Scalability, Privacy And Governance – Main Problems For DApps, Says Qtum Co-Founder

Ethereum’s functionality has lured a huge number of new ICOs onto the platform, as companies seek to easily create coins or tokens with various features. However, the recent CryptoKitties DApp has proven that the network can be slowed by transaction volume. And while smart contracts have made the Ethereum Blockchain more functional than Bitcoin’s for some companies, security risks remain a reality.

The Qtum Blockchain hopes to provide an alternative to Ethereum and is getting heavy attention as of late. The company’s cryptocurrency QTUM has risen substantially in recent weeks, from $12.31 at the beginning of December to about $51 at press time.

Qtum Charts

Cointelegraph recently had the opportunity to speak with Jordan Earls, co-founder of the Qtum project, lead developer and co-chair of the Smart Contracts Alliance, to understand how Qtum is distinguishing itself from other Blockchain solutions.

Cointelegraph: Thanks for taking the time to sit down with us. So help our readers understand how Qtum is unique from the Ethereum Blockchain for DApps?

Jordan Earls: Qtum is mostly compatible with the Ethereum DApp ecosystem, but offers many technological advances “behind the scenes.” DApp developers can, of course, use Solidity and their existing Ethereum knowledge to create a Qtum DApp, but there are more benefits beyond that.

One of our biggest advantages is that we use the “UTXO” Blockchain model. Basically, what that means is that we can use the widely popular SPV protocol created by the Bitcoin ecosystem in order to bring lightweight smart contract interactions to mobile and IoT devices. This is why Qtum is ideal for DApps that heavily rely on Mobile and IoT type use cases.

CT: What do you see as the principal problems that existing DApp platforms are currently facing?

JE: Bitcoin is designed to be a currency, it’s simple, secure and stable. It’s not a platform because its script language has limited flexibility. So when we are talking about a DApp Platform, we are talking about infinite flexibility. Only through Turing Complete Smart contact programming language, we can have infinite flexibility, then people can build decentralized applications.

Right now, personally I think all DApp Platforms are far away from maturity, even Ethereum and Qtum are facing a few principal problems: first of all, scalability, since the decentralization and speed are always a trade-off for a public Blockchain. Right now, for Ethereum the TPS (transactions per second) capacity is around 15-20, it’s far away to support thousands of DApps, and even though Qtum’s TPS is around 60-70 for the mainnet, it’s still not enough for the future. The solution for scalability is a layered network or off-chain channels.

The second principal problem is independence and privacy. For a platform (think about the Android Platform) each application is independent from each other, the PayPal application downtime will not affect your google maps application. We need to figure out a way to make DApps have less dependency on each other (for example, the CryptoKitty DApps should not stop the fundamental transaction between two people who just want to transfer a $100 in Ether).

For privacy, especially for some business use cases (like a transaction between bank A and bank B should never leak to bank C), we are finding some solutions now. I think in the future, based on zero knowledge proofs, we can have a better smart contract architecture.

The third problem is the governance model for DApps. Right now, for Bitcoin and Ethereum, we do not have a clear governance model, so it’s hard to make decisions and achieve consensus when some emergency things happen. How can we have a better governance model for all the participants? Qtum designed the decentralized governance protocols. For example through smart contracts, we can monitor some network parameters, like Gas price, Gas limit, and more. This makes it easier to solve the forking problems, but the governance problem is still an open question for the Blockchain industry.

Qtum also implements the Decentralized Governance Protocol which allows us to quickly change parameters on the Blockchain to mitigate attacks as they happen, without requiring a fork or other network disruption.

CT: How does Qtum plan to deal with Ethereum scalability issues that have recently come to light?

JE: Qtum provides some partial answers to the scalability problems right now, with more solutions planned for the future.

First, the Qtum Blockchain implements the Decentralized Governance Protocol that allows us to quickly adjust network parameters to react to scaling or security problems. For instance, it is possible for the governing parties on the Qtum Blockchain to vote to increase the blocksize from 2 MB to 4 MB. If the governing parties agree and the proposal passes, then the network rules are changed instantly, with no software upgrade or network downtime required.

In our testing, the Qtum Blockchain supports about 70 transactions. Being based on the UTXO model of Blockchains allows us to process some transactions in parallel and is thus capable of scaling to higher numbers in the future.

We are currently working on the Qtum x86 VM. This basically will allow for smart contracts to be executed on the Blockchain more efficiently and with lower gas costs. It also implements features to allow more transactions to be processed in parallel, and even allows for multi-threaded smart contract code.

And finally, we also believe that the ultimate solution to achieving thousands of transactions per second and more is to move more transactions off-chain so that they do not consume any resources on the Blockchain. We currently have a prototype lightning network functioning on our testnet, and Qtum is compatible with Raiden network technology as well. We are currently designing and researching a hybrid lightning network based on the best parts of both Raiden and lightning technology.

CT: So what do you think has been behind the recent rise in Qtum price?

JE: We’re not too sure to be honest. Markets are unpredictable. If we were to guess though, it would be the market reacting to our plans over the next year. Also, there is some speculation around the UBTC announcement that an airdrop will happen for Qtum holders that means for each 100 Qtum held, they get one UBTC.

CT: Tell us what is the most exciting use case for which consumer-ready DApps already exist (other than ICOs)?

JE: It’s a hard question, because from my understanding when we talk about Blockchain, we are talking two things – one is cryptocurrency, and another is Trustless Platform (DApps). Even today, people claim we have a few hundreds DApps, but most of them are not real DApps. They’re more like a centralized application with a cryptocurrency payment solution.

One of the exciting areas I have big interest is using Blockchain to rebuild the digital contents (movies, music, ebooks, short videos, etc) and the entertainment industry. Like you could download movies (copyright already registered on Blockchain) from everywhere on the Internet, and everyone could help distribute the movies and earn some money (decentralized channels). Then when you watch it, the system will charge you for it through the smart contract. Personally, I think that’s the really ideal DApp on Blockchain and everyone could use it on their mobile phones. If it happens, we may not need the Apple App Store or Google Play anymore. It will be a big innovation for application developers and the software industry.

cointelegraph.com