EthereumContinuing to show interest in dApps and smart contracts where bitcoinhas never been able to have applications that can compete with Ethereum in these areas. It looks like this won’t be a problem any time soon, as Bitcoin-focused Stacks are starting to become a major competitor in areas where Ethereum excels.
Bitcoin-focused decentralized finance (DeFi) has been working for a long time to benefit this industry. Muneeb Ali, Stacks apps co-founder and data scientist, said:
“Theoretically, Bitcoin apps and smart contracts have always sounded like good ideas. What has changed now is that Stacks is applying all these ideas in real life.”
Stacks is this application introduced as a Layer-1 blockchain to make Bitcoin more programmable, enabling the creation of dApps and smart contracts. In a recent post, Ali said, “Everyone agreed that it is more difficult to build financial instruments and primitive structures around Bitcoin.”
He stated that due to the lack of functionality of Bitcoin smart contracts, Ethereum’s “decentralized finance” functionality controls $152 billion of the $223 billion “Total Value (VTL) Locked”.
Ali made two important comments on this subject; first, layer solutions can replace the requirement of “forks”. Second, “it doesn’t make sense for Bitcoin to have full smart contracts at the core layer, so core developers aren’t interested in this idea.”
There is no need to fork or change Bitcoin to enable apps & contracts.
(Faketoshi might not like this.) pic.twitter.com/xhMpeW8EY0
— muneeb.btc (@muneeb) October 18, 2021
He reiterated that despite all these challenges, the DeFi field is not entirely impossible. Stacks uses a Proof of Transfer (PoX) consensus mechanism on Bitcoin’s Proof of Work chain. Therefore, transactions on Stacks are verified on Bitcoin. In turn, holders can earn Bitcoin through ‘stacking’. This means,
“It is designed so that developers can take advantage of Bitcoin’s features without changing Bitcoin itself.”
In terms of programming, Stacks uses “Clarity” smart contracts while Ethereum is built on “Solidity”. Additionally, “Stacks” also uses Ethereum’s “burn” functionality in a different way. In a recent podcast, Ali explained that people are reacting very negatively to the “burn” function, thinking that Bitcoin is valuable. Therefore, Ali and his team thought;
“What if Bitcoin is recycled and diverted instead of being incinerated…”
Given Bitcoin’s “crazy” hashrate, miners don’t convert electricity and computing power to earn block rewards and transaction fees.
According to Ali, the biggest difference in terms of competition is the unique connection Stacks has with Bitcoin.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.