The rise of staking nodes and bitcoin as a new banking infrastructure

It’s no longer debatable: taxis have been nearly destroyed by Uber; hotels are being cannibalized by Airbnb and YouTube and Netflix have become more popular than cable TV. Which begs the question: Will financial institutions share the same fate as the taxi, entertainment and hotel industry? The resounding answer is yes.

In fact, the financial industry’s transformation may be more disruptive because many Fintech incumbents and banks seem to be unaware of the tsunami of financial changes coming their way.

And it’s safe to say that the recent bitcoin purchase* by Microstrategy and Square as a reserve asset, is the beginning of a tidal wave of this financial change that we’ll see play out in the next decade.

Will financial institutions share the same fate as the taxi, entertainment and hotel industry?

Not surprisingly, Bitcoiners applauded the CEO of Microstrategy, Michael Saylor’s bold move to add to bitcoin to their treasury reserve. On the other hand, economists and analysts accused Saylor of recklessly gambling with his shareholders’ money. Unfortunately, this enigmatic view of bitcoin and other crypto assets are still largely held by the world’s top economists and financial experts.

Many of these critics fail to see that Square and Microstrategy didn’t simply purchase a “currency” or a reserve asset; but that these companies now have a stake in the most powerful decentralized digital monetary network with programmable financial capabilities yet to be fully explored. And since both companies have strong Engineering teams, it would not be much of a surprise if in the future, they built innovative products that leverages bitcoin’s programmable capabilities.

In fact, the Stacks (STX) protocol is one of the few blockchains anchored to bitcoin and using its advantageous position as the most dominant chain in the crypto ecosystem. The Stacks protocol leverages bitcoin’s powerful PoW’s security and a new consensus algorithm called Proof of Transfer(PoX). This new algorithm allows Stacks miners to transfer bitcoin as a reward to Stacks holders for helping to increase the decentralization of the Stacks blockchain.

In the Stacks model, “staking” – as its commonly referred to in the crypto space – is called stacking. STX token holders aka Stackers, with less than 0.02% of the circulating supply – the required amount to earn bitcoin – can pool their STX with other Stackers using a Stacks pooling service like Stackedsats. Unlike other blockchain networks, Stackers are paid in BTC when they stack STX which helps to secure the Stacks network.

One of the many business concepts emerging within the Stacks ecosystem (as it is in many blockchain communities) is the delegation pooling services model. These stacking nodes may be the first iteration of Satoshi’s vision of full reserve banking alternatives built within the bitcoin ecosystem.

Ironically, most people mistakenly believe that Satoshis was completely against banking; on the contrary. Bitcoin was created as a rallying cry against fractional reserve banking and not banking itself. In a bitcointalk post, Satoshi wrote about bitcoin nodes acting as full reserve banks 100% backed by bitcoin. So it’s fair to conclude that Satoshi’s vision of a fairer, more just and transparent alternative financial system may begin with the nodes that are accumulating BTC while securing the Stacks network.

These stacking nodes may be the first iteration of Satoshi’s vision of full reserve banking alternatives built within the bitcoin ecosystem.

As previously mentioned, stacking with providers like Stackedsats may be a gateway to a new financial model which may lead to alternative financial options for small businesses and individuals.

It would come as no surprise if Square or Microstrategy or another forward-thinking company announced that they were purchasing a large sum of tokens which would be stacked and reinvested for a few years with the intent of using the proceeds for future Opex and CapEx needs. But as everything in crypto, risk management is paramount and the loss of funds is always a possibility. There are no guarantees in any system and this one is no exception. This is not financial advice.

Unlike other staking models, Stackers are paid in BTC (bitcoin) when they stack STX; which in turn helps to secure the Stacks network.

Nonetheless, this very disruptive alternative business model and potential funding alternative is well underway. And as time goes on, these alternative financial tools will get more sophisticated and usher in a tsunami of financial change that will hit the Fintechs, banks and other financial institutions much harder than they anticipate.

When cutting edge startups explore this small corner of the crypto ecosystem, they will discover that with the right allocation of tokens, reinvestments and time; their “staking” and “stacking” endeavours may be able to fund their internal projects.

And just as Michael Saylor and Jack Dorsey made huge strategic bets on bitcoin as a reserve asset; the startups that bet on stacking STX and receiving BTC may put them light years ahead of their competitors.

Would you like to learn more about Stacks?

Here’s how you can join the Stacks community:

Join the Stacks discord group here

Join Freehold

Check out the Stacks Foundation

Follow Hiro Systems (formerly Blockstack) on Twitter @blockstack

Follow Stackture on Twitter @stackture

Sign up to our waiting list for our Stacks pooling service updates at Stackedsats

Guest blogger:

The Stackture Team – We create tools and services that provide actionable insights to promote and grow the Stacks ecosystem.

We are also the team behind StackedSats. Sign up to our waiting list to get launch updates.

#staking #Stacks #stackingsats #STX #BTC #bitcoin #Proof of Transfer #delegator #

Disclaimer: NO INVESTMENT ADVICE. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Fintech Recruiters Inc.

Fintech headhunters; opportunity brokers; global citizens;disruptive technology enthusiasts; Toronto-New York-San Fran-London-Barcelona-Hong Kong-Singapore.

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Fintech Recruiters

Fintech headhunters; opportunity brokers; global citizens;disruptive technology enthusiasts; Toronto-New York-San Fran-London-Barcelona-Hong Kong-Singapore.