Proof of Authority: The Alternative to Proof of Work and Proof of Stake

Proof of stake (POS) and proof of work (POW) are the two consensus algorithms that secure blockchain systems. Proof of work is a system where blocks are verified by solving cryptographic puzzles; this was what bitcoin used to prevent spam on the network. On the other hand, proof of stake is a system where people stake their coins; this means they lock up coins they hold to verify blocks. Funds are released when verification is complete, and the transactions add up. Both of these methods have their trade-offs, and alternative approaches have been taken. One such approach that has recently gained attention is proof of authority (POA). This article will explain the proof of authority and how it differs from the earlier alternatives.

What is Proof of Authority (PoA)?

Proof of Authority is an alternative consensus algorithm that achieves fast and secure transactions that are cheap and scalable. It is used by private blockchains where users have known identities and approved accounts run validating nodes. It is well suited for government use cases or applications where identity is essential. While Proof of Stake (PoS) requires that coins be locked up to create a block, Proof of Authority (PoA) is a system where approved accounts are allowed to create blocks. Similarly, while PoW systems can suffer from heavy centralization and high power costs, PoA systems are more decentralized and require fewer computing resources.

The PoA blockchain is best suited to private or consortium chains where there is a limited amount of trusted entities, like government agencies or financial institutions. Ethereum has already adopted PoA with its Clique Consensus Algorithm, allowing private blockchains to be created based on specific nodes permitted to create blocks.

Final Word

Proof of authority is unique among the consensus algorithms, making it so attractive. It promises to combine the efficiency and transparency of Proof of Work and the fairness of Proof of Stake while getting rid of their flaws at the same time. In other words, it is a promising improvement over existing consensus algorithms that could potentially ensure faster transaction times, better security, and, perhaps most importantly, enough flexibility to keep up with future developments on the blockchain.

Find more information at:

Binance Academy:


Related posts

Leave a Comment