Fellow humans,
Stacks (STX) is a crypto-asset with the following breakdown. Stacks is the blockchain which uses the algorithm called Proof of Transfer (PoX), rather than Bitcoin’s Proof of Work (PoW). STX is the token which fuels the Stacks blockchain for transactional purposes. Similar to how Ether (ETH) is the token which fuels the Ethereum blockchain, and bitcoin (BTC) is the coin which fuels the Bitcoin blockchain.
Fuel is synonymous with fee, which is paid to miners.
Why did I mention Ethereum? Glad you asked. In my opinion, Stacks is our best opportunity for making Ethereum irrelevant, which if you ask me, should be priority. Obviously, “decentralized finance” (DeFi) and “smart contracts” are here to stay. Bitcoin was not designed for either, which is why Ethereum has found so much success. Bitcoin was designed to be sound money, and does not take well to change.
However, the market wants what the market wants, and people want DeFi. People want decentralized applications, which is why I’m bullish on Stacks, because Stacks brings DeFi to Bitcoin. To my understanding, Stacks cannot function without Bitcoin, because of PoX. In order to mine Stacks, one must have bitcoin, kind of like collateral. Please understand, today’s letter is over-generalized for the purpose of simplicity.
Ethereum does not technically need Bitcoin. Stacks does, which means Stacks actually empowers and expands Bitcoin. One must have extra bitcoin in order to mine Stacks — bitcoin which may not have been otherwise purchased. “Join ‘em if you can’t beat ‘em” applies to my thought process around Stacks. We can’t eliminate DeFi, so unless we want to drive ourselves insane, we’re better off embracing the concept.
My crypto journey has been experimental, to say the least. I’ve traded and shilled shitcoins during my early days, transformed over time into a Bitcoin Maximalist, and then morphed into an open-minded investor. Don’t get me wrong, my core views around Bitcoin have not changed. Now more than ever, we need neutral and sound money as our next global reserve currency, and Bitcoin is the best candidate.
Watching central banks manipulate fiat currencies and economies all over the world is frustrating. Centralized monetary policy is not the root of the problem, but plays a major role. The root of the problem is complex, but the best way to explain is to say — the love of money is the root to all types of evil. Our government officials love to manipulate our money supply for their own benefit, and we end up struggling.
Anyway…
Bitcoin is much more than money though. Bitcoin is also sophisticated technology, which will likely never stop evolving. One can think of Bitcoin’s technology as layers of data. The foundational layer of Bitcoin is extremely difficult to change, which is one of the reasons bitcoin is sound money. Additional layers is where innovation happens. For example, the Lightning network is a layer 2 technology, built on Bitcoin.
Stacks is technically not a layer 2, but acts similarly. Because Stacks is a separate blockchain, it’s not built on Bitcoin the same way as Lightning. However, both Lightning and Stacks transactions (data) eventually make their way to the Bitcoin blockchain, finding an immutable home. The reason we want data to settle on Bitcoin’s blockchain is because we can trust the network’s integrity.
Bitcoin works because of decentralization and security. Once our bitcoin transactions are confirmed, we can trust the data will stay intact forever. We don’t need to worry about somebody fudging the numbers. Attacking Bitcoin to make transactional data changes or manipulate the monetary policy is too expensive and frankly a waste of time. Bitcoin works because people are financially incentivized to follow the rules.
Even while explaining Stacks, I’m still convinced about Bitcoin’s usefulness and success, which is a good place to end today’s letter. Although Stacks (STX) is currently one of my favorite investments, the future of Stacks is still relatively uncertain. The market cap is low, which could be an outstanding investment opportunity. However, the Stacks network is relatively untested, which can lead to failure.
I’m looking for Stacks to not only increase my dollar profits in the next fews years or so, but also my bitcoin profits. Stacks is currently ranked #70 by market cap, and bitcoin is always and forever numero uno. What does this mean? You’re asking great questions today! If STX rises in rank to become a top ten crypto, then it would have to grow against bitcoin immensely in the market, which would mean a major payday.
Until next time,
Salvatore Norge
P.S. — Stacks is currently trading around 48 cents, and can be bought on a variety of exchanges, so click here to learn more (if you want). Also, Stacks was a registered security in the United States, while Ethereum never was. This is important from a regulatory standpoint. Bitcoin has already been deemed a commodity, so we’re good.
UPDATE (10 August 2022) — Stacks is no longer a security, which seems to be a good thing, because more exchanges can list STX. I shouldn't have missed this update last January, but I did. My fault.
“Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, ‘Who is the Lord?’ Or I may become poor and steal, and so dishonor the name of my God.” -PROVERBS 30:8-9
I’m not very wise. Never financial advice. Do your research.
Stacks on 8/5/22 was $ .58. On 2/27/24 it hit $3.26. Excellent vision!