With Bitcoin being at the epicenter of many discussions these days, it seems like a good time to look at how the legendary network has evolved. Although BTC is the largest cryptocurrency by market capitalization, the underlying Bitcoin blockchain is often criticized for its lack of features compared to newer blockchains like Ethereum.
As a layer-1 blockchain (which is also the oldest), Bitcoin contains some inherent problems by design. But at the same time, projects are tirelessly working to solve them, gradually adding new features to the network. Additionally, the Bitcoin developer community also rolls out regular updates to further optimize the network infrastructure to facilitate modern-day needs.
That said, here are three of the biggest misconceptions about Bitcoin and how one project is upending this prevailing dynamic.
1. Bitcoin Can’t Scale
The average transaction speed on the Bitcoin network stands at around 7 to 10 transactions per second (TPS), which is much slower than second and third-generation blockchain networks.
Yes, the problem of scalability plagues the Bitcoin network (and other blockchains as well). To put this into perspective, traditional payments service provider Visa claims that its network can deliver as much as 65,000 TPS. If true, this speed outpaces even the fastest blockchains by a substantial margin.
This scalability problem has limited the Bitcoin network considerably, especially when it comes to decentralized finance (DeFi), non-fungible tokens (NFTs), and other emerging sectors. In this context, it is essential to understand that the Bitcoin network, in its original form, wasn’t designed for high-speed and throughput transfer of value. It has a limited bandwidth, and accordingly, the number of transactions that can be processed at any given time is comparatively less than other networks. An average of 7-10 TPS isn’t nearly enough to support DeFi transactions.
That said, Stacks has developed a solution that significantly increases the Bitcoin network’s throughput. To add scalability to the Bitcoin network, Stacks has introduced a new consensus mechanism called Proof-of-Transfer (PoX), whereby a varying number of “microblocks” allow rapid settlement of Stacks transactions while harnessing the security of the Bitcoin network.
While the eventual goal is to bring scalability to Bitcoin, Stacks uses a different method than other existing sidechains or layer-2 scaling solutions. By utilizing its own nodes, network, token, and miners, Stacks leverages Bitcoin’s base-layer to store all transactions, thus providing a consensus algorithm between two independent blockchains to demonstrably raise transaction throughput while preserving and prioritizing security above all else.
2. Other Blockchains Have Better Smart Contracts
Smart contracts were never a part of the Bitcoin blockchain – not until the recent Taproot upgrade. Several projects have started offering smart contract functionality on the Bitcoin blockchain following the upgrade.
While there are several layer-2 scaling solutions and sidechains currently offering smart contract features on the Bitcoin chain, Stacks is the only layer-1 blockchain that allows anyone to deploy smart contracts and decentralized applications (dApps) on the Bitcoin network. Due to its inherent design, Stacks integrates DeFi primitives with Bitcoin’s security and stability.
Given the visibility Stacks contracts provide into the Bitcoin state and Stacks’ ability to leverage Bitcoin’s security and settlement advantages, Stacks is uniquely suited to enable true Bitcoin DeFi. Since the Stacks chain is tethered to Bitcoin via Proof of Transfer, all transactions settle on Bitcoin, allowing developers to build apps, smart contracts, and digital assets integrated with Bitcoin’s security, capital, and network.
3. Bitcoin Doesn’t Power NFT Minting
Many of the misconceptions surrounding the Bitcoin network stem from the fact that it doesn’t offer smart contract functionality. However, with the Taproot upgrade and the rise of Stacks and other layer-2 solutions as well as sidechains, the Bitcoin network is now well-equipped to support a myriad of emerging sectors.
In the last few months, the concept of Bitcoin NFTs has gained momentum, partly fuelled by the ongoing developments on the Stacks blockchain. STXNFT, an NFT marketplace for Bitcoin NFTs built on the Stacks blockchain, has positioned itself as the go-to option for minting NFTs secured by Bitcoin’s hashrate.
For a platform that joined the mainstream for barely a year, STXNFT has already shattered several records, with more than five of its projects raising over $100,000 through mints. At the same time, several other projects have crossed $2 million in secondary sales. To further popularize Bitcoin-secured NFTs, Stacks-based STXNFT recently launched Gamma.io – the Web3 social identity hub powered by NFTs – featuring a user-first community marketplace, a creator-first launchpad, and a social platform. Gamma’s trading volume has crossed $3.5 million over the past six months.
All in all, the point is that the Bitcoin network is evolving at an unprecedented rate. New-age solutions like Stacks, Lightning Protocol, and several others, paired with the unwavering loyalty and support of Bitcoin’s ever-expanding global community of users, and the continuous upgrades to Bitcoin’s core features, have equipped the legacy network to finally assert its dominance upon DeFi, NFTs, P2E gaming, and other emerging sectors.