The layer 2 blockchain Stacks (STX) has experienced a significant surge in value after billionaire investor Tim Draper expressed his support for the emerging protocol. This surge was observed shortly after Draper’s comments circulated on social media, causing the asset’s price to rise by 26% from $1.18 to $1.53 at the time of writing. In an interview with Coin Bureau, Draper highlighted Stacks as the first “showstopper” in the crypto space that caught his attention this year.
Introducing Stacks
Launched in January 2021, Stacks is a blockchain platform that operates as a smart contract and NFT-compatible layer 2 solution for Bitcoin (BTC). Essentially, it functions as a scaling layer for BTC, while also allowing for features commonly associated with other networks such as decentralized applications, smart contracts, and NFTs. Stacks achieves this by hashing and settling all transaction data onto the Bitcoin blockchain.
Embracing the Trend
Draper’s investment strategy emphasizes shifting important applications to the Bitcoin network. He draws parallels to Microsoft’s approach, where the tech giant acquired and developed successful software applications that started on smaller networks. An example of this is WordPerfect, a word processing application that gained popularity in the early 1990s and later became part of Microsoft Word. According to Draper, a similar trend is now emerging for Bitcoin, as developers explore ways to migrate applications from newer networks like Ethereum, Solana, and Tezos to the more established Bitcoin network.
Draper believes that a consolidation around Bitcoin is starting to occur, given its strong brand compared to other cryptocurrencies. He has long been a supporter of Bitcoin, citing its superior decentralization and security as key advantages over fiat currency. Although the network has faced technical limitations in terms of slow and inefficient transactions, Draper contends that layer 2 solutions, such as the lightning network, are already addressing these concerns. He believes that old arguments against Bitcoin are fading away, making room for new arguments in favor of standardizing on Bitcoin.
Earlier this year, the newly developed Ordinals protocol sparked significant adoption of NFTs and tokenization on the Bitcoin network. This adoption is something that was previously thought to be impossible on the network’s base layer. The increasing popularity of Ordinals coincided with growing interest in Stacks, and its founding team has shown strong support for the protocol. Stacks also allows for Bitcoin-based NFTs, aligning with the broader trend of enhanced functionality being developed on the Bitcoin network.
Muneeb Ali, the co-creator of Stacks, expressed delight at Tim Draper’s endorsement of Stacks and Bitcoin layer 2 solutions. Recognizing Draper as a legendary investor, Ali shared his enthusiasm for the future of Stacks following Draper’s positive comments.
Stacks has experienced a significant surge in value following Tim Draper’s endorsement. The protocol’s integration of layer 2 functionality on the Bitcoin network has garnered attention and support from both investors and developers. With the trend towards consolidating important applications on Bitcoin, Stacks is well-positioned to play a vital role in the future of the crypto space.