What is meant by Proof of authority?
Proof of authority (PoA) is an algorithm used as part of blockchains to directly handle open transactions. Here, a consensus process is used that verifies the identity of the user.
Networks based on a proof-of-authority verify blocks through validated accounts, also known as “validators”. These validators emulate software that verifies all transactions.
The special feature here is that this process is automated and the users do not have to actively track orders. Nevertheless, the validators must ensure that the computers, which are also referred to as nodes, are in perfect working condition.
What advantages does a proof-of-authority algorithm offer?
In principle, a proof-of-authority algorithm differs from the well-known proof-of-work (PoW) and proof-of-stake (PoS) algorithms. PoS mining is primarily done by miners who have a high number of tokens in their wallet, while PoW requires the completion of blocks, otherwise, no transactions can be performed.
PoA, on the other hand, relies on the validators and in return refrains from mining. Thus, the validators are rewarded with tokens at the proof of authority, which is why there is such a special focus on obtaining the validator status.
In addition, users do not need a high token inventory to qualify to be a validator. Another advantage is the low computational power required for the role of a validator.
Especially in the case of PoW, the need for computing power ultimately reduces personal net income. The option of provisional confirmation can also reduce the risk of sustained damage from a wrong transaction.