What are stacks? Smart contracts on Bitcoin[Outlook &Upate] | by Maximilian Perkmann | March 2023

In recent years, the world of cryptocurrency has revolutionized the way we conduct financial transactions. Since then, Bitcoin has been the face of the crypto movement.

Bitcoin was created as one digital currency, designed to act as a decentralized alternative to traditional currencies. It was primarily developed as a medium of exchange, and its main use is for peer-to-peer transactions. Very much different is the approach to other projects like Ethereum. Ethereum was created as a platform for building decentralized applications. It offers more advanced features and capabilities, including the ability to execute smart contracts, which are self-executing contracts with the terms of the agreement between the buyer and seller written directly into lines of code.

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Now “Stacks” wants to combine both worlds. Stacks is a decentralized computing platform that has gained traction in the crypto community.

Stacks is expected to bring scalable transactions and useful smart contracts to Bitcoin without changing the underlying blockchain itself.

The project chose Bitcoin as it is the first and most secure blockchain. Bitcoin offers potential not only as a cryptocurrency, but also as a general transaction protocol.
The team assumes a similar development for cryptocurrencies as in the competition for Internet protocols in the past. The TCP/IP protocol was the only version that became the standard. All others were then built on this protocol.

Stacks, formerly known as Blockstack, is a unique project that uses the Bitcoin blockchain to build decentralized applications (dApps). This platform leverages the security and stability of the Bitcoin network while adding new features to the blockchain. Unlike other blockchain-based projects, Stacks focuses on empowering developers to build scalable, decentralized apps that can run on Bitcoin.

Bitcoin has a limited capacity to process transactions, which can lead to delays and high fees. Stacks solves the scalability problem through a combination of layer 2 scaling, dApp scaling, the PoX consensus algorithm, and support for sidechains. By leveraging these strategies, Stacks can improve speed, efficiency and scalability of the network, while providing a secure and decentralized platform for building decentralized applications.

The Stacks platform offers several benefits to users, including improved security, transparency and decentralization:

1. Decentralized Apps (dApps): Stacks enable developers build dApps on the Bitcoin network, which is one of the most secure and established blockchain networks in the world. This means Developers can leverage the security and stability of the Bitcoin network while building decentralized applications with smart contracts.
2. Smart contracts: Stacks supports the development and execution of smart contracts, which are self-executing contracts with the terms of the agreement between buyer and seller written directly into lines of code. This allows more efficient and automated processeswithout the need for middlemen or intermediaries.
3. Tokenization: Stacks enables the creation and management of custom tokens on the blockchain, allowing businesses and developers to create their tokens to represent assets, currencies or other types of value.
4. Proof of Transfer (PoX): Stacks uses a unique consensus algorithm called Proof of Transfer (PoX), which is designed to be more energy efficient than traditional Proof of Work (PoW) algorithms. PoX is an extension of the Proof-of-burn (PoB) mechanism. It uses an established cryptocurrency by a PoW consensus mechanism (anchor blockchain) to create a new and secure blockchain. The main difference between PoX and PoB is that the anchor cryptocurrency is distributed to the network participants instead of being burned. Stacks is the first blockchain created with PoX as the consensus mechanism. It uses PoX to connect to the Bitcoin blockchain.
5. Side chains: Stacks is designed to support the creation of sidechains, which are independent blockchain networks connected to the Stacks network. Sidechains can be used to handle specific types of transactions or applications, helping to reduce the load on the blockchain in main stacks and improving overall scalability.

One of the key benefits of Stacks is its focus on empowering developers to build decentralized applications. The Stacks platform provides developers with all the tools they need to build and deploy dApps, including a suite of developer tools, a robust smart contract language, and extensive documentation. This makes it easier for developers to build and deploy decentralized applications, even if they have limited experience with blockchain technology.

