What is the bitcoin ecosystem?
There will be a number of opportunities for people to profit from the blockchain ecosystem according to Eric Schmidt, executive chairman of google;
“[Bitcoin] is a remarkable cryptographic achievement… The ability to create something which is not duplicable in the digital world has enormous value…Lot’s of people will build businesses on top of that.”
Building on the overview in our previous post titled— What is bitcoin?
We’ll attempt to explain the ecosystem as detailed by Chris Berniske and Jack Tatar in their book Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond.
This post is intended for those new to the cryptocurrency space, and who are looking for a high-level explanation of bitcoin and associated technologies. For readers who are already familiar with the basics and want to know more about bitcoin and other cryptocurrencies, we’d recommend the Princeton Bitcoin Book or Blockchain at Berkeley to start.
It’s important to think about bitcoin and other cryptocurrencies as economic stacks of incentives and technologies. The stack is carefully structured to incentivise people to act for the overall benefit of those involved via their participation.
Think of it like a stack of hardware, software, applications and end users.
The miners that compete to secure and complete the transactions on the system are the hardware layer. Miners run the operating system/software of the network.
The miners are rewarded in bitcoin for this activity.
Operating System (Software)
Applications run on top of the miners and the bitcoin core. They interface with the bitcoin operating system, which pushes and pulls information from bitcoins blockchain.
End Users ( You and I)
Then there is you and I, the end users. We use applications to buy, sell, transfer and hold (hodl) bitcoin.
We can do all of this via our applications without any real need to understand the inner workings of the bitcoin core software or the hardware of the miners. Similar to the way we use the internet via our browsers while the underlying technology secures and supports our economies.
Sound too complex? Would you rather do what you do and have someone else invest your spare change in Bitcoin?
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