did you know that google's original motto was don't be evil this phrase was meant to remind everyone working at the company that great power comes with great responsibility google scrapped this motto in 2018 and this inspired a cryptocurrency project called staxx to adopt the motto can't be evil rather than trust that tech giants will play fair with the internet and all its data stacks is creating a new decentralized internet on bitcoin where users have complete control over their data the crazy thing is that the internet of stacks doesn't modify the bitcoin network and the users who secure it with the stx token earn bitcoin as a reward for doing so if this sounds too good to be true then today's video about stacks is just for you [Music] before we get stacking there are some disclaimers that need unpacking if you're looking for financial advice i'm afraid you won't get any from me that's because i'm not a financial advisor i do educational crypto content for free if this is your first time seeing my face my name is guy and welcome to my place this channel is packed with enough quality crypto content to give you a heart attack coins tokens defy and nfts there's no crypto topic that's too big or small for me if this is what you've been looking for subscribe to the channel and ping that notification bell to ensure you get more you can use the timestamps in the video timeline to get around and skip ahead to any juicy topics you've found i'd love it if you watched from start to finish because the youtube algorithm gives lots of weight to your minutes that's enough of that let's get on with stacks staxx was founded in 2013 by computer scientists munib ali and ryan shea at the university of princeton stax is the product of munib's doctoral thesis which detailed a framework for an internet that could be built around the bitcoin blockchain this framework is called block stack and this was also the original name of the project until it rebranded to stacks in october last year the new york software company that developed stacks also rebranded from block stack pbc to hiro systems pbc and i'll explain why that's significant later on at the conceptual level you can think of stacks as being a layer 2 blockchain for bitcoin like the lightning network the stax blockchain also uses a novel consensus mechanism called proof of transfer that leverages bitcoin's proof-of-work consensus for security proof of transfer is conceptually similar to proof-of-stake as it involves stackers who stack the stx token on the stacks blockchain and earn bitcoin as a reward this bitcoin comes from stax miners who commit btc to the stax blockchain for a chance to mine a block on the stax blockchain and earn stx the btc they commit goes to stackers as stacking rewards the reasoning behind this consensus mechanism is that each btc coin essentially represents mining power from bitcoin's proof-of-work blockchain everything that happens on the stacks blockchain is verifiable on the bitcoin blockchain this doesn't modify or strain the bitcoin network because this information is just regular btc transactions made by stax miners in addition the stax blockchain is smart contract compatible and uses a specialized coding language called clarity that was created with the help of algorand instead of storing the data from its smart contracts on chain smart contract data generated by the stacks blockchain is stored off-chain in a decentralized storage system called gaia all data generated by a user on the stacks blockchain is assigned to their unique identity i. e their wallet address only the holder of the wallet address can access its associated data stored on gaia and give permissions to decentralized applications and third parties to do the same now this only scratches the surface of how stax works and if you want to take a closer look under the hood you can do just that by watching my first video about stacks and the link for that is as ever in the top right although the stax blockchain has technically been live since late 2019 it wasn't until mid-january this year that stacks became a finished product this was marked by the release of stax 2. 0 which enabled proof of transfer mining and smart contract functionality on the stacks blockchain it turns out that how proof of transfer works in practice is pretty damn complicated but it seems to be lucrative for both miners and stackers to briefly recap the stx token has halving cycles similar to bitcoins for the first four years the block reward on the stacks blockchain is 1000 stx per block with the current market price of stx this works out to just over two thousand dollars per block plus any transaction fees in that block from the stacks blockchain now if my calculations are correct the amount of btc you'd need to commit to the stacks blockchain to minor block is currently about fifteen hundred dollars that's about a five hundred dollar profit in stx which is not too shabby that said the amount of btc that needs to be committed changes over time since the likelihood of getting chosen to minor block is proportional to how much btc you have committed relative to other minors moreover there is a risk that the btc you commit as a minor could appreciate during the 16 hour time frame it takes to receive your rewards in stx the value of the stx you're waiting for could also fall during that time now on the bright side the hardware requirements to mine stx are extremely low and if you're interested in mining on stacks i'll leave a few resources for you in the video description if you're more of a stacker the amount of stx you have to stack to earn the btc being committed by miners is likewise based on how much stx other stackers are stacking right now the minimum amount of stx you need to stack is 90 000.
