Qtum (QTUM) is a public blockchain platform that reportedly “leverages the security and simplicity” of Bitcoin’s UTXO (unspent transaction output) protocol. Similar to other cryptocurrency platforms such as Ethereum and NEO, the Qtum network also allows users to issue smart contracts.
“Decoupling Applications” Through Account Abstraction Layer
According to the explainer video on Qtum’s official website, Qtum uses an “account abstraction layer” to “decouple applications” from a blockchain’s base protocol. Separating application processing from the “underlying protocol” helps to “maintain the performance” of the blockchain network, Qtum’s developers claim.
Decoupling software programs from the underlying protocol on which apps are built allows developers to “add more smart contract capabilities in the future”, Qtum’s development team notes.
Proof-of-Stake (PoS)-based Consensus Mechanism
The Qtum blockchain uses the proof-of-stake (PoS) consensus mechanism to implement a “decentralized governance protocol.” Qtum’s community members are able to collectively decide whether to modify block sizes, how much to charge in gas fees, and make other decisions related to network management.
Although most proof-of-work (PoW)-based blockchains also allow users to make decisions regarding ongoing development, Qtum’s developers note that governance-related matters on Qtum are settled “without ecosystem disruption.” Contentious hard forks such as the most recent PoW-related Bitcoin Cash (BCH) upgrade on November 15th, 2018 resulted in two separate blockchains and coins.
Following the controversial fork, there was a great deal of confusion regarding which chain should be assigned the BCH ticker. There had also been reports of serious security-related issues involving the Bitcoin (“Satoshi Vision”) SV chain which reportedly allowed users to engage in double spending. Because of these critical problems with PoW-based consensus protocols, many second and third-generation crypto platforms including Qtum are based on PoS consensus protocols.
Is PoS More Secure Than PoW?
Developers who prefer PoS over PoW, including Qtum’s creators, claim that PoS is a more secure and better approach to achieving distributed consensus on a blockchain. At present, there are reportedly over “5,000 active nodes online” that are running the Qtum protocol. The Qtum network has also been operating without any down time for more than a year, according to the platform’s development team.
Facilitating “Mainstream Adoption” Of Smart Contracts
As developers worldwide work to create improved implementations of the Lightning Network (LN) protocol (a second-layer solution that reduces transaction processing times), Qtum’s design team is set to introduce the “QuantumX86 virtual machine (VM)” and “Unita.” Both of these technologies are described as “significant innovations” as the quantum VM aims to “better facilitate mainstream adoption of smart contracts.”
The Quantum VM will support widely-used programming languages including C, C++, Rust, and Python. There’s also a complete standard set of software libraries, “native tool chains”, and parallel contract execution” features that reportedly “improve gas efficiency.” Meanwhile, Unita (also known as Quantum Enterprise Edition) is designed to enable organizations and individuals to “rapidly deploy” blockchain-based solutions for real-world applications.
As mentioned in Qtum’s whitepaper, PoS-based blockchain networks “promise significant performance advantages” compared to PoW solutions. Moreover, Qtum’s development team states in the platform’s whitepaper that the industry needs “stable backwards-compatible smart-contract systems” that can “automate cross-organizational information-logistics orchestration with lite mobile wallets that support simple payment verification (SPV) techniques.”
Better Data Processing, TX Validation With SPV Techniques
Due to frequent hard forks (backwards incompatible upgrades) that are activated by many different cryptocurrency platforms, it can become challenging to update smart contract-enabled applications. In order to solve this issue and to also make it easier to manage data on blockchains, Qtum’s developers will use SPV techniques for transaction processing – as these don’t require downloading the entire blockchain to verify transactions.
On January 9th, 2019, Qtum’s development team announced they had completed the Qtum platform’s first atomic swap with bitcoin (BTC). As crypto enthusiasts know, atomic swaps enable on-chain exchanges between digital currencies that reside on two separate and independent blockchain networks. Intermediaries, or third-parties, are not required to complete atomic swaps.
Implementing Atomic Swaps With HTLCs
This development indicates that trustless interoperability between two separate blockchains is not only possible, but that it has also been carried out successfully. As explained in Qtum’s official blog post, the atomic swaps were implemented using Hash Time-Locked Contracts (HTLC). These types of contracts lock funds until both blockchains involved in a transfer confirm the transaction. After both chains have confirmed the transfer, they are able to claim their funds.
