Will the financial industry use public blockchains? Quantum blockchain provides this possibility

In August this year, the Qtum open source community released the white paper "Quantum Chain White Paper - Value Transfer Protocol and Decentralized Application Platform", which systematically introduced Qtum Quantum Chain - the third blockchain ecosystem besides Bitcoin and Ethereum. Qtum is committed to building an open source community ecosystem with global influence through community, third-party developers and technological innovation, with the ultimate goal of integrating blockchain into different industries such as finance, social networking, games, and the Internet of Things.

The designer Shuai Chu is one of the earliest participants in the blockchain community. He graduated with a Ph.D. in computer science from the Chinese Academy of Sciences. In 2013, he left Alibaba to start his own business. He has been researching blockchain since 2011. During this period, he participated in the development of many foreign projects and wrote the technical document "Build Your Own Blockchain from 0 to 1".

The motivation for Shuai Chu to design Qtum stems from a concern: Chinese people have basically no say in the blockchain field. "Whether it is Bitcoin expansion or code modification, there has not been a single Chinese person in Bitcoin's core development so far. The same is true for Ethereum development. There are 40 core developers, and as far as I know, there are only two Chinese developers."

On the one hand, the participation rate of Chinese people is low. On the other hand, the areas in which Chinese people participate are mostly concentrated in mining and trading, and they rarely make achievements in the field of coding.

“There are very few domestic participants in some protocols and new applications, so we want to build a platform and an ecosystem in China with strong development capabilities, a strong community atmosphere, and good developer support.”

In addition, there is another more intuitive reason for designing Qtum. The blockchain industry is still in its infancy, and the entire technology is evolving rapidly, and there are still many problems. Shuai Chu said: "For example, the Ethereum network has developed hundreds of applications in two years, which is already very successful, but it still faces many problems, which are also problems of the entire industry, such as the capacity and scalability of online transactions. Ethereum's smart contracts are also very early concepts, and early applications cannot support the rapid growth of the entire industry."

Qtum Architecture Diagram

In response to the problems existing in the overall technology of blockchain, Qtum made many considerations at the beginning of its design and made targeted improvements. In many communications with banks, financial institutions, and enterprises, the Qtum development team found that from the perspective of banks and financial institutions, they hope to use the characteristics of blockchain to solve many problems, but it is not realistic for banks to deploy mining machines on a large scale and use GPUs to maintain the network. Therefore, there is no mining mechanism designed in Qtum, but the IPOS (Incentive Proof of Stake) mechanism is adopted, that is, proof of stake based on incentive mechanism, so as to ensure that small nodes are online to jointly maintain network security. Shuai Chu revealed that the effect is quite good on the test network.

Blockchain systems are often attacked by DDOS, which causes the entire network to be paralyzed and unable to conduct transfer transactions. To address this problem, Qtum Quantum Chain has made improvements based on ordinary blockchains, separating transaction behaviors and contract behaviors in the system. In the Qtum system, in addition to the traceable Transaction Ledger based on the UTXO model, a Contract Ledger for contract content will also be built. The most intuitive benefit of the two-layer design is that even if a DDOS incident occurs and the contract is attacked, normal transactions can still be carried out. Shuai Chu said: "Transfer is actually the most basic function in a blockchain system. There should be priority for handling these transfer transactions. Contracts can be handled later. Contracts are higher-level functions, and the reliability and security of the underlying layer must be guaranteed first."

Qtum has made many explorations on how to connect blockchain with the real business world, including integrating the logic of supervision and building a bridge between the real world and the blockchain world through Oracle and Data Feed. Shuai Chu mentioned, "The Bitcoin blockchain is actually somewhat closed. It can be understood that the Bitcoin network has actually become a self-sufficient network, and all participants form a closed loop, which is separated from the outside world." Oracle and Data Feed are such a channel, a gap, which can introduce more off-chain things to be reflected on the chain while ensuring network security.

Another innovation of Qtum is to extend the concept of smart contracts and propose the concept of master contracts for the first time. In the Qtum system, Blockchain Contract is divided into smart contracts and master contracts. The application scenarios of master contracts are quite common.

"For example, if a contract is signed between two banks, the execution between the two banks can be stopped as long as the two banks agree. Other miners are only responsible for executing the contract. In fact, the person who signs the contract has relatively large rights. If both parties agree, the contract can be terminated. This is how it works in the real world." The concept of master control contract is a huge innovation, which enriches the connotation and application scenarios of blockchain contracts and expands the concept of smart contracts.

As we all know, one of the important reasons why existing public chains are not adopted by banks or financial institutions is that there is no identity authentication or access link. However, Qtum Chain has taken this issue into consideration at the beginning of its design. With identity authentication as an option, Qtum Chain users can choose to authenticate through a third party or choose to remain anonymous. The two types of users are distinguished by different user types or address types. Users who have authenticated their identities have more priority when accessing financial services, which also provides great possibilities for financial services to access Qtum Chain.

More functions mean a more complex design, so will this make the system less secure? Shuai Chu believes that

“For security issues, we can use mechanisms to ensure which actions must be on-chain and which can be executed off-chain. The system is bound to be more complex than the existing systems, but it is worth studying and exploring anyway, because it really has commercial value. It is also a direction worth exploring for the entire blockchain technology itself, and it can expand some boundaries.”

Building an open source community and ecosystem from scratch is not an easy task. Why is the Qtum development team willing to spend time and energy to do this? Shuai Chu said,

"Overall, there are very few development teams at home and abroad that are truly engaged in blockchain technology. Many foreign teams are also working on applications. It is very difficult to achieve real technological breakthroughs and innovations, and it is also very difficult to improve existing systems. Referring to China's software development history over the past 20 to 30 years, although many technologies are open source, they must be autonomous and controllable, and you must conduct thorough research and make innovations and applications on them. Only in this way can you see the direction of future technological development and have a better technical foundation to serve commercial applications. We see huge opportunities in the blockchain industry, and early research and development and system development are very worthwhile."

With the completion of the internal testing of the test network, Qtum will also be open source in the next few months. The Qtum development team currently has 10 developers, most of whom are developers that Shuaichu met in the community in the early days. The team said that they hope more industry partners and developers will join the Qtum open source community.

Qtum is still in the early stages of development, and it is impossible to predict whether it will be used for large-scale commercial applications in the future. But at least in terms of overall design, Qtum has made more down-to-earth improvements while drawing on the advantages of Bitcoin and Ethereum blockchains, providing a more practical possibility for various commercial applications to use blockchain.