go-ethereum/docs/_doc/Private-network.md

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Private network

An Ethereum network is a private network if the nodes are not connected to the main network nodes. In this context private only means reserved or isolated, rather than protected or secure.

Choosing A Network ID

Since connections between nodes are valid only if peers have identical protocol version and network ID, you can effectively isolate your network by setting either of these to a non default value. We recommend using the --networkid command line option for this. Its argument is an integer, the main network has id 1 (the default). So if you supply your own custom network ID which is different than the main network your nodes will not connect to other nodes and form a private network.

Creating The Genesis Block

Every blockchain starts with the genesis block. When you run geth with default settings for the first time, the main net genesis block is committed to the database. For a private network, you usually want a different genesis block.

Here's an example of a custom genesis.json file. The config section ensures that certain protocol upgrades are immediately available. The alloc section pre-funds accounts.

{
    "config": {
        "chainId": 15,
        "homesteadBlock": 0,
        "eip155Block": 0,
        "eip158Block": 0
    },
    "difficulty": "200000000",
    "gasLimit": "2100000",
    "alloc": {
        "7df9a875a174b3bc565e6424a0050ebc1b2d1d82": { "balance": "300000" },
        "f41c74c9ae680c1aa78f42e5647a62f353b7bdde": { "balance": "400000" }
    }
}

To create a database that uses this genesis block, run the following command. This will import and set the canonical genesis block for your chain.

geth --datadir path/to/custom/data/folder init genesis.json

Future runs of geth on this data directory will use the genesis block you have defined.

geth --datadir path/to/custom/data/folder --networkid 15

Network Connectivity

With all nodes that you want to run initialized to the desired genesis state, you'll need to start a bootstrap node that others can use to find each other in your network and/or over the internet. The clean way is to configure and run a dedicated bootnode:

bootnode --genkey=boot.key
bootnode --nodekey=boot.key

With the bootnode online, it will display an enode URL that other nodes can use to connect to it and exchange peer information. Make sure to replace the displayed IP address information (most probably [::]) with your externally accessible IP to get the actual enode URL.

Note: You can also use a full fledged Geth node as a bootstrap node.

Starting Up Your Member Nodes

With the bootnode operational and externally reachable (you can try telnet <ip> <port> to ensure it's indeed reachable), start every subsequent Geth node pointed to the bootnode for peer discovery via the --bootnodes flag. It will probably also be desirable to keep the data directory of your private network separated, so do also specify a custom --datadir flag.

geth --datadir path/to/custom/data/folder --networkid 15 --bootnodes <bootnode-enode-url-from-above>

Since your network will be completely cut off from the main and test networks, you'll also need to configure a miner to process transactions and create new blocks for you.

Running A Private Miner

Mining on the public Ethereum network is a complex task as it's only feasible using GPUs, requiring an OpenCL or CUDA enabled ethminer instance. For information on such a setup, please consult the EtherMining subreddit and the Genoil miner repository.

In a private network setting however, a single CPU miner instance is more than enough for practical purposes as it can produce a stable stream of blocks at the correct intervals without needing heavy resources (consider running on a single thread, no need for multiple ones either). To start a Geth instance for mining, run it with all your usual flags, extended by:

$ geth <usual-flags> --mine --minerthreads=1 --etherbase=0x0000000000000000000000000000000000000000

Which will start mining bocks and transactions on a single CPU thread, crediting all proceedings to the account specified by --etherbase. You can further tune the mining by changing the default gas limit blocks converge to (--targetgaslimit) and the price transactions are accepted at (--gasprice).