The Hidden Promise of the Bitcoin Network
Bitcoin is the world’s leading cryptocurrency and is widely considered the most secure blockchain. However, the network also lacks specific aspects, particularly where smart contract functionality is concerned. Nevertheless, Stacks is building the necessary infrastructure to change the game and can help unlock some compelling use cases.
Bitcoin Is A Limited Network
Being the leading cryptocurrency and most secure blockchain are two big labels associated with the Bitcoin network. However, one cannot be blind to the lack of programmability this ecosystem offers. At its core, Bitcoin is designed to be a payments network and not necessarily one for decentralized applications, gaming, NFTs, and so forth. That is unfortunate, as more developers flock to other ecosystems like Ethereum.
Most people do not realize how the Bitcoin network can serve many more purposes than just transferring value. For example, one may argue that Bitcoin doesń’t need decentralized finance, non-fungible tokens, or any of those other potential fads. However, leveraging the network’s security to accommodate those needs can prove viable. A decentralized application or NFT collection is only as secure as the underpinning network, and Bitcoin has every ecosystem beaten hands down.
The trust factor associated with DeFi, NFTs, blockchain gaming, and other concepts is much more crucial than one may think. Therefore, it makes sense for developers and users to favor the most secure network available today. While Ethereum may offer many exciting developer tools, it does not have the top-grade security of Bitcoin. When Ethereum switches to proof-of-stake, the security aspect will become even more important, whereas miners will always secure Bitcoin.
With no available infrastructure for next-generation blockchain development, Bitcoin is in a bit of an awkward state. If developers can not write smart contracts, exploring DeFi and NFT opportunities is impossible. However, the Stacks team has developed a solution that makes building for Bitcoin more appealing. Many new opportunities and use cases await.
What Is Stacks Exactly?
The Stacks ecosystem is designed to unlock Bitcoin’s full potential. A connection between the Stacks ecosystem and the Bitcoin network is made through the Proof of Transfer consensus mechanism, leveraging the proof-of-work of the Bitcoin network to secure the Stacks blockchain. Using Bitcoin makes much sense, as it is the longest-running blockchain protocol with the highest security, and it is the highest-value network in the cryptocurrency space.
New concepts become accessible to Bitcoin users through Stacks, including decentralized finance, NFTs, and more robust applications. The Stacks ecosystem provides smart contracts to build apps, and several dozen projects are in development or accessible to use today. For example, Alex, an up-and-coming DeFi platform for Bitcoin users, recently secured millions in funding, confirming a solid interest in DeFi on Bitcoin.
The new financial characteristic creators can tap into is an extra benefit of Stacks and Bitcoin NFTs. An artist can leverage Stacks to enable an ongoing annuity for a project or cause by sending a percentage of transactions to a vault. That vault will earn a high yield – up to 10% yearly – in Bitcoin. It is a solid way to earn pure BTC rewards by taping into Stacks’ new smart contract functionality.
Additionally, one can easily make the case for DeFi on Bitcoin. The Bitcoin network represents hundreds of billions of dollars in capital, much higher liquidity than any competing blockchain. Moreover, Stacks users who hold $STX can stack their assets to earn native BTC rewards, with a yield of 9% per annum. That is just one use case for DeFion Bitcoin, although the Clarity smart contracts can do much more.
The Stacks ecosystem introduces exciting and much-needed functionality to the Bitcoin network. Decentralized applications pave the way for Web3 adoption, and the world’s leading cryptocurrency cannot lag in this regard. Moreover, developers now have access to the necessary tools to explore opportunities across finance, art, collectibles, blogging, social activities, and much more.
The opportunity for new and existing crypto users to ear BTC DeFi rewards is a crucial development. Most DeFi protocols – on Ethereum and other chains – only reward users in their native token, which may not have much long-term value. Bitcoin, as a store-of-value, will always have value and makes more sense as a reward for $STX stacking.