When we look back at the history of the cryptocurrency and the blockchain ecosystem, there will be two dates that really stand out:
- October 31, 2008: The day Satoshi Nakamoto released the Bitcoin whitepaper.
- July 30, 2015: The day Ethereum was launched.
According to an update from Qtum, the significance of these two protocols is “pretty self-explanatory.” First, Bitcoin introduced the concept of decentralized money and blockchain tech to the mainstream. Meanwhile, Ethereum successfully deployed smart contracts, which “empowered developers worldwide to create decentralized applications.”
The team at Qtum also mentioned that by “combining Bitcoin’s original UTXO model with Ethereum’s … EVM (Ethereum Virtual Machine),” Qtum claims that it has “created a blockchain that’s the most organic and obvious evolution of the original Bitcoin blockchain.”
As noted in the update, Vitalik Buterin, the Russian-Canadian programmer and writer who created Ethereum (along with many other co-founders/creators), worked for Bitcoin Magazine.
Buterin had been quite fascinated with Bitcoin and “truly understood the implications of blockchain technology.” He believed that Bitcoin “could potentially host and support decentralized applications (dApps), expanding its scope beyond simple payments.”
The team at Qtum pointed out that Buterin had “argued this point with the bitcoin core developers before implementing his ideas via Ethereum.”
As explained in a blog post, smart contract functionality on top of Bitcoin’s original architecture is what Qtum aims to offer. According to the developers, Buterin “ultimately chose to launch Ethereum by sidestepping one of Bitcoin’s fundamental architectural choices — UTXOs (Unspent Transactions).”
The update also noted that the UTXO model is “built using the cash system.” Your Bitcoins “exist as a list of UTXOs.” When you need to send a transaction, your wallet “combines these UTXOs for an amount greater than or equal to the value of the transaction,” the update explained.
Following that, the excess amount gets “sent back to your account as leftover change.
Ethereum, on the other hand, works like your typical bank account.” It maintains a balance, and as and when you send or receive your ETH, “it adjusts accordingly.”
As noted by Qtum, Buterin chose this particular account model “since it was simpler for smart contract computation.” But unfortunately, it sidesteps the “many advantages that the UTXO model brings in, like better security and reliable traceability.”
As mentioned in the update:
“Plus, transactions in the account model are not particularly scalable since it needs to constantly refer to the global state data for the correct synchronization. As the network grows, so does the state data, making it harder to keep track.”
In November 2021, nearly 13 years after Bitcoin was officially launched, “it finally integrated smart contract functionalities with the Taproot upgrade.” But the complexity of the smart contracts that it could host “is still debatable.”
Plus, many believe that Bitcoin “shouldn’t concern itself with anything else other than payments and store-of-value.”
With Qtum, you are “getting Bitcoin UTXO, with the most successful model for smart contract execution the world has ever seen — The EVM.” The developers further explained that this approach allows them “to create a system that seems like the most natural evolution for Satoshi’s original vision without compromising on the basic tenets that made it great.”
Several high-profile projects have “followed Qtum’s lead, like Cardano, which combines UTXOs with its own virtual machine.” But by integrating the EVM, Qtum claims that it offers “a ready platform for Ethereum’s established developer community to easily port over their apps while enjoying Bitcoin’s robust security.”