Proof of Authority (PoA)

Proof of Authority is a consensus algorithm used in some blockchain networks. In a PoA network, nodes that participate in the consensus process are known and trusted entities that are authorized to validate transactions and maintain the blockchain. This is different from other consensus algorithms like Proof of Work (PoW) and Proof of Stake (PoS), where any node can participate in the consensus process.
In a PoA network, nodes that participate in the consensus process are referred to as validators. Validators are selected based on their identity and reputation rather than their computational power or stake in the network. Validators are responsible for validating transactions, creating new blocks, and maintaining the blockchain. They are typically required to put up a certain amount of collateral, which they risk losing if they are found to be acting maliciously or negligently.
PoA networks are designed to be faster and more energy-efficient than PoW networks, as they do not require the intensive computational work of PoW mining. They are often used in private blockchain networks, where the participants are known and trusted entities, or in public blockchain networks that require fast and efficient transaction processing.
Examples of blockchain networks that use the PoA consensus algorithm include Ethereum-based networks like Goerli and Kovan, as well as other blockchain networks like POA Network and Ethermint.
+-------------+
| |
| Authority |
| Nodes |
| |
+------^------+
|
|
+----------+----------+
| |
| PoA |
| Consensus |
| Algorithm |
| |
+----------^----------+
|
|
+-----------------+----------------+
| |
| Authorized Validators |
| |
+-----------------^----------------+
|
|
+--------------+--------------+
| |
| Transaction Validation |
| and Block |
| Production |
| |
+-----------------------------+
In this diagram, the PoA blockchain network is made up of Authority Nodes, which are known and trusted entities that participate in the consensus process. These Authority Nodes are responsible for validating transactions and creating new blocks, with each block being signed by one or more authorized validators.
The PoA consensus algorithm ensures that the network is secure and trustworthy by relying on the reputation and identity of the Authority Nodes and the authorized validators, rather than the computational power of nodes like in the PoW algorithm. The authorized validators are selected based on their identity and reputation, and are required to put up collateral as a guarantee of their good behavior.
The PoA consensus algorithm is designed to be fast and efficient, making it a good choice for private blockchain networks or public networks that require fast transaction processing. The authorized validators validate transactions and create new blocks quickly, ensuring that the blockchain network is always up-to-date and secure.