WHAT IS AN ECOSYSTEM IN BLOCKCHAIN?

By YPtK7 | Encryptocurrency BlogChain | 20 Feb 2024


A blockchain network consists of different parts & a blockchain ecosystem refers to the different parts of a blockchain network & how these different parts of a blockchain network interact with each other. The different parts of a blockchain network each play a role contributing to the function of the blockchain network, imagine an automobile - it has different parts that make up the automobile such as the steering wheel, engine & tail lights to name just a few & each part plays a role for the effective functioning of the automobile.

An Ecosystem is a Tool for Investors

An ecosystem will tell investors how a blockchain works & is a health report of the blockchain network giving investors the health condition of the blockchain network.

What Is A Blockchain?

Think of a blockchain as a distribution ledger or a database that is distributed across various blockchain nodes. A blockchain is not controlled by a single entity or a central figure which is known as decentralization. Data is stored in blocks while is the reason it's called a blockchain.

This is what you find in any blockchain network:

• Developers

• Nodes

• Miners/Validators

• Stakeholders

1. Developers build & update the blockchain network.

2. Nodes are devices that run the software of the blockchain & keep an updated transaction history.

3. Miners & validators (like myself)  are participants in the blockchain network's transaction validation process. 

4. Stakeholders (again like myself being both a validator & stakeholder) hold the native token of the blockchain's cryptocurrency & have the right to make proposals & vote on proposals giving stakeholders a voice in the future of the blockchain network which is different to holding stocks which I have the opportunity to hold myself except my investment is in a publicly traded company with a central figure but those who purchase the native token of a blockchain network & use it for payments are categorized as stakeholders.

Smart Contracts & Project Creation

A smart contract is a self-executing blockchain contract, think of a smart contract as a program that runs on a blockchain. 

Smart contracts extend the capabilities of blockchain technology & can prove to be a lucrative tool because of the opportunity to create new projects such as:

1. Decentralized (DeFi) Platforms: examples include the ability to create a peer-to-peer cryptocurrency lending.

2. Non Fungible Tokens (NFTs)

3. Blockchain Video Games

 

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