Cryptocurrency stakeholders: an inside look at who they are and how they work
In every business and industry, there are stakeholders. Their primary aim is to ensure that the sector is guided to work in line with the laid down guidelines.
The fact that the digital currency industry is not under any government control doesn’t mean that there are no guidelines for the trade. Thus, the needs for stakeholders.
Being a system that relies on blockchain technology, many people are involved in its day-to-day operation.
Since introducing a cryptocurrency over a decade ago, many, especially working professionals, initially approached blockchain with caution due to its unknown effects and uses. If any mistake is made leading to massive loss, there is no one to run to, making it a highly volatile industry. For instance, the recent withdrawal of Elon Murks from the use of Bitcoin made many lose their life savings as the value of the number one cryptocurrency crashed.
Being a trade based on speculations, many economists have exercised extreme caution in going into it, despite its immense popularity that keeps growing every day. Due to this, it has innovatively affected many industries, as they are gradually adopting cryptocurrency as a form of payment like the FIAT money.
Blockchain is becoming more trustworthy
The blockchain has now formed a part of business strategy, making it a business model that is becoming more trustworthy, approachable, and efficient.
Being a collection of components or layers, Blockchain technology has three layers that form a stack representing the software development of blockchain. They include:
- Layer one: protocol – computing languages and computational rules
- Layer two: networking – access to the protocol
- Layer three: application – serves user requirements.
In each of these three-layered blockchain stacks, various key stakeholders at each developmental stage are motivated by different things such as building new products and services, developing infrastructure, or funding the development of these new products and infrastructure.
Outside this, there are those stakeholders who seek to educate others in the hope of blockchain reaching the scale it’s capable of as the new technology continues affecting the business strategies of these stakeholders.
Now lets’ look at the critical stakeholder in the cryptocurrency business.
These are a set of people involved with setting up blockchain protocols that serve networks. They ensure that the block, which contains a timestamp, digital signature, and varying other kinds of information or rules, will be shared with the network. They are in the protocol layer charged with ensuring that the cryptographic keys, which are either open-source or private, interact with the networks.
Open-source cryptographic keys come with networks that allow anyone to download, audit, and submit changes to the protocol. It is a public community that is decided by a system of consensus or voting.
Private entities use the private blockchain networks, and they are accessible only to operations of a specific class. Here, the developer encodes the personal information and alters the encoded value locally before sending it to an aggregator.
2. Researchers and Academia
These are the people that research the blockchain, thereby educating others on the implications of the technology. Being a relatively new software platform, having academics involved in the blockchain strategy system ensures blockchain is continually challenged and researched in various endeavors, like political, behavioral, economic, and psychological. In this way, they gather knowledge and inform all other stakeholders involved in the other layers of the process.
This is a networking layer that deals with how the protocols (software) are implemented. It is a global network filled with many individuals running the same form of software. These individuals run on what is referred to as nodes – devices that run a copy of the protocol, storing a full copy of that blockchain on the device.
They decided the kind of network they want to build, which could be a very public and large network like the bitcoin network or the one that can be used by an enterprise that will not go public.
4. Industry Bodies
These are regulatory bodies saddled with defining the rules of engagement and interaction for all stakeholders involved. For instance, some coalition is trying to come up with legal provisions that will back cryptocurrencies and aid police investigation where the need arises.
In the digital space, regulators are becoming innovators as they entertain, explore and experiment with the adoption of distributed ledger technologies (DLT), digital currencies, application programming interfaces (API), artificial intelligence (AI), augmented reality (AR), and a host of other digital technologies.
These are the ones who provide access to blockchain protocols. So that other can interact and transact in the blockchain strategy system. They sell a usage token needed to join the blockchain network during an ICO (initial coin offering) to raise funds to build the product mentioned in the relevant whitepaper.
They are the people involved in the application layer of the blockchain. They build applications, products, or services utilizing blockchain protocols and networks. With their main goal being to make a profit, entrepreneurs and startups are often motivated by passion and a desire to infiltrate traditional, age-old systems and make them better through blockchain technologies.
Using bitcoin as an example, many entrepreneurs have the vision to bridge the gap between the traditional world of banking and digital currencies, which is an extremely difficult task that comes with a lot of regulation, risk, and resistance. They end up succeeding after maintaining a good standing relationship with all other stakeholders involved in the blockchain strategy system, especially the regulators.
These are the real people using the application, product, or service. Their role is critical in the entire blockchain strategy system. An entrepreneur can’t decide without considering them because their response will impact the business strategy in the blockchain strategy system. The end-user exists because the traditional financial methods were not meeting consumers’ needs.
All these stakeholders have one or two roles they play in the system, and they are important. It mens all of them are interdependent.
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