The Ecosystem of Blockchain defined

The Ecosystem of Blockchain defined

You all must be thinking of this buzzword Blockchain what the hell it is?

I have already written a post on this so I am not going to explain it here. You can read about what is blockchain from here.

The Ecosystem of Blockchain defined

In this article, I will discuss the Ecosystem of blockchain which is a bit tough to understand.

The ecosystem here refers to the interaction and the persons by whom it’s done and the system out of the world. I am going to tell you about 4 people that matter in Blockchain

  1. Users
  2. Miners
  3. Investors
  4. Developers

Understanding the working of these all in blockchain will not only give you a bigger picture of how a blockchain works and will also allow you to better understand it’s growth potential. So let’s discuss them.

Users

That’s you, dude!

Right, that’s your users are the applicants of blockchain who use them for a purpose such as buying cryptocurrency and selling it later (investment). If users exist, a cryptocurrency must have some utility. And these utilities are:

  • Bitcoin: – I am sure that many of you know about bitcoin. Bitcoin is the most valuable cryptocurrency and it is also known as Digital Gold. Bitcoin only provides us with one utility which is payment for goods and services. If we see the current stats around 100000 lakh merchants accept bitcoins in exchange for their goods and services.

Bitcoin

In fact, several household brands and major e-commerce players including PayPal, Expedia, Microsoft, Subway, Bloomberg, Reddit, Dell, Steam, Whole Foods, Shopify and Webjet have all added their names to the ever-growing list of Bitcoin merchants.

This list will inevitably continue to grow over the next decade and it is entirely possible that Bitcoin will be as widely accepted as Visa, AMEX or Mastercard at some point in the not so far future. The advantages of making payments through bitcoins in comparison to traditional currencies are: –

  • Very low transaction fees
  • No-third party interruption
  • Faster than any other payment system
  • Secured

Benefits to merchants

  • No chargebacks
  • Additional customer base

IMHO Bitcoin is a great for long-term investment as it improves price stability in the economy and gives investors hard data to base their price estimates.

 

  • Ethereum: – I have seen many people thinking that Ethereum Blockchain and Bitcoin Blockchain is the same but its completely wrong! Ethereum is a lot different due to its ability to embed smart contracts into the blockchain and due to this it provides us with 2 utilities: –
  1. Currency Utility: – This was not the main motive of the cryptocurrency but still people are able to use Ethereum to pay for Goods and services. There are many companies out there (Token Card, Monaco etc.) who are trying to capture market share with their cryptocurrency debit cards and online payment platforms like Coinify are offering plug and play solutions for online merchants to accept cryptocurrency like Ether as payment. Currently, Bitcoin is the king of all cryptocurrencies but in upcoming years other currencies will compete with it.
  2. General Utility: – The sole motive of this cryptocurrency is this. It refers to the user interaction with decentralized applications built on the Ethereum Blockchain. There are many decentralized applications out there. Gnosis and Stox have both released alpha versions of their prediction market decentralized Apps (read: betting platforms) where users can bet on the outcome of any event. Numerai, a unique kind of hedge fund gives data scientists around the world access to encrypted market data, then incentivizes them to outperform the current trading algorithm and improve the overall performance of the hedge fund. It’s just the beginning of a new era every day new decentralized apps are being released. A list of all apps can be found here.

Ethereum

 

  • Ripple: – The 3rd biggest Blockchain by market cap is Ripple. It differs a lot from both the stated above it was designed with a goal in mind and for a purpose to supply financial institutions with secure, instant and low-cost global transaction of any size. Ripple has already announced partnerships with some of the world’s largest financial institutions such as Standard Chartered and UniCredit and the market has rewarded it with the number three spot on the blockchain market cap list.

Ripple

Miners

The blockchain is a very large network and to fully maintain its integrity it’s network of independent nodes around the world comply to maintain it. There are 2 Types

  • Private Blockchains: – A Central Organization owns every single node on the network.
  • Public blockchains: – Anyone can set-up their computer to act as a node and the owners of these computers are known as miners.

These miners are rewarded with some incentives for mining the coins of the specific blockchain and to maintain the integrity of the Blockchain.

