The blockchain ecosystem is a network of participants in a blockchain that share business objectives and processes.
Blockchains have surged in popularity ever since bitcoin introduced the world to cryptocurrency. There has never been a new technology that has grown this fast. In a blockchain, data is stored in a way that its near impossible to change or hack it. Everyone wants a piece of this pie, from Silicon Valley to businesses and venture capitalists. But while blockchain has been around for a long time, people mostly associate it with cryptocurrency. Blockchain has now evolved into various decentralised projects that leverage its power.
This evolution owes its success to the creation of smart contracts, a self-executing piece of code that is stored in the blocks of a blockchain. The contracts allow for the automation of tasks that were previously performed by a central entity in software projects and applications.
This evolution has resulted in the growth of the blockchain ecosystem -- a network of participants in a blockchain that share business objectives and processes. There is still a long way to go for this nascent technology as more developers and businesses start utilising it for a plethora of reasons. As time passes, the significance of a sound blockchain ecosystem will grow, but let us understand where the blockchain ecosystem stands as of now.
What is a blockchain ecosystem?
A blockchain ecosystem is a group of various technological elements capable of interacting to create a system that performs a specified function. This system encompasses multiple governing structures like individual participation, data ownership, funding, exit and entrance criteria, information shared with the system's participants.
The blockchain ecosystem can provide true decentralisation, immutability, transparency, accountability and flexibility to day-to-day operations.
These advantages can be a boon for technology startups and projects as it creates an interconnected network, even if they must consider what information they want to share within the network.
How will blockchain ecosystems benefit organisations?
The distributed nature of blockchains is the perfect example of network technology. It can bring new functionalities for the employees and customers of an organisation. It will revamp the complete workflow and how projects are developed, from the starting stage to the end.
For a blockchain to be viable for an organisation, it has to consider how it can improve the ongoing operation that an existing solution can't. For example, in an organisation where database entry is limited and there is no need to share data among peers, a blockchain ecosystem would not be that beneficial. But an organisation where data sharing among various entities, departments and individuals occurs at a higher rate could benefit from the blockchain structure of validating data among nodes or peers as fast as possible.
The biggest advantage of a blockchain's distributed ledger is that the exchange of information is swift. The use of smart contracts in blockchains can also remove intermediatory in a process that would extend the time to perform a task in a larger process. A private blockchain ecosystem can give visibility to the participants, but at the same time, the information given out to the participants can be controlled.
As an example of this type of information control, we can look at Finboot. It is a blockchains-as-a-service provider that delivers a solution involving an ecosystem of airlines, fuellers and into-planes (logistics operators) as participants. The implementation of the blockchain optimises refuelling services. But the solution only shares selective data among participants to ensure efficiencies gained don't compromise competing interests.
For a blockchain ecosystem to be successful, an organisation has to analyse the system's dynamics that already exist and how the implementation of a blockchain could affect it.
The types of blockchain ecosystems
A blockchain ecosystem could have participants in its network with different goals and business models. They can even have distinct contributions to the network. In fact, the various participants can even be competitors. In a blockchain ecosystem, every participant would be looking out for themselves and what business value they receive as a part of the ecosystem.
The type of blockchain ecosystem for a shared blockchain project will depend on the participants in the network. That is why different types of blockchain ecosystems accommodate the specific needs of the participants in the network. Here are some of the notable ones being used these days.
Single party-led: A Single party blockchain project is led by a single organisation where its stakeholders have a mutual benefit for participating in the network. An example of this ecosystem would be Bumble Bee Foods. They created an ecosystem of various stakeholders to improve the traceability of yellowfin tuna fish from the ocean to a customer's dinner table.
The stakeholder of Bumble bee Foods includes fishermen, packagers, transportation personnel, distributors, and retailers who record the fish's details on the blockchain. Customers can use a QR code to view this information. It can help improve the buyer's confidence in the fish's freshness.
Joint venture ecosystem: Joint ventures ecosystems usually have two or more organisations at the helm. These ecosystems are slowly becoming popular and are now overtaking formal joint ventures. These ecosystems are created to pool sources for a common goal.
The only question in the ecosystem is whether the organisations forming a strategic business association are a new legal entity or just entering a formal contractual arrangement.
An example of a joint venture ecosystem is BunkerTrace, an association between Forecast Technology Ltd. and BLOC (Blockchain Labs for Open Collaboration). BunkerTrace is a marine fuel tracking solution.
Regulatory blockchain ecosystems: This ecosystem comprises various government agencies that share a project and have to self-report for compliance. An example of a regulatory ecosystem would be the shared project between Marine Transport International and the Recycling Association. They use a blockchain-based tool to capture data concerning shipments of recyclable waste from Britain.
A crucial aspect of all these ecosystems is how they will be funded. Typically, ecosystems are excluded from the day-to-day business model funding. An organisation has to set aside a budget for creating a blockchain ecosystem as they have to consider various governance and operations costs for the ecosystem.