that's worth more than 180 grand thankfully there are ways that you can stack less stx using exchanges and stacking pools unfortunately this delegated stacking is not yet available in the native stacks wallet but the boom wallet and ex-first wallet are currently working on integrating stacking pools while the rewards for stacking are also not entirely clear they seem to add up to about 10 in btc relative to the dollar value of stx you're stacking if you plan on stacking just be aware that there is a 16-day lock-up period i'll leave resources for stacking in the video description as well shortly after the stacks 2. 0 upgrade went live about half a dozen companies signed up to become miners on the network such as foundry digital and block daemon in february stax announced the winners of their clarity smart contract challenge the winner of the advance category was a project called arcadio dao a clone of maker dao that is looking to bring crypto collateralized stable coins to the stax blockchain the winner of the basic category was a magic 8 ball which will generate randomness for the stacks blockchain in addition to eight predictions for people into superstition by march stackers had earned more than and a half million dollars in bitcoin rewards which might have been what enticed the chief strategy officer of coin shares to join the stax foundation a few weeks later the stax foundation announced its accelerator program which provides funding and guidance to any projects building on stacks for the first three months one of the people who will be guiding projects building on stacks is chain link founder sergey nazarov who seems to have a very close relationship with stax founder munib ali the stax accelerator complements the stack foundation's grants program which has reserved over 30 million stx for those contributing to the growth of the stax ecosystem in april the stx token listed on the south korean upbeat exchange which was apparently the sole driver behind its sudden 2x move according to coindesk this is because south korean traders are crazy for altcoins and many of them are also attracted to the btc rewards given by stx stacking speaking of price it's about time we popped open the charts for stx stx is up more than 10x since i covered it last november so props to anyone who got in early to be completely honest though stx hasn't performed nearly as well as other altcoins and its price action also looks quite bizarre i suspect this is for two reasons first the distribution of the stx token is not very equitable even though the stax explorer doesn't actually show you wallet balances it's enough to know that no tokens were sold to the public during the stax ico the entirety of stx's initial supply was split between prived investors the stax foundation hira systems pbc and the project's founders these stx tokens have a fairly aggressive vesting schedule which is set to finish in october this year now given how much stx has appreciated compared to its sale price many of these tokens are probably being sold when you combine this cell pressure with the cell pressure coming from stax miners you need a lot of demand if you want prices to go higher now in theory this demand should be coming from those looking to stack stx and earn bitcoin but the costs required to do this solo are way too high and pooling stx with a third party is neither safe nor convenient for the time being what this means is that we might continue to see suppressed and sideways price action until the fall unless improvements are made to stacking or new dapps create new demand for stx however there seems to be some hope on the technical analysis side stx is printing either a bull flag or an ascending triangle on the daily time frame in either case we will likely see stx spike by 50 cents over the next few days the bearish news here is that when you zoom out on the weekly time frame you can see that people have consistently been taking profits at just above the two dollar mark as denoted by the tall wicks on top this is support for my thesis that cell pressure from miners vcs and founders is suppressing the price action of stx now if you want to learn how to do this with your favorite altcoin be sure to watch my videos about technical analysis and the first episode is hanging up there in the top right in terms of a roadmap staxx no longer has one and that's because the community decides what comes next stax community governance is coordinated by the stax foundation and all upcoming upgrades and milestones can be found on stack's governance github repository it appears that staxx is in the process of implementing fungible and non-fungible token standards which are a prerequisite for serious smart contract functionality and user adoption on that note stax has seemingly struggled with adoption despite having a solid project and raising nearly 100 million dollars in funding this is evident in the amount of stackers which is fewer than 300 for this 16-day cycle now this is concerning because these 300 stackers alone are stacking more than 30 percent of stx's circulating supply according to stacking club the next round of stacking will only see 250 of 3200 stacking slots filled now while i wasn't able to find any up-to-date statistics on how many miners there are right now in a february interview stacks founder munibali mentioned that there were just 46 miners on stacks besides the economic implications of