Bitcoin Forum

My understanding is that both miners and nodes are considered full nodes and that the nodes perform the consensus, but the miners add blocks to the blockchain and for this extra work they get rewarded in tokens.  In the case of a private blockchain where there are no tokens being offered do you still need miners?

There is a need for a kind of "mining" if the parties that run the blockchain do not trust each other.

Completely private blockchains generally run inside an organization and thus do not need mining as nobody would maliciously double-spend there. But there is a "mixed form" called "consortium blockchains" where non-anonymous, but different parties that do not necessarily trust each other, run nodes. There are different mechanisms for this particular kind of blockchains. "Proof of work mining" is almost never employed because such a strong consensus mechanism is not needed if every "double spender" would be identified and probably excluded from the consortium. More common are simple "majority vote", Proof of Stake- or Byzantine-fault-tolerant consensus algorithms.

The reward will not be a reward but just a way to generate the coins. This is one of the major reason why these "Private"

Blockchains are doomed to fail. In "Public" Blockchains the people know the supply are fixed and it cannot be changed without

the consensus of the majority of the nodes. {hosted by the general public} In "Private" Blockchains these decisions are made

by a central authority, like it is done by reserve banks now. {printing money like toilet paper} Now it can be done, by a push

of a few buttons. {scary stuff}  >:(

It depends on the project, as there can be many different blockchain application with different rules. It's true that when mining is permissioned it becomes closer to being a middleman, but there are still some differences. Miners can't alter any data if it has digital signatures, so their power is limited - they can refuse to add transactions to blocks, effectively freezing your account (this is also possible in Bitcoin, but since there are so many miners and anyone can join, it's unlikely that they will all agree to refuse confirming some transaction) and they might also be able to create chain splits if network rules allow it, so permissioned blockchain protocols might feature their own economic incentives to discourage miners from misbehaving - by adding PoW, PoS or other mechanism that require miners to burn something on order to get their right to append blocks. Just like in Bitcoin mining after most coins will be mined, permissioned miners can be rewarded by transaction fees to compensate for their work.

Thanks for that explanation, so this would be similar to what the Hyper-ledger Fabric is doing with their PBFT consensus..

But how could you convince your CIO who wants to implement a blockchain solution to use a public blockchain over private?  Any group of anon members could come along and fork the chain for whatever reason. 

@3piecechickendinner: Exactly, PBFT is one of the possible algorithms.

@Kprawn: Private and "consortium" blockchains are only a database solution with an added "security" layer (the hashing of the previous data entry provides a proof that it's not manipulated, not even by machine or network failure).

They aren't a competition for Bitcoin or other cryptocurrencies, but a way to communicate 1) between parts of an organization adding important data to a database, or 2) between different organizations that need to share data or a common "private currency". Nothing to be worried about from a Bitcoin hodlers point of view ;)

Uh, yeah, That is how the TX's get processed and confirmed. I suppose you can do away with the mining, but whatever the last transactions are that you make are going to just sit there and stare at you for the coming years. Mining is what makes the blockchain run and transcations become confirmed.

That depends from what we define as "mining". There must be some instance that validates the new transactions and verifies that there is no double spending. This can be one node elected by some algorithm (PoW, PoS, PoT ...) or a group (like the 66% of all nodes in typical "Byzantine fault tolerant" systems).

But "Proof of work mining", with all the associated costs (and energy waste) is not necessary, at least not in private and consortium blockchains.

I believe whether the network need miners on a blockchain depends on the setup of its network.  Mostly Blockchain needs miner to move the block, even with the PoS system, they still mine it by opening their wallet and carrying weight to stake.  Others does not need miner because it is what their system was created.

The presence of tokens is the drive for mining innovation. The relevance of miners therefore is directly proportional to the availability of tokens in the blockchain framework.