What is PoA (Proof of Authority)?

Proof of Authority (PoA) emerged as a pragmatic and efficient solution for private or enterprise blockchain networks. Gavin Wood, co-founder of Ethereum (ETH)He coined this term to define a system that completely breaks with the traditional rules of the game. Unlike models based on computing power or accumulated wealth, here the validator node doesn't risk money or electricity. What's at stake is something much harder to recover: their own legal reputation and real identity.

How does this mechanism work in day-to-day operations? A select group of entities passes a rigorous verification process to earn the right to write blocks to the registry. Forget about the anonymity that defines public networks. If a validator attempts to act in bad faith or approves fraudulent transactions, their identity is immediately exposed, destroying their credibility in the traditional market. It is an incentive system based on the fear of social and legal discredit, a formula that works wonderfully in corporate environments but frightens the purists of decentralization.

Limiting the number of validators to a handful of identified actors offers an undeniable competitive advantage in terms of technical performance. The network is lightning fast. By eliminating the need for cumbersome mathematical discussions among thousands of computers scattered around the world, transaction processing speed skyrockets, making this consensus mechanism the ideal choice for supply chains or banking consortiums. The trade-off is clear: we sacrifice censorship resistance in exchange for massive scalability and absolute access control.

How does the PoA protocol work?

The operation of the PoA protocol is quite simple. First, for the system to work, validators must be chosen at random. The inclusion and selection of nodes. it is done thanks to a voting system of other nodes previously authorized. In this way, it is avoided that malicious nodes can be included and affect the operation of the network. In addition to this, each validator can sign a maximum of one of a series of consecutive blocks during their validation turn. Additionally, PoA does not require a mining is. as it happens in Bitcoin, so it is very eco-friendly.

As in PoS, where participation is used as a measure of selection and trust within the network, PoA makes use of identity and reputation. The identity of a person or institution is scarce, and its reputation is very valuable. Its use within the protocol means, that the validator must disclose who he is voluntarily. By making this information public, it is easy to establish responsibilities in the operation of the blockchain. Any act that threatens the reliability and transparency of the network falls directly on that person or institution. Something that can undermine or destroy your reputation everywhere.

In this way, the validators of a blockchain using the PoA protocol will take care of its reputation and identity. And it is for that reason, that they will ensure the proper functioning, transparency and reliability of its operation. In this sense, the identity put into play can serve as a great equalizer, understood and valued by all actors. People or institutions whose identity is at stake will feel encouraged to preserve the network.

PoA operating conditions

The PoA operating conditions are the necessary steps for protocol compliance. Among them, we can highlight the following:

1. Necessary validate the identities of potential validators. This means that those who want to participate in the network must verify and make their real identities public.
2. El candidate a validator must be ready a invest money and put su reputation as guarantee. This process guarantees that the candidates have motivations to participate in long term within the network.
3. You must have a work standard all with la approval of a validator. With this, it is sought that the selection method is appropriate to select equally the candidates for validators.

The system must be able de delete a possible malicious actors. If a validator within the network acts badly, the network must remove it. All this in order to maintain the trust and transparency of the rest of the parts of the network.

PoA protocol limitations

PoA protocol implementations

As mentioned above, PoA consensus is used in the test network Hive y Rinkeby de Ethereum. It is also used by several well-known platforms and, from this point on, it seems to be the most plausible consensus mechanism for institutions seeking to implement private blockchain networks.

The best known of these networks is POA Network. A public network for smart contracts that works like a sidechain from Ethereum. In it all its nodes are formed by independent validators. They use the database of notaries public as a mechanism for the eligibility of validators. Essentially, validators go through a formal identity verification using two steps. A client who makes use of the software POA Network DApp, as well as the notary public system.

Hyperledger y Ripple They also make use of the PoA protocol on their blockchain. In the case of Hyperledger Fabric is based on the Byzantine Fault Tolerance, but uses the PoA consensus as part of its overall open source framework for the consortium's blockchains. Ripple It uses an iterative form of PoA consensus and more detailed information about its consensus process can be found here.

Another chain that uses PoA is VeChain. This is an enterprise level public blockchain specialized in transparent management of business information. Focused especially on the management of the supply chain and logistics.

FAQ – What is Proof of Authority (PoA)?