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I'm a developer that has recently started to dive into blockchain business use cases. What I'm failing to grasp is this:

  1. I understand the distributed ledger concept
  2. I understand how the blockchain is created/added to
  3. I understand how mining works
  4. I understand how coins are given for service of mining

My question comes to if I as a company, want to build my own blockchain to to smart contracts in real estate.

Who does the mining? How do they get compensated? Or as a business I would be doing the mining taking place of the public miners.

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Blockchain solves for trust. If it's just your own company then you need a reliable database, not a blockchain.

If it's a small network of trading partners who need a shared source of truth about topics of interest within their own trading network, that is the permissioned blockchain idea. In this case, miners (or "verifiers") would typically be evenly distributed to prevent any participant from gaining an unfair advantage. As @JAG points out, they might as well set the gas limit really high and block time really fast. Several Ethereum offshoots work on roughly this basis.

If you want assets that can escape the boundaries of private networks, then you need a widely inclusive network where any member of the public can validate claims. You need to account for nodes with scarce horsepower and high-latency connections. To avoid unwanted centralization, you will have to accept anonymous nodes. Probably there will be no accountability for misbehavior in this case, so you will probably introduce financial rewards and punishments in place of accountability.

You will end up with comparatively high block times and financial incentives to help ensure the network tends toward correctness and consensus even though there may be nefarious and anonymous participants with no accountability.

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If you have a private Ethereum network you would need to have your own miners to process the actions on the blockchain. You can think of the miners as the CPU to the Ethereum Virtual Machine (often referred to as EVM).

In your own private network you're able to set the quantity of Ether in the network (thus setting the value). If you're not intending to let the public use the network and have it as an internal system then you might as well set the quantity massively high as not to run into gas limit issues and can make sure processes are always carried out

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  • So then you as the company running the private Ethereum network, would be in charge of mining (aka computing power). So you would have to charge someone for your blockchain product. And you would be in charge of validating the chain. How is this any different than a centralize database architecture? – random Mar 5 '18 at 22:08
  • Well it's not really much different from a centralized database when used like this at all. You could let the public become miners and be able to use the Ether that they mine on your private/separate from the mainnet net network as 'tokens' which they can use for various products or services from your company though. I would suggest looking at Hyper Ledger as well as another potential candidate for your use case – JAG Mar 6 '18 at 0:46

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