Some advantages of atomic swaps include: not requiring third-parties for transaction settlement, and being able to conduct transfers between two separate networks without having to trust the other party (trustless). A few drawbacks of atomic swaps are: a “price-matching tool” is needed so that both parties can negotiate and decide how many tokens will be swapped; confirmation times are dependent on the “transaction confirmation time of both blockchains”, which makes the process a lot slower slower than using a centralized exchange, Qtum’s blog notes.
Learning More About PoS After 51% Attacks On PoW Networks
In response to the recent 51% attacks on top 20 cryptocurrency platforms, including the Ethereum Classic (ETC) and Dash (DASH) networks, Dev Bharel, a blockchain solutions architect, published a post on “Qtum’s 101” Medium account that explains how PoS works. The blog mentions that there are many different implementations of PoS, with “some like Qtum [that] require no minimum stake, others like DASH [that] have PoS and PoW working in tandem, while others still, like Cosmos, work through a Delegated Proof-of-Stake system, where only a subset of nodes are validators.”
The post further explains that Qtum’s consensus protocol is “PoS version 3”, meaning that it is supposed to be animprovement over version 2. First introduced in a paper (published in 2012) authored by Scott Nadal and Sunny King, PoS’s second and third versions have been developed by Pavel Vasin while working on the Blackcoin project.
PoS version 3 (PoSv3) is “built for UTXO based blockchains”, according to Qtum’s blog. The version of PoS on which Qtum is based on reportedly “mitigates” the Nothing At Stake problem
through its “decentralized governance protocol which manages how forks work on chain. Launching an attack on this type of PoS network is “significantly expensive with a low enough reward based on the UTXO PoSv3 consensus”, the blog states.
More Later On Qtum’s Business Partnerships, Ongoing Development
Despite the prolonged cryptocurrency bear market, the blockchain industry continues to grow as there are a lot of improvements being made to the ecosystem’s infrastructure. New products and platforms are also being developed to better serve retail and institutional investors. In future posts, we shall take a look at Qtum’s business partnerships and other updates related to its ongoing development.
Smart contract exploits are more ethical than hacking… or not?
There has been a lot of talk about the recent “hacks” in the decentralized finance realm, particularly in the cases of Harvest FInance and Pickle Finance. That talk is more than necessary, considering hackers stole more than $100 million from DeFi projects in 2020, accounting for 50% of all hacks this year, according to a CipherTrace report.
Some point out that the occurrences were merely exploits that shined a light on the vulnerabilities of the respective smart contracts. The thieves didn’t really break into anything, they just happened to casually walk through the unlocked back door. By this logic, since the hackers exploited flaws without actually hacking in the traditional sense, the act of exploiting is ethically more justifiable.
But is it?
The differences between an exploit and a hack
Security vulnerabilities are the root of exploits. A security vulnerability is a weakness that an adversary could take advantage of to compromise the confidentiality, availability or integrity of a resource.
An exploit is the specially crafted code that adversaries use to take advantage of a certain vulnerability, and to compromise a resource.
Even mentioning the word “hack” in reference to blockchain might baffle an industry outsider less familiar with the technology, as security is one of the centerpieces of distributed ledger technology’s mainstream appeal. It’s true, blockchain is an inherently secure medium of exchanging information, but nothing is totally unhackable. There are certain situations in which hackers can gain unauthorized access to blockchains. These scenarios include:
- 51% attacks: Such hacks occur when one or more hackers gain control of over half of the computing power. It’s a very difficult feat for a hacker to achieve, but it does happen. Most recently in August 2020, Ethereum Classic (ETC) faced three successful 51% attacks in the span of a month.
- Creation errors: These occur when security glitches or errors go overlooked during the creation of the smart contract. These scenarios present loopholes in the most potent sense of the term.
- Insufficient security: When hacks are done through gaining undue access to a blockchain with weak security practices, is it really as bad if the door was left wide open?
Are exploits more ethically justifiable than hacks?
Many would argue that doing anything without consent cannot possibly be considered ethical, even if worse acts could have been committed. That logic also raises the question of whether an exploit is 100% illegal. For example, having a U.S. company registered in the Virgin Islands can also be seen as performing a legal tax “exploit,” though it isn’t considered outwardly illegal. As such, there are certain gray areas and loopholes in the system that people can use for their own benefit, and an exploit can also be seen as a loophole in the system.
