What's the deal with the Nakamoto Bitcoin Upgrade

So, I came across this update on coindesk about an interesting development. Apparently, the Bitcoin Layer-2 Network called Stacks is kicking off the Nakamoto Upgrade. Bitcoin's been struggling to act like a proper currency for a few reasons. It's not just because there aren't enough merchants accepting it for payments. Scalability is a huge issue too, plus its price is super volatile and transactions can take a bit to confirm. According to the news, Stacks is supposed to bridge that gap. It’s set to boost transaction speeds by acting as a layer 2 network on top of Bitcoin. They plan to reward miners who put in work during specific mining periods with Stacks, and then these blocks will be settled on the Bitcoin blockchain. Everything's gonna work using the POT (Proof-of-Transfer) protocol with Bitcoin as the base currency. Now I've got some questions for you all: Was this something we were expecting? Is this the solution to Bitcoin's scalability issues? How do all these hard forks fit into Bitcoin's future? Is this something us Bitcoiners actually want? I'm curious to hear your thoughts on this. I definitely encourage everyone to check out the link for more details. I’m still wrapping my head around how this could play out.

We have Lightning Network, MAP Protocol (MAP), Liquid Network, Rootstock and Stacks in addition to sidechains so the features provided by these networks are what will determine the number of users but the majority will prefer Lightning Network for low cost daily transactions. It is not a hard fork so it does not need network consensus.

Stacks seems to be more about adding smart contract functionality rather than increasing scalability. But yes, generally speaking I'd reckon Layer 2 solutions, though not Stacks specifically, would be the way to go. To clarify for OP: The hard fork is happening on the Stacks Layer/Sidechain, not Bitcoin itself. So the Stacks team can do all the changes they want, without affecting the Bitcoin base layer.

Short answers, 1. I don't know, since i don't really follow Stacks development. 2. It's just one of many ways to solve scalability. 3. You're asking wrong question, since the hard fork happens on Stacks (the Layer 2), not Bitcoin network itself. 4. Who knows. But it's not part of Bitcoin protocol, so Bitcoiner who don't like it could just not use it.

The only reason for bitcoin not being used as a currency as much as it was expected is the fact that its price keeps going up in the long run. People don't tend to spend something that is worth $15k on Jan 2023 and $70k by March 2024 (360% in 14 months). It doesn't matter how scalable bitcoin is. Considering the fact that people don't use Stacks to transact bitcoin, they use Stacks to create shittokens, I have to say no it is not the way to solve scalability. It is not helping bitcoin either, because this is a separate network having its own separate protocol changing through a hard fork. And Bitcoiners don't usually like this sort of stuff (ie token platforms).

Many discussions about them are there Sidechain Observer - Bitcoin L2 Projects & current state of developmentGenerally when transaction speed is main concern, and priority is the speed, a blockchain must sacrifice other things including security. It's my understanding and if I move big fund, I don't pick these side chains that I only consider to use with small transactions. Like if you want to get convenience and save your time, you use cross chain bridge, let's accept bigger risk. It's convenient, I agree but I don't like to take bigger risk.

Yes, I have planned to cover Stacks in the Sidechain Observer linked already by @tranthidung (if no other forum member wants ). The Nakamoto upgrade however, afaik does still not activate sBTC, which would be activated in Q4 2024 according to their roadmap. The Nakamoto Upgrade (shameless namedropping, in my opinion) is however the requiremente for sBTC to work. sBTC is the "decentralized bridge" which would convert Stacks effectively in a Bitcoin sidechain. Until then, Stacks is simply an altcoin. I'm generally optimistic regarding layer-2's and sidechains in particular. In contrast to Lightning, they offer the advantage that you transact like on Bitcoin or other blockchains. You don't need to monitor your channel for possible fraud, and also merchants don't need to be online to receive payments. However, Stacks, like most other L2 projects, has a big disadvantage in my opinion: It depends on an utility token which was premined and sold in an ICO. This is not only not good for decentralization, but probably will also not generate interest for the concept by die-hard Bitcoiners, who will continue to prefer L2s without premine, like Lightning. AFAIK Stacks is however open source, so if it works it can be forked into a no-premine version IMO this is the way they market it, and for sure it's an advantage if you want to create complex DeFi stuff. But every sidechain, even Ethereum via tBTC (a more decentralized variant of wBTC), adds to Bitcoin's scalability.

Didn’t know we had a lot of them already, the LN seems to have cast a dark shadow on the rest and they don’t even get to make a name for themselves. Good to know this Nakamoto Bitcoin upgrade thing is a network just like LN which makes it outside of Bitcoin and a fully optional use. I don’t see it to be what Bitcoin users actually want. Eventually, a lot of users or investors would want their transactions done on the Bitcoin blockchain and not some side network that would be a bridge to Bitcoin network.

Stacks in general is not like LN. It is somewhere between being a Second Layer (like LN) and a Side Chain and it is somewhat closer to being a side-chain. It has its own blocks, and more importantly its own consensus rules that can change easily by the centralized authority controlling the protocol like the Nakamoto Upgrade and you'll have to convert your bitcoins to the token that is present in that [side] chain with a peg.

You realize LN constitutes to ~1% of all Bitcoin transactions and that LN has it's own scalability issues and it's getting really centralized ? No one but Bitcoin geeks use LN and it won't change, the project is a failure. LN is going down as can be seen in the statistics: https://bitcoinvisuals.com/lightning For so many years LN was the answer for all the Bitcoin scalability and privacy issues in all the discussions, now what ? I would love to see something like LN to succeed because it's technology could be used in other projects as well.

Why buy coffee with BTC today when you can buy a coffee shop in a month? BTC's deflationary model doesn't really need another scaling.

By not using Bitcoin for everyday small purchases you are substantially limiting it's growth potential. Demand for digital cash is much higher than the demand for "Digital real-estate" thingy, there are plenty other investment options far superior than Bitcoin. Bitcoin "digital gold" / "digital real-estate" HODL narration has closed it's doors to the biggest market of them all. If Bitcoin is not used as cash, the Proof of Work is not needed anymore. We can as well just stop the chain completely and trade mnemonics for the associated coins like real-estate.

Stacks is an altcoin. Not a Layer 2. Let that sink in. That's just baseless speculation, and you know it. In my opinion, people need a digital asset that serves as a hedge against inflation and a store of value more than they need anonymous digital cash. It's also misleading to claim there are "plenty of other investment options", unless you're a successful macro-investor. For the average person, buying Bitcoin outperforms any other asset as a store of value with minimal time commitment. If demand for digital cash was higher, why does the market appreciate Bitcoin more than Monero?

Monero is steadily taking over Bitcoin in utility: https://x.com/shopinbit/status/1811651225005195471 https://x.com/CoinCards/status/1809702144288882870

Re-read the question.

Price will follow demand, the demand is increasing.

Yes, however the demand for both is increasing; it's just that they're demanded for different reasons. I just don't see how you notice that the demand for medium of exchange is higher than for store of value.

PayPal is one of the examples where demand for a transaction processor is visible, demand for store of value is much lesser but Monero takes that cake too with privacy. VISA/Mastercard are another. There's no reason to go back to Bitcoin when you switch to Monero, at least not for me.

What if the population decreases rapidly in the future, while Monero will keep churning out new coins in eternity? Don't you think the deflationary nature of BTC will shine for a store of value?

Store of what value ? what value does it have if it's not used for anything else aside from speculation ? If population decreased drastically (I suppose WW3 or Alien attack), then the crypto they hold would most probably disappear with them. We need new supply to replenish the lost coins.