While the proof-of-authority consensus algorithm is turning into perhaps one of the most mature versions of blockchain technology. It is faster than other algorithms, more scalable, and does not depend on mining. Market leaders Walmart and GE Aviation are using PoA to track supply chains, and Microsoft has created a whole line of PoA-based enterprise products.
Nevertheless, there is something in this innovative mechanism that contradicts the basic principles of cryptocurrencies — decentralization and anonymity. Cointelegraph talked to technology companies to find out how PoA products work, and what benefits the use of this algorithm brings them.
How it differs from other algorithms
The PoA consensus algorithm stands apart from the rest of the algorithms, and unlike proof-of-work and proof-of-stake, it does not require miners to be involved at all. In a blockchain network based on PoA, all transactions and blocks are processed by approved accounts (validators) that replace miners.
As a result, there is no need to spend vast amounts of resources to maintain the network’s performance, making such platforms extremely cheap to maintain. In this context, PoA is currently being implemented as a more efficient alternative to older counterparts, as it is capable of performing more transactions per second.
Such blockchains are also much faster than the ones running on the PoW consensus algorithm. For example, blocks in the POA Network are generated once every five seconds, in VeChain — once every 10 seconds, and every 15 seconds in Ethereum Express.
As the name implies, in PoA, the authority of the participant is the guarantor of the transaction’s validity. Therefore, such a network is protected against manipulation by the owners of richer nodes. This is different to PoS, where the more tokens a user has, the more likely they are to form a new block. In addition, PoA validators must pass a series of checks to confirm their reliability.
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