What is Proof of Authority (PoA)?

What is Proof of Authority (PoA)?

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Proof of Authority (PoA) is a consensus algorithm in which the nodes with the right to create new blocks and validate transactions are chosen in advance. These nodes are called “authorities” and are usually appointed by the network’s organization. The authorities are responsible for validating transactions and adding them to the blockchain.

In PoA networks, the authority nodes are trusted to create blocks and validate transactions honestly, as they have a reputation to uphold. This makes PoA networks more efficient than networks that use Proof of Work (PoW) or Proof of Stake (PoS) algorithms, as there is no need for the expensive and time-consuming process of mining new blocks.

PoA networks are often used in private or consortium blockchain systems, where the participating organizations trust each other and want to achieve a high-efficiency level. One example of a PoA network is Ethereum’s “Clique” protocol, which is used by the Ethereum testnet Rinkeby.

There are some drawbacks to using a PoA consensus algorithm. One concern is that the authority nodes may collude or act maliciously, as they have significant control over the network. To mitigate this risk, it is important to select the authority nodes carefully and have sufficient oversight and checks in place.

Popular Blockchains Using Proof of Authority

Some popular blockchains that use the Proof of Authority (PoA) consensus algorithm include:

  • Ethereum (using the “Clique” protocol): Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. The Ethereum testnet Rinkeby uses the Clique protocol based on PoA.
  • Quorum: Quorum is an open-source blockchain platform that is based on Ethereum. It was developed by J.P. Morgan and is designed for enterprise applications. Quorum uses the PoA consensus algorithm and has additional privacy features such as private transactions and voting-based consensus.
  • Corda: Corda is an open-source blockchain platform developed by the R3 consortium. It is designed to be used by financial institutions and other regulated industries. Corda uses the PoA consensus algorithm and has features such as strict privacy controls and a shared ledger model.
  • Hyperledger Besu: Hyperledger Besu is an open-source blockchain platform that the Linux Foundation developed. It is designed to be used by enterprises and can be configured to use either the PoA or the Proof of Work (PoW) consensus algorithm.
  • Aion: Aion is a decentralized platform that enables the creation of interoperable blockchain networks. It uses a hybrid PoW/PoA consensus algorithm, in which the PoW component is used to secure the network, and the PoA component is used to achieve high transaction throughput.

Is PoA Decentralized?

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The level of decentralization in a PoA network depends on the number and distribution of the authority nodes. For example, suppose it has a small number of authority nodes controlled by a single entity. In that case, the network may be less decentralized than a network with a larger number of authority nodes that are more widely distributed. However, even in networks with a small number of authority nodes, there may still be some level of decentralization, as the authority nodes are not necessarily controlled by a single entity and may be required to follow certain rules and procedures.

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