this it also means that the stax blockchain itself is fairly centralized as far as i can tell the real reason why stacks has had such a hard time so far is because of the sec the sale of the stx token in 2019 was actually the first cryptocurrency ico to be sanctioned by the sec in the united states and the stax team went above and beyond to make it happen there's just one small problem and that's that doing the stx sale by the book within the united states meant that stx was automatically designated as a security by the sec without getting into the legal mumbo jumbo one of the side effects of stx being classified as a security is that it cannot be listed for trading on cryptocurrency exchanges inside the united states given that almost all of stack's infrastructure marketing and network effects are within the us a lack of exchange support for the stx token makes it difficult for fans of stacks in the us to participate in its ecosystem as miners stackers or users there is one caveat here and that's that the stax team has been working like mad to convince the sec to change its classification of the stx token from a security to a currency now that stacks 2. 0 is live while it wasn't clear to me why stax and hiro systems had rebranded in october this makes a lot of sense when you consider the fact that this rebrand makes it easier for stx to be classified as a currency a green light from the sec seems to be the only thing preventing the buildup of institutional clients and investors in the united states from using stax and stx everything else already seems to be in place case in point coinbase already provides custody for the stx token and multiple u.
s exchanges have signaled their readiness to list stx once it's cleared by the sec hirosystems recently filed its final annual report with the sec and has stated that it will no longer handle the stx token as a security now whether the sec feels the same way remains to be seen but once these floodgates are opened the adoption could be unprecedented for starters stax is built around a cryptocurrency that is seeing massive adoption by institutions and investors stax already has hundreds of apps for things like decentralized video streaming accounting and health record sharing most importantly institutions can trust the project because it was built in the united states by people from one of the world's top universities who held a token sale sanctioned by regulators according to stack's founder mani valley the real value that stacks will bring is sustainability to the bitcoin blockchain in 100 years or fewer the last btc will be mined now many have argued that transaction fees alone will be enough of an economic incentive to keep the bitcoin network going after that point however the fees for these transactions would need to be large and the transactions would need to be frequent if fees are large there will be fewer transactions and this would create a negative feedback loop that could kill bitcoin monieb argues that large and frequent transactions on the bitcoin blockchain is exactly what the stacks ecosystem will incentivize through its mining process if he's correct then stacks might actually be what bitcoin needs to maintain long-term security well into the future if you want to learn more about what happens after all the bitcoin is mined and a few of the other ways it could survive without transaction fees i happen to have a video about just that you know where to find it and if you forgot it's in the top right stax is a cryptocurrency project that has struggled to get the attention it deserves after all who wouldn't want to earn btc for securing a decentralized internet built on bitcoin it's a powerful proposition that should attract millions of people inside and outside of crypto but unfortunately things seem to have played out a bit differently in practice even though proof of transfer is one of the coolest consensus mechanisms in crypto you'd be hard-pressed to find many people who are willing to trade their btc for an altcoin under any circumstances my suspicion is that most of the miners on stacks are institutions and not retail investors something tells me that people stacking stx aren't retail investors either stax has by and large seen sluggish growth and many of the statistics around its adoption seem to have been exaggerated now believe it or not i don't blame the stax team for this ever since the project began they've done everything by the book and ironically that seems to have been their biggest mistake these days most cryptocurrency projects opt to set up a company or non-profit somewhere outside of the united states build out their ecosystem and then try and move into the u. s crypto market it turns out that fighting your way out of regulatory red tape from within the united states is the more difficult alternative i reckon that's something the founders didn't know when they began back in 2013. the team seems to be pretty upset with the sec and have been actively pushing for a currency designation since december the recent statement that hira systems will stop filing with the sec and handle stx as a security seems to be a show of force in this regard luckily for stacks the project has gotten a lot of attention from really big players inside and outside the industry and mass adoption is literally just waiting to happen the triple whammy would be the sec granting stx currency status coinbase and other u.
