Stacks and Ordinals - Creating Bitcoin Utility?
The Stacks network makes Bitcoin programmable through smart contracts at layer 2. The question is - will this be good or bad for Bitcoin
Stacks on Stacks
Stacks is a layer 2 on top of the Bitcoin network which aims to make Bitcoin programmable with smart contracts. Stacks have been around for a while but have recently surged due to the popularity of BTC Ordinals. Ordinals are like NFTs on Bitcoin but the provenance and permanence of the Ordinal theory itself make Ordinals quite different from your average NFT. Stacks are very similar but it doesn’t utilize the same layer to make the inscription but still utilize the oldest and most well-known blockchain technology which is Bitcoin. Stacks is powered by the $STX token and has surged in price in the past week. Stacks may see more traffic given the popularity of BTC Ordinals. Stacks already has minted quite a few NFTs on their layer so they could see a rise in attention to their platform given the demand of Ordinals.
The Rise of BTC Dapps?
Ethereum has taken the cake in years past as the dominant blockchain that has had massive network effects around Dapps, tokens, and many layers 2’s. Ethereum is considered the best option for many developers for its decentralized network and the security of its blockchain. But could the dynamics change slightly due in part to interesting use cases we were seeing on Bitcoin like Stacks and Ordinals? Bitcoin has rock-solid security and decentralization just like Ethereum but it has never been used like Ethereum. There could be a shift in how people view and even use Bitcoin altogether with the rise of Ordinals and layers-like Stacks which aim to make Bitcoin programmable. The Bitcoin community is quite torn over this issue since some see Bitcoin as digital gold only, while others seek to see Bitcoin grow with more interesting use cases. It’s not certain how this can develop over time but it’s fascinating to see nonetheless.
The Reign of the King: BTC
What makes Ordinals and Stacks exciting is the fact that they are bringing additional usage and use cases to Bitcoin, which in turn means more fees and more non-zero wallets on Bitcoin. We are seeing a huge influx of wallets with Bitcoin balances and also an increase in fees spent inscribing Ordinals in general. Just last week Bitcoin broke an all-time high of wallets with non-zero addresses reaching 44 million. Add in Stacks with their layer 2 solutions built using Bitcoin and it adds an interesting case to be made about how many more exciting things we could see on Bitcoin.
Furthermore, Bitcoin has been the king of the entire crypto market for years and has never lost its dominance outright to any other cryptocurrency. Because of this professional traders and investors use Bitcoin exclusively as a heartbeat of their entire crypto market for obvious reasons. Given that Bitcoin could see a lot more interest, it could force the entire crypto market into an uptrend over time. Now I am not saying we're going into a bull market, but we could see Bitcoin keep dominance and interest for the foreseeable future along with it lifting the crypto market. Bitcoin dominance has waned in the past few years but notices an uptrend in Bitcoin dominance in the chart below.
Final Thought
You want to keep your eye on the inner workings of Bitcoin, Stacks, and Ordinals. Stacks predate the Ordinals and have their token, community, and platform as well. Given Bitcoin is the first real blockchain with major significance and historical value, add in the historical value and use cases that come with Ordinals and Stacks. The markets have been uncertain in recent months, but one thing that is very certain is that we’re witnessing history be made on Bitcoin once again.