In this article, we will explain what Proof of Authority (PoA) is, what benefits and downsides it has, and if it can be used in a decentralized manner.
What is Proof of Authority?
Proof of Authority (PoA) represents a consensus algorithm that is based on reputation, creating a practical and efficient solution for blockchain networks, especially when it comes to private ones.
The main form of leverage in Proof of Authority is none other than a user’s identity, meaning that a block validator isn’t staking coins, but their very own reputation. This means that PoA blockchains are secured by the validating nodes that are randomly chosen to serve as trustworthy entities.
PoA uses a limited number of block validators, which makes the system highly scalable. Both blocks and transactions are verified by pre-approved participants, who serve as moderators of the system.
What Benefits Does PoA Have?
Unlike PoW, and similar to PoS, PoA doesn’t rely on solving puzzles in order to make sure that there is a continuous connection between nodes. This means a PoA validator doesn’t require special equipment to help maintain the network. This also is great for reducing the amount of power used.
PoA also enjoys a greater speed for validating transactions. Blocks are generated in a predictable sequence by taking into consideration the number of validators, which means that the blockchain will enjoy a higher transaction rate when compared to PoW or PoS.
PoA also stands out thanks to its resistance to 51% attacks. That is due to the fact that it is incredibly hard to get control over 51% of authorities that aren’t connected directly. Furthermore, nodes are pre-authenticated, so, in the case that one is not available, the network is able to remove it from the validation process.
What Downside Does PoA Have?
Just like PoW or PoS, PoA also has its own limitations. Since validators need to be verified, trusted, and picked by the network, this translates into having a rather small validating group. This does offer the benefit of a higher level of throughput, but it also makes a PoA network more centralized.
Because block rewards are visible to everyone in a public blockchain, anyone can see how much a certain PoA validator has earned. This means that there may be a higher risk of corruption or manipulation. This is why the validator needs to be an entity that is trusted.
Becoming a validator is also rather hard as candidates need to pass a notary exam that attests no criminal record and the good moral standing of a candidate while also filtering out those who aren’t committed. Then again, the end result does translate into a pro for PoA, but, to get there, it may turn many people off from trying.
Can It Be Used In a Decentralized Manner?
The PoA mechanism works best in a centralized way, due to the reasons we’ve mentioned before, such as having a small number of validators. This means that many believe PoA to be a consensus mechanism that aims to make centralized systems better and more efficient, not decentralized ones.
The PoA can be used in corporations that have high logistical needs, but within the crypto community, it is very unlikely that it would be embraced in its current form.
Conclusions
Proof of Authority is a consensus mechanism that stands out for relying on a validator’s reputation to make the blockchain work properly. While it’s a more environmentally friendly method than PoW, and it is faster, the network will always be limited by the small number of validators active, and by the fact that, by design, it can’t be used in a decentralized manner – for now.