Can Stacks Unlock Bitcoin?
Just under 70% of the total market capital of all cryptocurrency is amassed by Bitcoin (52%) and Ethereum (17.5%) combined. And in general terms, most would agree, that Bitcoin is crypto’s digital gold whilst Ethereum is crypto’s digital oil. Ethereum, backed and powered by cutting edge layer 2 chains such as Polygon, Immutable, Optimism, Arbititrum and a plethora of others, is at the cutting edge of web 3 with literally thousands of Dapps running on the Ethereum blockchain. Bitcoin on the other hand has been mainly dormant for its whole lifetime. Yes of course there is the Lightning Network, which allows users to send or receive Bitcoin quickly and cheaply by moving transactions off of the Bitcoin blockchain onto the Lightning Layer 2 blockchain, but little else. The sad truth is that if you want to put your well earned Bitcoin to work, perhaps to explore the world of De-Fi, then you,ll have to swap your BTC for WBTC or such like and switch to the Ethereum blockchain leaving the security of Bitcoin behind.
But what’s all this got to do with Stacks? Well Stacks (STX), is trying to do what many thought was impossible. The Stacks team is hard at work, trying to make Bitcoin “programmable”, so that just like Ethereum, Bitcoin too can have it’s own network of decentralised Dapps utilising smart contracts.
Stacks Objectives
The Stacks Blockchain, just like most other modern blockchains, is equipped with a powerful programming language that can be used to create smart contracts for a multitude of Dapps. Stacks has designed and developed it’s very own blockchain language, Clarity, which is based heavily on lessons learned from other leading blockchains flaws to create a language that is ultra safe and secure.
As Stacks is being built to run side by side, and indeed in sync with Bitcoin, Stacks ultimate goal is to make Bitcoin “programmable”. Making Bitcoin programmable would of course unlock a large proportion of the market capital of Bitcoin creating a Bitcoin Dapp economy worth hundreds of billions of dollars. It is a fact that compared to Ethereum, most Bitcoins are held idle in storage just as gold sits in a bank whilst a large proportion of Ethereum is put to work each day.
Unlocking Bitcoin to enable it to utilise a network of decentralised finance applications and indeed other applications too, would in effect create a new economy for the crypto world unleashing the power of dormant Bitcoins. And as Stacks transactions are finalised on the Bitcoin blockchain, all Stacks transactions inherit the decentralisation, security and stability of Bitcoin which Ethereum lacks.
But of course the theory of what Stacks is trying to achieve is all well and good but the real question is how close is Stacks in achieving its goal?
The Nakamoto Upgrade
Stacks needs to implement 2 major upgrades before programmable Bitcoin becomes a reality. These two upgrades are The Nakamoto Upgrade and SBTC, which a trustless two-way Bitcoin peg system. Firstly, the Nakamoto update solves the problem of Bitcoin’s slow block times. Anybody who has sent bitcoin or has waited to receive Bitcoin will tell you how painfully slow a process it is. Confirmation times for Bitcoin transactions are typically at least 10 minutes, although often much longer, which of course would be no use for Dapps. Stacks’ Nakamoto Upgrade aims to reduce confirmation times down to as little as 5 seconds. This will be achieved by increasing the Stacks block production rate with a new micro block created at 5 second intervals rather than the existing 10 minutes or so.
SBTC Upgrade
Stacks defines sBTC as the non-custodial, programmable 1:1 Bitcoin-backed asset that enables decentralized movement of BTC in/out of Bitcoin layers. In simple terms sBTC is a programmable Bitcoin that can be employed on smart contracts. Any user who wants to use their Bitcoin on future Dapps powered by Stacks, will firstly swap their Bitcoin 1:1 to sBTC. So, if for example a user wants to run a Stacks Dapp with 0.1 Bitcoin, firstly the Dapp will swap the 0.1 BTC to 0.1 sBTC. Once the “swap” is carried out then the user can use the sBTC on any of the Stacks powered Dapps. And when the user has finished using Stacks Dapps, they can simply swap back any remaining sBTC to BTC. And remember ,each and every transaction that is carried out on sBTC is written to the Bitcoin blockchain just like every Bitcoin transaction.
Stacks Future Upgrades
The Nakamoto and sBTC upgrades could possibly be major milestones, not only for Stacks, but of course for the Bitcoin too. The Nakamoto Upgrade will give Stacks transactions a big increase in speed whilst the sBTC Upgrade will make Bitcoin programmable. For Stacks to succeed, both upgrades must succeed.
Upgrade Timelines
As I write this article (Dec 3rd 2023) the sBTC Developer Release has been made available to select developers and testers through incentivised tasks over the last couple of months. Also of note is the first basic test version of Nakamoto, Mockamoto, is live.
During the first quarter of 2024, both the Nakamoto and sBTC upgrades will undergo further testing, audits, and fine tuning in preperation for launch early in Q2 of 2024, around the time of the Bitcoin halving.
The Stacks Ecosystem
It’s clear that “If you build it then they will come” is true for Stacks as already there appears to be a thriving ecosystem waiting for Stacks upgrades to be deployed. However this is early days for the Stacks Ecosystem which should attract worldwide interest from developers around the world and indeed existing quality Dapps that thrive on other blockchains.
Stacks – The Next Few Months
Over the last week we’ve seen a surge in Stacks price and there may be more to come. There are several upcoming events that should have a positive impact on the price of Stacks.
Firstly, most now expect Bitcoin Spot ETFs to be approved, at the very latest in early January 2024. There is no doubt that this will benefit all leading blockchains especially those closely linked to Bitcoin, just like Stacks. The competition between the US Investment giants such as Blackrock, Fidelity, Ark, etc, all fighting for market share, should create a tidal wave of good publicity for Bitcoin with a healthy price rise. The price of Stacks STX coin is now highly correlated to the price of Bitcoin which is understandable as Stacks works “hand in hand” with Bitcoin. If you take a look at the graph below you’ll notice how Stacks is overreacting to the increase in the price of Bitcoin especially over the last week or so. If we are to see Bitcoin Spot ETFs in the near future then we should see a very healthy rise in the Bitcoin price, which should have a positive “knock on” effect for the price of STX too!
Also under the radar, perhaps buried under the Spot ETF hype is the fact that Stacks will be ramping up its own publicity machine. Behind the scenes Stacks has been expanding their global presence with a new partnerships with Spartan Capital in Singapore and also in South Korea with DeSpread. It has been reported that both will run marketing campaigns early in 2024 raising awareness for Bitcoin’s Layer 2s concentrating on South Korea, Honk Kong, Singapore, and also Dubai.
The Stacks Upgrades too should create healthy publicity around the world as firstly the upgrades roll out to a full test net, then of course news of the full release on the Stacks main net. The next 6 months should see Stacks gain more traction than ever before with the strong possibility of the Stacks price hitting new all time high.
Stacks – The Long Term
The successful release and deployment of the Nakamoto and sBTC upgrades, plus of course Stacks adoption by the crypto world, I believe will be crucial to the long term success of Stacks. Stacks has been a promising project for years with little publicity as the team have been focused on building. With the Bitcoin halving just months away, time is running out for Stacks. The Nakamoto Upgrade was originally scheduled for 2023 but has been delayed although in fairness perhaps the initial roadmap was far too ambitious. Stacks needs to roll out its upgrades on schedule to cash in on this cycle’s bull run.
Having Dapps which finalise on the Bitcoin Blockchain could create a new financial ecosystem which could make Bitcoin the number one internet currency and Stacks one of the leading cryptocurrency projects.
Time will tell!
