Blockchain project Stacks has released a whitepaper outlining a new digital asset called “Stacks bitcoin” (sBTC) that aims to make Bitcoin fully programmable. Bitcoin’s more straightforward scripting language currently limits what developers can create on the platform.
Stacks, an existing smart contract platform, hopes to overcome these limitations by introducing sBTC, a digital asset pegged at a 1:1 ratio with Bitcoin and can be used to create smart contracts on the Stacks platform. sBTC can also be converted back into Bitcoin.
The Stacks protocol currently uses a consensus mechanism called “proof of transfer,” where anyone can be a miner or “stacker.” Miners earn STX rewards for mining Stacks blocks but must first post Bitcoin to earn mining privileges.
This Bitcoin is then distributed as a reward to stackers who maintain a copy of the Stacks ledger. In the proposed sBTC system, users send regular Bitcoin to a wallet controlled by stackers, which mints an equivalent number of sBTC that can be used in smart contracts on Stacks.
To get their Bitcoin back, users return sBTC to the wallet, and stackers sign these “peg out” requests and release the equivalent amount of Bitcoin back to the users while also burning the corresponding sBTC.
Stacks co-founder Muneeb Ali believes using STX to incentivize stackers to sign peg-out requests is a significant advantage, as it means there is no company in the middle. Users can pick their own stackers based on their level of trust. However, this also means an extra token, which some may see as a drawback.
The sBTC system is being implemented and will be formalized under Stacks Improvement Proposal (SIP) 21. Ali estimates that it will be eight to nine months before it is ready for release.