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What Is the Stacks Blockchain?

Stacks blockchain and bitcoin tokens stacked up
Hannah Scherwatzky / ONE37pm

The Bitcoin blockchain is one of the most trusted and well-known blockchains available, however, it does have its limitations. Now developers are figuring out how to utilize Bitcoin’s secure blockchain technology while adding new features. Such is the case with the Stacks blockchain.

Stacks is a layer-1 blockchain that is linked to Bitcoin by its Proof of Transfer (PoX) consensus mechanism. This enables Stacks to leverage the security and capital of Bitcoin for decentralized apps and smart contracts.

At this point, there are so many blockchains it can be hard to keep track of them all. With that, the Stacks blockchain is completely different from any other blockchain currently available. Let's take a look at how it is different.

What is Stacks?

A popular misconception regarding the Stacks blockchain is that it is a layer-2 sidechain of the Bitcoin blockchain, however, this is not true.

What is the Stacks blockchain
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Stacks is its own layer-1 blockchain, similar to how Ethereum and Cardano are their own blockchain, except the Stacks blockchain is linked to the Bitcoin blockchain using the first-of-its-kind Proof of Transfer (PoX) consensus mechanism.

This type of blockchain runs parallel to another blockchain—in Stack’s case—the Bitcoin blockchain.

How does Stacks work?

Stacks' one-of-a-kind mining algorithm assures the history of all blocks ever created is resolved on Bitcoin. A maximum of one Stacks block is mined for each Bitcoin block, and if there is competition, a winning Stacks block is selected at random by a cryptographic sortition process.

PoX is a unique mining system in which block producers are chosen by sending another cryptocurrency to a preset list of addresses on another blockchain. It sends Bitcoin to Bitcoin addresses that STX token holders specify on a regular basis in the Stacks 2.0 version of PoX. 

PoX mining, like PoW mining, is a kind of single-leader mining. Each block is created by a single miner, and each miner can pick any existing block as its parent block.

Why is Stacks important?

The importance of the Stacks blockchain stems from its aim to bring new functionalities to Bitcoin’s mainnet blockchain. However, since Stacks’ blocks are anchored to Bitcoin’s blockchain, the time to mine a Stack’s block remains the same as Bitcoin, which is approximately 10 minutes.

Why is Stacks blockchain important
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So, does that mean that Stack’s blockchain is limited to the same throughput that the Bitcoin blockchain is limited to? Absolutely not.

To avoid this potential issue, Stacks has implemented a mechanism called microblocks that enables increased transaction throughput and speed. Blocks that are confirmed on the Stacks blockchain simultaneously to Bitcoin blocks are called anchor blocks, which occur about every 10 minutes.

That is where microblocks come in. Between these blocks, microblocks make a rapid settlement of Stacks transactions. Then, once the associated anchor block has been approved on the Bitcoin blockchain, the microblocks are also approved.

Through this innovative method, Stacks achieves scalability.

What is STX?

STX is the native cryptocurrency of the Stacks blockchain. It is used to fuel smart contracts for Bitcoin and to reward miners on the Stacks network, plus it enables holders to earn bitcoin by Stacking.

What can you do with Stacks?

Of course, the Stacks blockchain wasn’t just created as a way to increase Bitcoin’s throughput speed. The stacks blockchain allows you to do many things that can’t be done on the Bitcoin blockchain, including:

What can you do with Stacks
Stacks.co

Bitcoin NFTs

The Stacks blockchain enables users to create their own NFTs with Clarity smart contracts. Because Stacks is linked to the Bitcoin blockchain, NFTs created on Stacks are just as secure as Bitcoin.

Additionally, marketplaces are enabling Lightning and Bitcoin payments and even Bitcoin yield-generating NFTs.

Bitcoin DeFi

Given Bitcoin's roughly $1 trillion market cap and rising acceptance, Bitcoin DeFi represents a vast, unexplored industry. Despite its expanding usage as sovereign money, Bitcoin hasn't been as productive of an asset for DeFi as other cryptocurrencies without passing through controlled exchanges or distinct blockchains in the form of wrapped BTC. Stacks alters this.

Considering Stacks contracts' visibility into the Bitcoin state, as well as Stacks' natural ability to exploit Bitcoin's security and settlement assurances, Stacks is positioned to allow real Bitcoin DeFi. Because the Stacks chain is linked to Bitcoin via the Proof of Transfer (PoX) consensus mechanism, all Stacks transactions settle on Bitcoin.

This assures that Stacks shares Bitcoin's long-term, unprecedented security for transaction reorgs.

Blockchain Domain Names

Stacks enables what is known as a Blockchain Naming System (BNS), which binds Stacks usernames to an off-chain state without relying on a single centralized entity. Unlike Domain Name System (DNS), anyone has the ability to create a namespace and set its properties.

A blockchain Naming System (BNS) is a network system that binds Stacks usernames to an off-chain state without relying on any central points of control. Unlike DNS, anyone can create a namespace and set its properties.

Namespaces are generated on a first-come, first-served basis, and they are permanent once formed. BNS names have three important qualities that make them a great tool for developing all types of network applications, such as:

  • The protocol does not allow name collisions.
  • Human meaning, each name is chosen by its creator.
  • Only the owner of the name can change the state to which the name belongs.

Ultimately, Stacks is a blockchain that retains the safety and trust of the Bitcoin blockchain by using a Proof of Transfer (PoX) consensus mechanism, but allows for some new features, in addition to an increased throughput speed.

To learn more about the Stacks blockchain, visit Stacks.co.

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