A visual representation of Blockchain may put the idea that a Blockchain consists of nothing but a series of interconnected digital blocks that form a part of the open ledger and are regularly updated under the supervision of every node in the network. As a matter of fact, that can be said to be the definition of Blockchain for a layman. But honestly, what seems easy is never so easy. There’s more to the whole Blockchain Ecosystem than what meets the eye. And a little crash course is enough to give a good idea of it.

When we talk about Blockchain ecosystems, what do we associate them with? Bitcoins, Ether, Ripple, Lightcoin and so many more. In one word- cryptocurrency. But unknowingly we acknowledge the presence of 4 basic components in a Blockchain Ecosystem (and no, they do not include a block and a digital piece of chain).

The first and foremost- Node. This can be anyone, even you. If you want to get into the whole cryptocurrency business, then you need an application on your computer at home that can handle these things. When you download that (for example owning a Bitcoin Wallet) you become a node.

The next is an Open Ledger. Based on the Blockchain you are a part of (public/permission-less, private/permission or consortium Blockchain), you are going to have an open ledger which you can check.

Next is perhaps one of the most important parts, it is a computer with enormous computation power. This computer encrypts or makes puzzles out of the transaction records. The first node to solve that needs to announce it to others. Now, to update the ledger the group you are in needs to reach a consensus regarding the validity of a record. That is where a Consensus Algorithm comes in.

If verified by a consensus, the record is included in the decentralized open ledger and the first node gets a reward. These form the components of a Blockchain Ecosystem.


Share this post on: