Smart contracts on Bitcoin are possible, however not much can be done using Script programming language directly on the Bitcoin blockchain. Compared to Ethereum, Polkadot, Cosmos etc, Bitcoin is not as programmable as its sole purpose is to be sound money. Bitcoin is minimal by design and is meant to not change. In other words, its easier going off and starting a separate blockchain, which in some ways it's actually the easier thing to do.
Still, there’s a couple of projects that are built adjacent or on top of the Bitcoin since its the most durable and secure blockchain.
Enter Stacks, the team that developed:
(1) Consensus: Proof of Transfer (PoX)
A new class of consensus algorithms that connect blockchains together and more importantly directly connect to Bitcoin. A unique feature of PoX is that it enables two cryptocurrencies to build a native exchange pair. In order to mine newly minted units of a new cryptocurrency, miners use a base cryptocurrency to launch.
(2) Token: Stacks cryptocurrency (STX)
Used as fuel for smart contract execution, transaction processing, and digital asset registrations. STX is a unique crypto asset that can be locked by STX holders to actively participate in consensus and earn Bitcoin (BTC) rewards from the protocol. STX holders can either (a) lock STX in consensus to earn BTC rewards, or (b) use STX as fuel for smart contracts and transactions.
(3) Language: Clarity Language for Smart Contracts
Developed jointly by Blockstack and Algorand, Clarity is a decidable language, meaning you can know, with certainty, from the code itself what the program will do. Clarity is interpreted (not compiled, like Solidity)
(4) Blockchain: Stacks 2.0
Layer-1 blockchain that uses the Bitcoin blockchain as a secure base-layer and brings apps and smart contracts to Bitcoin. Stacks implements PoX consensus and natively connects to Bitcoin. With PoX there is no need to modify Bitcoin to enable smart contracts around it. There are two types of participants on Stacks (a) STX miners, and (b) STX holders. More details here.
There’s adoption from the dev ecosystem and users, with 400+ dapps on the Stacks network, 2.1 million usernames on the explorer, 300,000 STX holders globally and +125 Clarity smart contracts on Github.
Fundamentally, Stacks 2.0 aims to fully unleash its potential to be the foundation of a user-owned internet. The the native connection created between Stacks 2.0 and Bitcoin can unlock (a) a Bitcoin-based crypto economy and (b) a crypto web directly on the secure foundation of Bitcoin. This convergence might carve out space for BTC to become a new source of liquidity and the default reserve asset for DeFi.
