No blockchain is merely a single entity. The physical ecosystem itself consists of a network of a large number of interconnected nodes or devices (computers, servers, smartphones, etc.), sometimes numbering in the thousands, tied together through the Internet, and powered by electricity generated from external sources. From the human perspective, the blockchain can be seen as a collaborative ecosystem involving users, investors, miners/forgers, and developers (which includes everyone involved in creating and then maintaining the system’s operational integrity.) From a functional perspective, the blockchain can be seen as an ecosystem composed of a distributed database platform on top of which run a number of interrelated software applications and services, each playing a separate but important role in the overall operation of the business. In short, the term “ecosystem” is an excellent description of the blockchain and recognizes it as an amalgam of all the parts that make up the whole and how they interact with each other within the system and then with the outside world.
The Physical Ecosystem
The physical blockchain is a network of nodes. Each node is a computer, server, or storage device of some sort. In the case of full nodes, each contains an entire replica of the blockchain database, including every transaction that has been executed since its inception. Lite nodes contain only a partial transaction list but must be connected in some way to a full node to make sure that their data is accurate and useful. Some nodes are used for authenticating transactions, and others are simply used to access the blockchain’s business services.
Anyone can create a node — it’s a very egalitarian and democratic process — but each node must be ready and able to provide a tremendous amount of processing power and storage capacity for obvious reasons. The more nodes there are on the network, the more distributed it is, and thus there is a lower risk of fraud, error, or drastic system failure.
The Internet is the external network that permits all the nodes on the blockchain to connect to each other. Without it, there would be no network. Each node is identified by its IP address and port.
An external supply of power is also an essential component of the physical ecosystem. Without power, the rest of the system might as well be used as a door stop or paper weight. For some blockchain operations — Bitcoin mining comes to mind — the power consumption is enormous, as much as some small countries. A stable, reliable, and sufficient supply of electricity is a must.
It should probably also be mentioned in this section that many blockchain users prefer a physical (hardware or paper) wallet to store their public and private keys and password, which then becomes part of the physical ecosystem.
The Human Ecosystem
As mentioned previously, the human blockchain ecosystem consists of users, investors, miners, and developers. Blockchain users are people who engage with a blockchain to accomplish a specific purpose. This may be to buy something, sell something, or exchange one currency for another such as with the Bitcoin network. Currently, over 46,000 merchants accept the bitcoin token as payment for goods or services, and this list continues to grow rapidly. Another user option is the Ethereum “smart contract”, now utilized by other blockchains as well. It permits the automated management of contracts between users that execute based on preset conditions that all parties have agreed to beforehand, without the need for a middleman. Another valuable use for the blockchain is to provide financial institutions with the ability to execute instant and almost free transactions anywhere around the globe. This is the goal of Ripple, for example, which provides services primarily at the institutional level, rather than to individuals themselves.
Investors, on the other hand, may not be interested in utilizing the diversity of blockchain capabilities at all. They purchase cryptocurrency tokens for the express purpose of watching them appreciate in value over time. While many have made millions or even billions on their cryptocurrency investments, many more have lost money by buying carelessly and without educating themselves to the intricacies of security tokens.
Miners and forgers are those who intend to profit through their efforts to authenticate blockchain transactions. On the bitcoin network, miners try to be the first to solve highly-complex and computer-intensive mathematical puzzles in an attempt to be the first to produce the solution. Their reward is a certain number of bitcoins. Forgers on the Ethereum network must actually own some amount of Ether currency and are required to stake their holdings as an assurance that their authentication of accounts is accurate and appropriate. The reward for successful forging is the payment of transaction fees for each authenticated transaction.
Developers include the creators of the blockchain, those who develop DApps (distributed applications) that layer on top of the blockchain, and the IT professionals who maintain the system, including making upgrades to the software and the applications.
The Software Ecosystem
The DApps can also be written in a variety of programming languages, as long as they play nicely with the underlying blockchain. These apps fall into, what an Ethereum white paper calls financial, semi-financial, and non-financial applications. The first involves money being used and managed. The second category includes business processes which may involve money but that focus on completing tasks or executing contracts. The last category is very open-ended and may include anything from election voting, governance, data record storage, and ID authentication. There are literally tens of thousands of DApps that have been created to date, with many more being developed daily.
The blockchain can be seen as the intersection of numerous systems, including both hardware and software technologies and people, all dependent on one another for ultimate success.