Then there are cases such as cryptojacking, which is a form of cyberattack where a hacker hijacks a target’s processing power to mine cryptocurrency on the hacker’s behalf. Cryptojacking can be malicious or nonmalicious.
It may be safest to say that exploits are far from ethical. They are also entirely avoidable. In the early stages of the smart contract creation process, it’s important to follow the strictest standards and best practices of blockchain development. These standards are set to prevent vulnerabilities, and ignoring them can lead to unexpected effects.
It is also vital for teams to have intensive testing on a testnet. Smart contract audits can also be an effective way to detect vulnerabilities, though there are many audit companies that issue audits for little money. The best approach would be for companies to get several audits from different companies.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Pawel Stopczynski is the researcher and R&D director at Vaiot. He was previously the R&D director and a co-founder at Veriori and at UseCrypt. Since 2004, Pawel has been involved in the development of 18 IT projects in Poland and the United Kingdom, focusing on the private sector. He was a speaker at several IT conferences, and the organizer of two TEDx conferences. For his work, Pawel was awarded a gold medal at the Concours Lépine International Innovation Fair 2019 in Paris, and a gold medal of the French minister of defense.
Close to $10 Billion Worth of Crypto Longs Wiped off the Market Amid Sudden Crash
It’s been a rough Sunday for the cryptocurrency market.
$7.8 Billion Liquidated in an Hour
The “up only” sentiment in the digital asset market took a major hit today as more than $7 billion in crypto long positions were liquidated within an hour in a sudden market wide crash.
According to data from bybt, more than $9 billion worth of crypto long positions were liquidated in the past 12 hours while more than $8 billion were wiped off the market in the last 4 hours.
Specifically, bitcoin’s price started trending downwards early Saturday but the sharp free fall commenced around 3:00 UTC on Sunday.
After recording new ATH day after day, bitcoin and other cryptocurrencies’ price witnessed a steep downfall today almost touching the $50,000 mark. At the time of writing, bitcoin has regained some support and trades at $55,300.
According to crypto analyst Lark Davis, bitcoin breached the 50-day moving average during the unanticipated crash which is a rare event during a bull run. For context, BTC breached the 50 day MA only a few times during the 2017 bull market. In retrospect, all such dips proved to be immensely profitable buy opportunities.
Overleveraged Longs get REKT
While it typically pays to long in a bull market, investors must be cautious of too much optimism and avoid being long in an already overbought market to not get rekt in sudden market crashes like that of today.
Being long in a market with less liquidity is particularly dangerous as the order books are thin and a sudden dump can cause the price of the underlying asset to go down much more than in other liquid markets.
The Block’s Larry Cermak noticed this on Perp Protocol where the price of ether (ETH) reached as low as $900 due to low liquidity.
Crypto derivatives exchange FTX’s CEO Sam Bankman-Fried share some interesting facts about the exchange during today’s crash.
According to SBF, the exchange witnessed trading volume close to $26 billion which was another all-time record volume day for FTX. At the same time, FTX had close to $250 million of liquidations today.
Kraken Daily Market Report for April 17 2021
- Total spot trading volume at $2.51 billion, 57% above the 30-day average of $1.6 billion.
- Total futures notional at $667.9 million.
- The top five traded coins were, respectively, Bitcoin, Dogecoin, Ethereum, Tether, and Siacoin.
- Strong returns from Nano (+51%) and Siacoin (+20%).
|April 17, 2021
$2.51B traded across all markets today
Crypto, EUR, USD, JPY, CAD, GBP, CHF, AUD
#####################. Trading Volume by Asset. ##########################################
Trading Volume by Asset
The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.
Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (April 17 2021)
Figure 2: Mid-size trading assets: (measured in USD) (April 17 2021)
Figure 3: Smallest trading assets: (measured in USD) (April 17 2021)
#####################. Spread %. ##########################################
Spread percentage is the width of the bid/ask spread divided by the bid/ask midpoint. The values are generated by taking the median spread percentage over each minute, then the average of the medians over the day.
Figure 4: Average spread % by pair (April 17 2021)
#########. Returns and Volume ############################################
Returns and Volume
Figure 5: Returns of the four highest volume pairs (April 17 2021)
Figure 6: Volume of the major currencies and an average line that fits the data to a sinusoidal curve to show the daily volume highs and lows (April 17 2021)
###########. Daily Returns. #################################################
Daily Returns %
Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (April 17 2021)
###########. Disclaimer #################################################
The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.
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