology.
1/ NEO thread. I never paid any attention to this project because “it’s a Chinese Ethereum!” just sounded so stupid for reasons I didn’t even know where to begin to explain. If you, like me, ignored NEO for this reason, here’s a quick recap of how hilariously bad this project is:
— Eric Wall (@ercwl) March 4, 2018
Full disclosure – I own NEO and am bullish on the developer community.
Qtum is neither Ethereum or Bitcoin, but a bit of both!
The best way I can describe Qtum is it’s a hybrid of existing technologies with its own proprietary stack on top or attached to it. Qtum uses Bitcon’s blockchain. Qtum uses Ethereum’s Virtual Machine (EVM). Why you may ask? Because both have systems have somewhat hardened and have been tested. Bitcoin’s PoW consensus algorithm protects the chain from several attacks since it would not be financially prudent (and energy intensive for that matter) for a malicious actor to do so. Ethereum has had many, many smart contracts deployed on its EVM.
Qtum is all sorts of flexible. Bendy is trendy.
Imagine a Frankensteinish child of Bitcoin and Ethereum. Enter Qtum. Qtum formed Bitcoin blockchain because the UTXO model is basically Fort Knox at this point in time. Additionally, Qtum’s fork already comes with SegWit. Qtum has launched the EVM atop Bitcoin’s blockchain. While Ethereum built its EVM into its blockchain it made sacrifices in scaling efficiency. There are multiple approaches to dance around this tradeoff. Qtum took the approach of disentangling its Virtual Machine from its blockchain with its Account Abstraction Layer (AAL).
Consider the AAL as a wrapper around both the EVM and Bitcoin blockchain – essentially it holds both the VM and blockchain to function similar to Ethereum’s integrated EVM+Blockchain. One advantage of decoupling the VM and blockchain is the potential to swap one part out for another. In the long run, Qtum can simply swap out EVM with a better VM in the long run. The VM is modular and Qtum does not need to stick with EVM if a new and better VM comes along the way.
If you’re a developer who has been working on their ERC20 token they could simply move over to Qtum since the EVMs are the same. That’s an incredibly attractive recruiting strategy. All it takes a big domino to move away from the train of Ethereum ICOs to shine more light on Qtum.
Portrait of Frankenstein
Proof of Stake
Qtum has opted for POS. There are many articles already circulating the web why one is better than the other. I personally like POS in that if done well it can provide a high level of security. Staking also reduces the number of coins in circulation and therefore increases its scarcity – effectively buoying Qtum’s exchange price. Normally with staking the token holder could run a fully operating node such as Navcoin or Ethereum when it launches POS. With Qtum, the lite wallet can be run on a Raspberry PI or even a mobile device due to inheriting Bitcoin’s UTXO model and by extension its Simple Payment Verification (SPV) protocol. Without going into too much detail, SPV significantly speeds up transaction verification times while also engaging with smart contracts and dApps.
Qtum has a ton of development and interest behind it. Its co-founders are active with its community. Month by month there are dApps built on Qtum or migrating to it. By drafting behind and learning from its fraternal companions in Ethereum and Bitcoin, Qtum is able to create a flexible hybrid blockchain + VM ecosystem. With all the attention and title granting of “Chinese Ethereum” to Neo, I think Qtum is still overlooked with a long runway ahead of it.