Stacks also offers several unique features that set it apart from other blockchain-based platforms. For example, Stacks allows the creation of non-fungible tokens (NFTs) on the Bitcoin blockchain, which has been a highly anticipated feature in the crypto community. In addition, Stacks offers a Stacking feature that enables users to earn Bitcoin by holding and locking their Stacks tokens.

Clarity

Stacks operates with its unique programming language “Clarity” and the development environment “Clarinet.”

Clarity, a new language that brings smart contracts to Bitcoin, is designed to prevent the many bugs and exploits that are prevalent today.
– Predictable
– To be decided
– Secure
– Security in Bitcoin
— stacks.co

The Stack’s blockchain enables users to write smart contracts, build apps, issue non-fungible tokens (“NFTs”) and participate in decentralized finance (“DeFi”) — supported by the BTC Blockchain at all times. Using Stacks apps, creators can also have one share of the value which they help to create

Stacks Blockchain provides a direct connection to the Bitcoin Blockchain using a hybrid consensus mechanism, Proof-of-Transfer (PoX). This ensures that every transaction carried out on Stacks Blockchain can also be verified and tracked on the Bitcoin Blockchain.

Stacks is not the only second-tier solution for Bitcoin.

The Lightning Network, for example, is a “second layer” network built on top of the Bitcoin blockchain. The network enables fast and economically efficient off-chain processing of transactions, contributing to Bitcoin’s scalability. The second layer solution, where Bitcoin transactions are processed off-chain until they are settled, is one increasingly important pillar for BTC payment transactions.

Read more: Lightning: The upgrade that Bitcoin needs

However, there are more important differences between Stacks and Lightning. While both platforms are built on the Bitcoin network, Stacks focuses on empowering developers to build decentralized applications, while Lightning is primarily focused on improving the payment options of Bitcoin. In addition, Stacks offers more extensive smart contract capabilities than Lightning, making it a more flexible platform for developers.

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On the official page of Stacks, there are already several decentralized apps that you can use with the STX Hiro Wallet.
In the meantime, you can find more than 400 apps developed on the Stacks ecosystem of independent developers and entities.
One of the main reasons why Stacks has recently attracted so many investors may be related to the release of several NFT projects.

CityCoins

City Coins are cryptocurrencies that can be issued by communities to improve their cities. They can be mined by anyone, with 70 percent of the profits going to the miners and 30 percent of the mining revenue going to the respective city. The mined city coins can in turn be bet on stacks, thus accumulating Bitcoin.
The first coin of this type is MiamiCoin (MIA), which was issued by the American city in the state of Florida. Miami is considered a crypto hotspot worldwide. Mayor Francis Suarez even wants to make Miami the Bitcoin capital of the world. So far everything seems to be going according to plan on this mission. Since August has Miami City Wallet has raised over 17 million US dollars.

NFTs

In the last few weeks, more and more NFT projects on Stacks have been started. For example, Anfang dieser Woche the sogenannte Bitcoin-Birds-Kollektion binnen weniger Stunden was completely sold out. Die erhöhte Nachfacht nach den “Bitcoin NFT” has led to this, that auch die Nachfacht nach STX angiegen ist.

Stacks’ STX token is at the center of the ecosystem and is used to execute smart contracts and process transactions on Stacks.
STX coins are mined by holding bitcoin. In addition, Stacks also offers the opportunity to earn bitcoin by staking STX. The cryptocurrency STX is thus required to operate the network’s smart contracts.

“Stacker” makes it possible to create smart contracts that are secured by the Bitcoin blockchain. This has opened a new door to create NFTs and DeFi products that have high security provided by Bitcoin. With its focus on empowering developers to build decentralized applications, Stacks has the chance to become a relevant player in the world of blockchain technology. While it faces competition from other projects such as Lightning, its unique features and extensive smart contract capabilities set it apart from other blockchain-based platforms. As the world of cryptocurrency continues to evolve, it will be exciting to see how Stacks and other promising projects shape the future of decentralized computing.