The Bitcoin layer-2 network Stacks has started rolling out its highly anticipated Nakamoto upgrade, a significant update aimed at dramatically improving transaction speeds. This change began its activation sequence on Wednesday and is designed to decouple Stacks' block production from Bitcoin's, resulting in a speed increase of up to 120 times. This will bring confirmation times down from Bitcoin's average of 10 minutes to just seconds.
Understanding the Upgrade
The Nakamoto upgrade has been long-awaited, with its implementation delayed for several months to ensure security enhancements and code verification. One "Stacking cycle," which consists of 2,100 Bitcoin blocks, allows ample time for operators to implement this upgrade. By the end of this period, core developers will choose the final block for the hard fork, and the full Nakamoto consensus rules will be in effect.
Impact on STX and Market
Despite the technical advancements, the STX token's price fell nearly 11% within 24 hours following the announcement, sitting at $1.59. This decline corresponds with broader downturns in the cryptocurrency market, alongside additional losses triggered by the upgrade announcement.
Proof-of-Transfer (POX) and Full Bitcoin Finality
The Nakamoto upgrade involves changes to the Proof-of-Transfer (POX) mechanism, where Stacks miners burn Bitcoin instead of using electricity. This upgrade also promises to make Stacks transactions as irreversible as those on the Bitcoin network, by ensuring full Bitcoin finality.
Future Developments and sBTC
The upgrade sets the stage for the release of sBTC, a "programmable Bitcoin asset" that facilitates BTC bridging to the Stacks network in a decentralized manner. The Stacks Foundation aims to enhance sBTC adoption, improve blockchain interoperability, and expand decentralized applications using the upgraded system.
Caution in the Bitcoin Layer-2 Arena
As new Bitcoin layer-2 networks emerge, Stacks Foundation Executive Director Mitchell Cuevas advises caution, noting the complexity of developing such platforms. He encourages users to conduct thorough research and remain skeptical of promises that seem too optimistic.
This ongoing development showcases the potential for Bitcoin to evolve beyond its role as merely a store of value, driving innovation and utility across the blockchain ecosystem.
