0

Does the concept of mining exist if an application is designed with a blockchain in the banking domain?

From what I understand from mining with respect to Bitcoin, the miners keep on creating valid blocks for their work. Then a few might get rewarded with Bitcoin for their effort.

I'm trying to understand how mining would work in banking transaction terms. If they exist, what will they get for the work they do?

closed as off-topic by Ismael, Asone, Lauri Peltonen, Eli Drion, Richard Horrocks Apr 2 '18 at 16:33

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "You should only ask practical, answerable questions based on actual problems that you face. Chatty, open-ended questions diminish the usefulness of our site and push other questions off the front page." – Ismael, Asone, Eli Drion, Richard Horrocks
If this question can be reworded to fit the rules in the help center, please edit the question.

2

What is a blockchain, really?

At the fundamental level a blockchain is a way of receiving a community consensus about state changes in a (usually) pseudonymous fashion.

A block chain as it's name suggests is a chain of blocks, each of which contain a series of state changes and proofs that chain on from the previous block in such a way that the entire chain can be verified from a given genesis point all the way through to the current head block.

Genesis
  +
Block 1 & proof
  +
Block 2 & proof
  +
Block 3 & proof
 ...

Mining

In a proof of work system, the different miners are competing to provide the integrity of the system by solving difficult cryptographical problems. Integrity and auditability are ensured by making the blockchain public and paying participants to keep the system honest.

In a proof of stake system, the miner that gets chosen to mine the block is based off a slightly different algorithm to give the miners who have a bigger stake in the system a less difficult problem to solve than others with lesser stakes.

Private chains

Private blockchains are almost a contradiction in terms unless there a multiple separate participants with separate concerns or interests keeping the other participants honest.

If there's a private blockchain with a single interested party controlling it then it's an almost pointless excercise, as there is nobody to ensure the integrity of the system. They might as well simply use a well protected database.

Public private chains

This is not the same as a public blockchain for a private (or specific) use.

If the general public (or enough different participants with cross purposes) can participate in the mining and ensure the legitimacy of the chain then that would allow integrity to be maintained.

You would however have to pay these participants in some fashion to encourage their engagement and honesty in the activity.

Integrity pays

What they get paid (or their stake in maintaining the system's honesty) will determine their motivation to not be corrupted or bribed by other participants or actors in the system.

Generally you want to pay them enough to make them self interested in ensuring the system is not abused, to guard against the abuse of others and to make sure that the cost of bribing enough people to gain consensus is prohibitively high.

  • appreciate your detailed explanation,if say miner added illegal transaction to block-chain who will verify its credibility ? or server re-verifies & drops the block ? or miner cant add invalid blocks to block chain at all ? – super cool Apr 3 '18 at 6:09
  • The validity of the chain is maintained by concensus. Generally in order to compromise the chain, you need to control 51% of the mining power of the network – norganna Apr 3 '18 at 6:52
  • in case of private block chain networks it can be compromised easily then ? As there are no miners exist . Right ? – super cool Apr 3 '18 at 6:56
  • Well it depends on your point of view I guess. Since you are the miner and you hold 100% of the mining power. Then you can compromise it however you like. On the other hand you don't have to worry about others comprising it in ways you don't approve of cause there aren't any others – norganna Apr 3 '18 at 7:45
2

NO.

The mining comes from consensus mechanism Proof of work.

There are many consensuses that not mine the blocks. Proof of stake Delegate proof of stake etc.

Corporate and Banking blockchains are private networks. If you are interested you can check Hyperledger many big companies use it. https://www.hyperledger.org/

In cases of private blockchain typically consensus is voting between parties and if even one participant is not ok with the new block can make this block invalid.

Not the answer you're looking for? Browse other questions tagged or ask your own question.