DeFi and NFTs are leading the way regarding the growth of the cryptocurrency markets. While trading platforms like Bitlevex allow more traditional traders to speculate on crypto prices, others prefer to go all-in on NFTs and put their trust in this emerging digital art market for making profits.
Consequently, NFT-focused blockchains are gaining traction in the market and providing investors with new, unseen ways to make profits. In Q3 2021 alone, the traffic in the NFT market saw an increase to $10.7 billion. Ethereum is clearly the big winner here, as more than 90% of all NFTs are nested on its network. This has left some investors to speculate that Ethereum as a smart contract blockchain could flip the value of Bitcoin in the following years.
That said, a fairly recent solution called Stacks might bring NFTs to bitcoin. In this article, we take a quick look at NFTs and Stacks and how they can co-exist to bring digital collectibles to Bitcoin, the most popular and secure blockchain on the market.
A short introduction to NFTs
NFTs or non-fungible tokens are unique digital assets recorded on a blockchain. Each one of them holds various characteristics that make them distinguishable from one another. Consequently, they can’t be interchanged for one another like cryptocurrencies, hence the name, non-fungible.
However, NFTs benefit from most blockchain features and provide full proof of ownership to the owner of the private key. Other advantages include:
- Durability – NFTs cannot be damaged or destroyed.
- Transferability – NFTs can easily be transferred from one user to another.
- Authenticity – NFTs are digital representations and unique. They can not be copied or have multiple instances of them on the network.
Bitcoin and smart contracts – can it be done?
As the original cryptocurrency, Bitcoin is a 1st generation cryptocurrency and doesn’t have smart contract capability. This means that Bitcoin was never designed to have a wide variety of use cases. Instead, it can be used to store and transfer value.
Developers can’t program decentralized applications and deploy them on the network. As such it cannot run DeFi apps or be used to deploy NFT marketplaces. However, Bitcoin is also the most popular cryptocurrency out there. Because of its robust and highly decentralized network, longevity, and pioneering status, Bitcoin is the most secure blockchain available, making it impossible to hack or compromise.
This decentralization and security can be very interesting for NFT collectors, as it adds a layer of safety to their investment. That’s where Stacks, a scaling solution for Bitcoin comes into play.
Stacks – bringing NFTs to the Bitcoin network
Stacks is a Layer 1.5 solution for Bitcoin. It has smart contract capability and rolls up all of the transactions on the main bitcoin blockchain. It works similar to the Lightning network, as it stores a number of transactions and executes them in batches on the main Blockchain.
What’s interesting is that the smart-contract capability of Stacks allows the creation of NFTs. In turn, these NFTs benefit directly from the Bitcoin blockchain security features, as each smart contract is secured as a transaction on the Bitcoin blockchain. Individual transactions are done off-chain and using the STX cryptocurrency, alleviating most of the work from the BTC chain.
Can Bitcoin NFTs rival those of Ethereum?
For the time being, the NFT scene on the Stacks marketplace is relatively small. That being said, both artists and collectors have shown interest in securing their assets on the Bitcoin blockchain.
Consequently, new projects are continuously being developed on the platform and made available for purchase. Some notable NFT collections on Stacks are the Bitcoin Birds, created by a 12-year old boy, and a copycat of the incredibly popular CryptoPunks called StackPunks.
The latter has already generated revenue of more than $2 million, showing that the interest in this platform is clearly growing. The Stacks (STX) cryptocurrency has surged +130% following an article from decrypt.co, which shows that Bitcoin supporters are waiting around the corner for their own NFT network.
There’s also the fact that, due to the saturation of the network, minting on Ethereum has become prohibitive. A single NFT costs multiple hundreds of dollars in ETH gas fees to be recorded on the blockchain. This is another reason why artists and collectors are looking for alternatives for their digital assets. Stacks could be the answer to their woes and provide a faster, cheaper, and more secure platform for NFTs.
The NFT market isn’t showing signs of slowing down anytime soon. As more artists join the movement, more collectors are drawn to the ecosystem. Stacks can be a true alternative to ERC-721 Ethereum based tokens, providing NFTs secured by the Bitcoin blockchain. Bitcoin supporters are known to be hesitant in investing in other cryptocurrencies such as Etyhereum, which might have hindered their ability to access the NFT market until now. With Stacks, even Bitcoin maximalists will be able to buy and trade NFTs, which could contribute even further to the growth of the NFT market in the future.