As per the Blockchainblog, com  Different blockchains utilize different mining systems however most of them contain some form of:

  • An incentive system – most commonly a combination of microtransaction fees and block solution rewards (Bitcoin miners receive 12.5 BTC for solving a single Bitcoin block. This is programmed to gradually decrease over time).
  • A consensus algorithm – All blockchains need a way of validating blocks that are broadcast to the network. The Bitcoin blockchain uses Proof of Work (PoW). You will learn more about how PoW works in the next post. Ethereum also uses PoW but is scheduled to change to Proof of Stake (PoS) next year (the Ethereum blockchain contains a ticking timebomb intentionally placed in the code to force the change to PoS at some point).

Miners have a lot of power on the network. Mining a single block is extremely difficult and a single computer can take a year to mine so miners have formed communities called mining pools to mine together and share reward together.

Investors

The majority of stakeholders in a blockchain are investors. The result, cryptocurrency markets are highly risky and price swings +/- 30% or more in a single day are not uncommon and the other reason that it’s risky because it is very difficult to assess the true value of a cryptocurrency or a decentralized application. The technology is still young and growing. The technology lacks users due to limited utility makes it difficult to predict how the technology will be used when people in bulk will start adopting it.

Despite all the factors still investing in the technology, the current market conditions actually make for an attractive investment opportunity:

  • The blockchain technology will continue to grow at a fast rate over the next decade.
  • The barrier to entry in the market is still high enough that the majority of people don’t enter.
  • Although blockchain has experienced incredible growth in both 2016 and 2017, the total market cap of all public blockchains is still relatively small at ~US$150B. To put that into perspective, at the time of writing (at a total market cap of US$150B), the entire blockchain industry would only be the 50th largest company in the world, right behind Unilever, a consumer goods company from the Netherlands. This article from Howmuch.net compares the total market cap of cryptocurrency to other types of assets and really puts things into perspective.

Investment on Blockchain

IMHO all blockchain are different and in next couple of years we will see plenty of startups crash and burn, dragging their investors hard earned money with them. We will see scam companies whose only goal is to siphon money from foolish investors. We will see serious competition from well-established corporations out to develop their own blockchain applications. Nothing in life is free and there are no silver bullets in this game. Picking winners and loser is not a simple task and if you want to invest your money in the blockchain, you’re going to have to accept a high level of risk.

Now I leave you with 2 thoughts

  • Plenty of companies will grow at a very high rate so don’t put all your money in one company. This will reduce the risk of losing all your money but also risk losing out on investing in the companies that do end up dominating the industry.
  • Also, before investing in any company actively research it for at least a week.

Developers

Blockchain has a lot more potential to become a lot more than cryptocurrencies. There are 2 types of developers in Blockchain are: –

  • Blockchain Developers
  • dApps developers

Blockchain developers are those persons who develop brand new blockchains with varying levels of functionality.

dApps developers are those persons who build decentralized applications that can run on Blockchains, thus providing users with a reason to use the blockchain i.e. utility.

After Ethereum introduced smart contracts it has opened the door to a world of dApps to create the next big thing.

To take full advantages of the technology keep yourself updated with the industry in both Blockchain and dApp development.

Conclusion

The ecosystem of Blockchain is very complex and vibrant.

Understanding it will allow you to make a better decision and take full advantage of emerging technology.

If you want to add something add it through the comments section and a Question for you ( Do you think that we will ever see governments adding cryptocurrency to their reserves?

Answer in the comments section also would love to have a discussion on the topic. Feel free to connect with me.

Thanks for reading the post like and share your knowledge with your friends too.

NOTE: – This article is an example of content curation all the content was taken from websites that are mentioned in the article.

Sources: –

Google search, Blockchain.com, IBM Blog, Blockgeek.com and myblockchainblog.com

 

Published by AnmolGogia

"Write when drunk. Edit when sober. Marketing is the hangover." -Ashwin Sanghi The perfect quote for a Digital Marketer and a Growth hacker. I am a highly motivated student with a goal driven work ethic. I have a strong curiosity for Growth Hacking and Entrepreneurship. I have some amount of experience in business world working with real world Data and producing results, having interned this summer since this was my first year in college, this was my first Internship experience. I am a Google certified digital marketer and Eazl certified Growth Hacker also knowledge about blockchain, data analysis and automated analytics results. I hope to become a valued Growth Hacker in this field and Someday have my own successful running company. I have interest outside of work I love to read books and being healthy and fit is my way of living. At the end I aspire to be the happiest, the most successful and the best version of myself.

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