The Truth About Stacks & Bitcoin

A few days ago, the CEO of Swan bitcoin called Stacks "an affinity scam". This begged the question, what is Stacks and how does it relate to Bitcoin?

Some misconceptions about Bitcoin

Most people assume that (1) Bitcoin is slow, (2) you can't buy anything with Bitcoin, and (3) that it does not have scalability for smart contracts. Here are some solutions that help solve these points!

Speed and payments

Through the Bitcoin Lightning Network (TLN) (payment layer on Bitcoin) you can purchase things using Bitcoin without waiting 5-10 minutes for the transaction to settle. Bitcoin groups payments into blocks that are 10 minutes apart. These payments are considered secure after 6 block confirmations, these transactions can take up to one hour before they are confirmed and irreversible. TLN does not need block confirmations”,” so transactions are immediate and instant. TLN improves transaction speeds as well as using bitcoin as a retail point of sale.

Smart contracts

Stacks is a layer-1 cryptocurrency secured by Bitcoin.

In a nutshell, Stacks is an extension of Bitcoin that allows for NFTs, Defi, DAOs, etc to be secured on BTC. Instead of deploying smart contracts directly on the Bitcoin blockchain, which is extremely expensive and would take up valuable blockspace, Stacks executes these smart contracts on its own layer-1 blockchain, while using Bitcoin for settlement.

Stacks uses a consensus mechanism called Proof-of-Transfer (PoX). PoX allows Stacks miners to write new blocks on its own blockchain through the mining energy consumed by those miners on the Bitcoin blockchain, and then the “merkle root” of these transactions is sent to the BTC chain, and therefore the STX block is verifiable on BTC.

The relationship between Miners + Stackers

In PoX, there are two major network participants: miners and stackers. Miners spend Bitcoin and earn new stacks of tokens, smart contracts, and transaction processing fees. The Stackers support by "stacking" STX tokens and earning Bitcoin as a result. Stacking rewards happen when (STX) token holders with Bitcoin by locking up their STX token for a period of time.

Due to a verifiable random function, the winning miner is completely random, resulting in enhanced protection against bad actors. These blocks can leverage much faster confirmation speeds. By the time Bitcoin has a confirmed block, the micro blocks can settle from Stacks to Bitcoin and provide finality to the transaction.

What coding language does STX use?

Clarity is the language that the smart contracts are written with that uses interpretable code”,” which means it is more secure and allows developers to see what the code will do before running it. Clarity is a decidable language which means that it’s possible to determine exactly which code is executed, for any function. Clarity unlocks new capabilities for decentralized applications! This is not to be mistaken with Rust which is the language that most of the Stacks blockchain is coded with.

Applications secured by Bitcoin on Stacks

Here is a list of some extraordinary platforms building on Bitcoin through Stacks.

• AlexGo & Arkadiko | Decentralized Finance (DeFi)

• Console | Decentralized Autonomous Organizations (DAOs)

• Gamma & Byzantion | NFT Marketplaces

• LNSwap | Lightning Swap

• NeoSwap | NFT Swap platform

• Sigle | Decentralized Writing Platform