Bitcoin was the first cryptocurrency to be introduced over a decade ago. Since then, there have been so many changes in the industry and there are many mechanisms that are being introduced on the blockchain networks. Proof of Work is one of the common algorithms used by Bitcoin as a way of users getting to an agreement. Unfortunately, the blockchain networks that use PoW consensus algorithms have scalability limitations. As such, the transactions per second are rather slow.
As a way of addressing the problem with the slower rate of the transactions being confirmed, Proof of Stake was introduced. There are many networks that jumped on the PoS algorithm with the intention of improving the transactions per second. However, it has been established that there is minimal difference between PoS and PoW, and as such, there is still a challenge that needs to be addressed. This is where the Proof of Authority comes in and it is considered to be a better option to resolve the scalability issues.
Proof of Authority Explained
What makes Proof of Authority a different form of consensus algorithm is the fact that it is reputation-based. This has changed the way blockchain networks perform as it is more efficient. Proof of Authority or PoA is a term introduced by Gavin Wood, Ethereum co-founder in 2017. In essence, the algorithm will use the value of identities to validate a block. When block validators are using this option, they will not be paying attention to the coins but the reputation that the coins carry. As such, blockchains will validate nodes that are considered to be trustworthy.
The fact that the PoA algorithm depends on fewer block validators, the system is highly scalable and the transactions are verified by pre-approved entities. These participants also serve as moderators of the blockchain network. There are so many scenarios where the Proof of Authority may be applied as it is considered to be of high value especially when it comes to logistical applications. One of the benefits of this model is that companies and organizations can maintain privacy while leveraging blockchain technology. One example of the Proof of Authority algorithm is Microsoft Azure.
Requirements for Proof of Authority Model
The cryptocurrency world is becoming better by the day, thanks to various improvements. Trading on https://bitcoin-billionaire.net/ is seamless as transactions are processed pretty fast. The Proof of Authority has some conditions which will make it work efficiently on a network. This model of consensus algorithm depends on a number of things like:
Validators have to confirm their authentic identity
It is difficult to become a validator and the process is quite stringent so as to ensure the trust is achieved
There is a standard that has been set and defined for approving validators
As you can see, this model heavily relies on the true identities of the validators. This is why there are very strict conditions which have been put so as to ensure only the right candidates are validators. The system has put strict measures in place so as to guarantee users get reliability and integrity.
There are some limitations that are associated with this model, with most people arguing that it is taking away the element of decentralization from the cryptocurrency industry. The developers are working on improving different aspects of this consensus algorithm.
Closing Remarks
Proof of Authority is a new system and has introduced an interesting approach to the validation of transactions. There are many private networks that have chosen this model and seem to be working efficiently. The industry will keep changing and getting better in a bid to make cryptocurrency acceptable all over the world.
