Blockstack (Stacks)

What Is Blockstack (Stacks)?

Blockstack is a blockchain-based, decentralized Internet platform that was launched in 2017. It allows users to completely own and control their personal data; the network applications that use the data are run locally on the user’s browser. A compatible browser is sufficient to access everything available on Blockstack.

Blockstack became the first company to receive approval from the Securities and Exchange Commission (SEC) to sell digital tokens, known as "stacks" (STX), in an initial coin offering (ICO) in 2019. Under the SEC's Regulation A+ exemption, Blockstack's IPO raised $23 million. At the time, these tokens could not be traded by U.S. investors on U.S. exchanges.

However, with the introduction of Blockstack's Stacks Blockchain 2.0 on Jan. 14, 2021, Stacks tokens can be traded by U.S. investors on U.S. digital asset exchanges because Blockstack's network will be no longer be controlled by any single entity. Therefore, its Stacks token can no longer be considered a security under SEC regulations.

Understanding Blockstack (Stacks)

With Blockstack, users do not have to upload data to an external site, like Facebook, or to an application, like WhatsApp. However, they can still share their data and media feed with friends and other users. This is achieved using decentralized applications (also called dApps) that are based on blockchain technology. DApps are run locally on the user’s browser, and users continue to own their data (text, images, videos, files, etc.).

Using the decentralized security granted by blockchain technology, a Blockstack user gets digital keys to create their identity on the Blockstack network. User data can be stored locally or connected to their storage hosting providers, which allows the user to retain full control.

Data processing is run on a client’s local machine, which is connected to the network (but not via a platform's centralized servers). A networked storage system, called "Gaia,' enables what Blockstack describes as “user-controlled private data lockers.”

Users connect their “data lockers” to Blockstack’s client software, and applications write to the lockers directly. The locker acts as storage for all the information attached to a user's account (also called a user's “universal ID”).

Sharing of content is achieved through a secure and encrypted medium. The Blockstack network supports tokens, like bitcoin, and other cryptocurrencies and is available for peer-to-peer (P2P) transfer or charging for downloads, subscriptions, and more.

SEC Approval of STX

In a still largely unregulated cryptocurrency market, Blockstack received the first-ever approval by the SEC to sell bitcoin-like tokens in an initial public offering. Prior to this approval, the company had raised more than $50 million in funding through approved token sales to accredited investors. Blockstack's IPO raised $23 million.

The public offering was approved under Regulation A+ of the 2012 Jumpstart Our Business Startups Act, which was introduced as a way to help fledgling companies raise capital with minimal disclosure requirements. Blockstack's success in winning approval will now provide other young cryptocurrency and blockchain businesses a template for how to proceed in raising funds of their own.

As of November 2021, one STX trades for roughly $2.15, and the platform's aggregate market capitalization (in terms of token value) stands at roughly $2.27 billion.