Long regarded as a rigid and limited blockchain, Bitcoin (BTC -0.44%) is undergoing a remarkable resurgence as it transcends the conventional perception as a mere store of value. This resurgence can be largely attributed to the rising prominence of Ordinals, commonly known as Bitcoin non-fungible tokens (NFTs), which have unleashed a wave of innovative possibilities on the Bitcoin network. 

Although Bitcoin will likely benefit from expanding utility, there is another blockchain positioned to seize the momentum surrounding the renewed interest in the original cryptocurrency.

Bitcoin gets a boost

Stacks (STX -12.31%), a Layer-2 solution for Bitcoin, addresses the well-known limitations in smart contract functionality and scalability that have driven NFTs and decentralized finance (DeFi) applications to alternative blockchains.

The advantages of Bitcoin are difficult to ignore. High levels of security, robust decentralization, and a strong track record put Bitcoin into a class of its own. With Stacks, Bitcoin's true purpose as a superior form of money is unlocked, allowing it to be used in new and innovative ways.

By adding smart contract functionality and scalability mechanisms to Bitcoin, Stacks unlocks hundreds of billions of dollars in latent capital to participate in DeFi, stablecoins, NFTs, payment solutions, and much more -- all while maintaining the security and decentralization of Bitcoin's blockchain.

The current DeFi economy is valued at about $42 billion, while stablecoins and NFTs add a combined value of over $131 billion, resulting in a total market worth of more than $170 billion that Bitcoin has yet to tap. With Stacks, the power of the world's most decentralized and secure blockchain is harnessed to participate in this burgeoning and lucrative economy.

Although Bitcoin's price is expected to benefit from these new opportunities, Stacks also holds significant potential for growth. But how high could Stacks' price really go?

Valuable potential

To provide a tangible example, let's compare Stacks to other assets in the industry. Wrapped Bitcoin (WBTC -0.34%) is a tokenized representation of Bitcoin that exists on the Ethereum blockchain. It enables Bitcoin holders to participate in DeFi activities and utilize Bitcoin within the Ethereum ecosystem.

To utilize Wrapped Bitcoin, users deposit actual Bitcoin with a custodian who then issues the corresponding WBTC tokens. Unfortunately, this process requires users to trust that the custodian will properly manage the Bitcoin and ensure the tokenization process is accurate, maintaining a 1-to-1 peg with Bitcoin's price.

Given Stacks' ability to interact directly with the Bitcoin blockchain and no need for custodians, the platform holds significant potential to achieve similar, if not greater, adoption than Wrapped Bitcoin.

As a testament to the demand for Bitcoin users seeking DeFi participation, WBTC currently has a market cap of $4 billion, the 15th-highest of all cryptocurrencies. When considering that Stacks outperforms WBTC in several crucial aspects, projecting a similar valuation for it is not unrealistic. To reach such levels would require its token price to increase by about 400% to $2.75.

Even better, though, at the peak of the previous bull market, WBTC reached a market cap of more than $15 billion as demand for DeFi-capable Bitcoin surged. If Stacks is able to position itself as the true Bitcoin-DeFi platform, there is a real chance it could blossom to the levels reached by WBTC previously. For that to happen, the price of a Stacks token would have to grow by more than 1,800% to a whopping $10. 

Playing the long game

The ability of Stacks to complement Bitcoin's core attributes while facilitating new use cases is difficult to value. By providing smart contract capabilities, addressing scalability challenges, and preserving Bitcoin's security and decentralization, Stacks offers a compelling solution that is otherwise missing in the market. 

It might take a little time, but as the conversation around Bitcoin's role evolves and perceptions shift, Stacks may emerge as a promising contender poised to reap the benefits. If Stacks achieves a similar level of utilization to counterparts like Wrapped BTC, it could evolve into a multibillion-dollar cryptocurrency, offering investors substantial growth opportunities.