While proof-of-work was the very first consensus mechanism used on a blockchain, as the technology has evolved, more and more innovative consensus mechanisms have come into play to add to various features of blockchains. If you’re in the know regarding advances in the blockchain tech, PoA or proof-of-authority is a phrase you may have heard. Among the newer consensus mechanisms introduced to the world of blockchain, PoA is a reputation-based consensus algorithm that has proven to be especially useful for private blockchains.
If “what is proof-of-authority?” is a question you have, in this post we explain the PoA consensus algorithm and its workings for you!
Table of Contents
What is Proof-of-Authority?
This term was first used back in 2017 by the Ethereum co-founder Gavin Wood. The proof-of-authority consensus mechanism was created with two goals in mind: energy efficiency and scalability.
With a proof-of-authority consensus mechanism, there are validator nodes in place to verify transactions and create blocks, just like a proof-of-stake blockchain. However, in the case of PoA, you could say validators are staking their own reputations instead of any coins.
Validator nodes are picked through arbitrary methods as trustworthy nodes by the whole network. The highly scalable consensus mechanism saves on both energy and transaction time, as only the chosen few validators have to come to an agreement regarding the legitimacy of a transaction.
The PoA algorithm has proven useful in the maintenance of supply chains, upholding a private blockchain network, and even Microsoft Azure puts this consensus mechanism to use.
How does Proof-of-Authority Work?
With the proof-of-authority consensus algorithm, pre-approved validators verify blocks and transactions, acting as moderators on the chain. PoA works on some general rules for validators, such as-
- The validators must be willing to stake their reputation and invest on the blockchain,
- Their identity must get validated by the whole network,
- And there should be no immoral background of the validator.
Terms and Conditions for Proof of Authority Consensus Mechanism
The proof-of-authority consensus mechanism relies on the reputation of the validators. So, some terms need to be fulfilled by each participant to become a validator on the blockchain. These terms work to maintain all network participants’ trust in validators. The conditions to be fulfilled to become a validator may vary from chain to chain, but in general, they should be:
- Validators must first confirm their real identities.
- Validators must be willing to invest money in the blockchain and believe in the project enough to back it with their reputation. This helps promote long-term commitment from the validators.
- The process for selecting validators should be the exact same for all participants.
Limitations of Proof of Authority
The Proof of Authority (PoA) consensus mechanism is perceived to sacrifice decentralization in exchange for efficiency. This makes it an attractive solution for large corporations with logistical needs, but it also raises some concerns, particularly within the cryptocurrency community. PoA systems offer high throughput, but they may be vulnerable to censorship and blacklisting, which calls into question their immutability.
One common criticism of PoA is that the identities of validators are visible to anyone, which could lead to manipulation by third parties. For example, a competitor could try to influence known validators to act dishonestly and compromise the system from within.
Advantages and Disadvantages of Proof-of-Authority
Just like any other consensus mechanism, PoA comes with its own set of advantages and disadvantages too. Some of these pros and cons of the consensus mechanism include:
Advantages
- Compared to older consensus mechanisms like PoW, PoA allows more transactions to occur each second as the validator nodes- being fewer in number- can achieve consensus faster.
- Proof-of-consensus requires lesser computational power to validate transactions and blocks than most contemporary consensus algorithms.
- PoA blockchains are also protected against DDoS (distributed denial-of-authority) attacks since the proof-of-authority consensus mechanism gives the right to generate blocks to only preapproved nodes, and overburdening the server will not affect the validation process.
Disadvantages
- As quite a few blockchain enthusiasts have pointed out, PoA does not stand upon the true values of decentralization with its close-knitted community of nodes who have the final say when it comes to the working of the blockchains. As they say, PoA is just a way to make a centralized network more efficient.
- The proof-of-authority consensus mechanism is better suited to a private blockchain than a public one.
- Validators are visible to everyone under this mechanism, which means the risk of third-party manipulation through a publicly known validator is higher.
Conclusion
So that was proof-of-authority explained in brief for you. As mentioned above, Web3 enabled PoA consensus algorithm is an option to help make centralized networks more efficient and secure but is definitely not efficient and secure enough for public decentralized networks where you typically don’t have the luxury to control or cherry pick node operators.
Frequently Asked Questions (FAQs)
1. What is Proof of Authority Meaning?
Proof of Authority (PoA) is a consensus mechanism used in blockchain networks to validate transactions and add new blocks to the chain. In PoA, validators are chosen based on their reputation or identity, rather than through a cryptographic algorithm like Proof of Work (PoW) or Proof of Stake (PoS). These validators are pre-approved by the network and are responsible for validating transactions and adding new blocks to the chain.
2. Is Proof of Authority the same as Proof of Stake?
No, proof of authority (PoA) and proof of stake (PoS) are different consensus mechanisms used in blockchain networks.
Proof of authority (PoA) is a consensus mechanism in which validators are chosen based on their reputation or identity, rather than through a cryptographic algorithm. While, Proof of stake (PoS) is a consensus mechanism in which validators are chosen based on how many coins or tokens they hold, or “stake,” in the network.
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