Written by: Alex Nguyen
Compiled by: TechFlow
Stacks is a smart contract platform that allows Bitcoin to be used in decentralized applications and decentralized finance (DeFi), unlocking trillions of potential Bitcoin capital. In this article, crypto analyst Alex Nguyen explains Stacks and its upcoming Nakamoto release, and why this is good for Bitcoin.
Stacks allows developers to build dApps that use real Bitcoin for payments, staking, tokens, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), etc. It enables decentralized finance (DeFi), the metaverse, Web 3.0, and other use cases by extending Bitcoin's scripting capabilities while respecting the philosophy of Bitcoin.
Some key features of Stacks include:
Trustless cross-chain bridge with Bitcoin;
A new Clarity programming language for more secure smart contracts;
Consensus is achieved through Proof of Transfer (PoX) which recycles BTC energy;
Tight Bitcoin Node integration to react to BTC transactions.
Stacks achieves this through the following technologies:
Recording data on Bitcoin to enable trustless verification of Stacks activity;
Once a Stacks transaction is confirmed by a PoX block, it inherits the security of Bitcoin;
Utilizes Bitcoin’s UTXO system;
Respect Bitcoin's monetary policy.
Stacks and Bitcoin have developed a symbiotic relationship:
Bitcoin provides security, liquidity, and a monetary base asset.
Stacks enables Bitcoin capital to be productive in advanced applications.
The next major release is called Nakamoto and includes:
sBTC — A trustless, decentralized two-way peg that brings Bitcoin liquidity to smart contracts.
Bitcoin finality — Once confirmed under a PoX block, Stacks transactions are irreversible.
Faster blocks - one block every 5 seconds while maintaining security.
sBTC allows for the minting of an asset on Stacks that is redeemable 1:1 for actual Bitcoin in a decentralized manner.
sBTC could free up trillions of capital for the following uses:
Using Bitcoin as collateral in DeFi;
Trustless Bitcoin trading on decentralized exchanges;
Issuing stablecoins and assets backed by Bitcoin;
Bitcoin payment channel.
The finality of Bitcoin makes Stacks transactions irreversible within about 100 PoX blocks after confirmation, and requires a deep reorganization of Bitcoin to reverse. This makes Stacks transactions inherit not only the probabilistic immutability of Stacks, but also the security of Bitcoin.
Faster blocks of ~5 seconds significantly increase transaction throughput and improve dApp responsiveness while maintaining the security of Bitcoin settlement.
By enhancing Bitcoin's functionality while deeply respecting the spirit of BTC, Stacks + Nakamoto can unlock Bitcoin's full potential in Web 3.0. Hundreds of teams are already using Stacks to build dApps, tokens, non-fungible tokens (NFTs), DeFi, DAOs, and more.
The launch of Stacks and the Nakamoto version will transform Bitcoin into the base settlement layer and reserve asset for an open metaverse that is autonomous, censorship-resistant, trustless, and empowers individuals.
