In case you haven't noticed, cryptocurrencies performed pretty darn well in 2017. In fact, the better than 3,300% gain in aggregate market cap last year made the ridiculously strong 20% gains in the S&P 500 look like a flat line in a side-by-side comparison. It's possible investors will never see an asset class deliver returns like this again over the course of 12 months.

At the heart of the rally in digital currencies is blockchain technology. For those unfamiliar, blockchain is the digital and decentralized ledger that underlies most virtual currencies and is responsible for recording all transactions. Blockchain first hit center stage when bitcoin debuted in 2009, and it has seemingly evolved and matured with each new cryptocurrency to hit the market since.

Binary code on bicycle chains linked together to represent blockchain.

Image source: Getty Images.

Why the buzz over blockchain? It mostly has to do with perceived inefficiencies with the current banking system, such as exorbitant transaction fees and long processing times. Blockchain aims to resolve these issue by dramatically speeding up validation and settlement times, as well as removing banks from the equation as middlemen, thusly lowering transaction costs.

Beyond the financial industry, blockchain has non-currency applications, too. Blockchain is potentially the perfect technology, given its transparency and immutability (i.e., unchanging nature), to help oversee supply chains, manage digital identifications, or even log medical records.

Qtum: Emerging from bitcoin's and Ethereum's shadow

While cryptocurrencies like bitcoin and Ethereum, which have the largest respective market caps, have traditionally received most of the attention and glory, it's other virtual currencies that are emerging from their shadows and really creating a lot of buzz. One such cryptocurrency is the Singapore-based Qtum.

What makes Qtum unique is that its blockchain combines bitcoin's infrastructure with Ethereum's Virtual Machine, then adds a few proprietary twists. In other words, it takes the most popular aspects of bitcoin's currency-only focus, then takes the best attributes of Ethereum's predominantly non-currency-focused blockchain, and adds factors that'll make its blockchain unique.

Binary code and blockchain nodes surrounding a digital outline of the continents.

Image source: Getty Images.

To begin with, Qtum relies on smart contracts like the Ethereum blockchain. Smart contracts are protocols that help with validating, facilitating, and enforcing the negotiation of a contract. Think of them as legally binding parameters that are completely customizable by businesses that help to guide the execution of actions, such as when money can be spent, or when new products can be ordered or shipped.

Secondly, Qtum's network, despite the expectation that it'll be regularly upgraded, will remain fully compatible with bitcoin gateways and Ethereum contracts. This means businesses that have already incorporated Ethereum smart contracts won't have to worry about integration issues if they were to switch over to Qtum's blockchain.

Lastly, Qtum is attempting to make it easier than ever to use its blockchain, with Simple Payment Verification protocols being used in lite wallets via mobile applications. There aren't too many blockchains to offer a secure and decentralized mobile application as of yet.

The Qtum Foundation has been a busy bee

Of course, Qtum's blockchain technology is only meaningful if it can land brand-name partners and succeed in real-world testing. In January, Qtum landed two such partners.

Two businessmen shaking hands.

Image source: Getty Images.

First, it announced a partnership with 360 Finance, a subsidiary of Qihoo 360. The privately held Qihoo 360 is the company behind the 360 Search engine in China, which has the third-highest search market share in the country. This partnership will focus on developing next-generation smart contracts, consensus models, and blockchain software security.

Just a day after its announced partnership with 360 Finance, Qtum partnered with Baofeng Bokocloud to achieve the world's first consensus network service. Baofeng's media player in China has more than 200 million active users, making it the perfect platform to use Qtum's blockchain to strengthen copyright protections. Baofeng's Bokocloud service also plans to help Qtum dramatically expand the number of nodes on its blockchain, which would increase the capacity of its network. 

But even these partnerships could take a back seat to a rumored tie-up that also gained steam in January and has yet to be confirmed or denied.

Could Qtum land a whale?

In mid-January, an administrator of the official Telegram Channel of Qtum announced that it would be partnering with global coffee giant Starbucks (NASDAQ:SBUX), although no specifics were offered. Though the admin, when questioned, responded "Yes, it's true. More details coming soon," no additional details have been offered via an official announcement or on Twitter. However, it is worth noting that Qtum has previously announced partnerships via its Telegram group prior to making an official announcement, according to various tech blogging websites. 

A smiling Starbucks barista.

Image source: Starbucks.

Why might Starbucks be interested in utilizing Qtum's blockchain technology? To begin with, blockchain can be used to make supply chains more transparent. Starbucks relies on its worldwide vendors to supply consistent grades of coffee. However, it's not always easy to assess if those quality grades are being consistently met from field to retail store. Blockchain, being transparent and immutable, would make it easy for Starbucks to track coffee beans from the field to their final destination. What's more, it would also be a lot easier for Starbucks to locate supply chain inefficiencies with blockchain as opposed to traditional paper-based tracking systems.

Another substantial benefit is that it could dramatically improve cash flow to farmers in underbanked regions of the world. Assuming farmers can gain access to Qtum's application via a mobile device or personal computer, the delivery of beans could result in an almost instantaneous payment to the farmer, as opposed to waiting weeks or months to be paid. Farmers with improved cash flow may have the ability to upgrade equipment or improve crop yields to Starbucks' advantage.

Though this is nothing more than an unconfirmed rumor at this point, it has the potential to be an absolute game-changer for Qtum, if true. Whether you're a blockchain enthusiast, Starbucks shareholder, or Qtum investor, it's worth keeping an eye on this rumor to see if it's proven true or eventually debunked.

Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool owns shares of and recommends Starbucks, but has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy.