Proof of Authority

What is Proof of Authority (PoA)?

Proof of Authority (PoA) is a Sybil resistance mechanism used in blockchain networks to prevent fake or malicious actors from taking control. It is a type of consensus approach where pre-approved, verified validators secure the network and validate transactions.

Key characteristics of PoA

• Pre-approved validators: PoA relies on a set of pre-approved validators with verified real-world identities. Examples could include known companies, institutions, or individuals trusted by the network.

• Reputation matters: Validators stake their public reputation rather than cryptocurrency. Acting maliciously can lead to removal and damage to personal or organizational trust.

• Part of consensus: PoA ensures who can validate blocks, while consensus algorithms like IBFT, Aura, or Clique determine how validators agree on the blockchain state.

A PoA blockchain is like a private club with a strict membership committee. Only approved members can make decisions. This centralization allows faster, more efficient decision-making since members are known and trusted.

How Proof of Authority works

1. Validator selection: Network operators vet potential validators based on identity, reputation, and trustworthiness. This may include legal documentation, background checks, or industry credentials.

2. Block creation: Authorized validators take turns proposing and validating blocks according to a predetermined schedule or algorithm.

3. Transaction validation: Once a block is proposed, other validators verify its accuracy. Since validators are pre-approved and identifiable, the process is fast and straightforward.

4. Reputation at stake: Validators risk their credibility, not cryptocurrency. Misbehavior can lead to removal and real-world consequences such as loss of business partnerships or damage to professional standing.

5. No mining required: PoA does not require expensive hardware or significant energy, making it cost-efficient and environmentally friendly.

Selecting validators is like choosing a company’s board members: people with proven track records and something to lose if they make bad decisions. They don’t need the most tokens or the fastest computers, they just need to be trustworthy.

Benefits and drawbacks of PoA

Benefits:

• High transaction speed: Small, trusted validator sets allow blocks to finalize in seconds.

• Energy efficient: No mining or high computational work required.

• Low operational cost: Minimal hardware and no energy-intensive mining.

• Predictable block times: Predefined schedules make block creation consistent.

• Harder 51% attacks: Compromising validators requires breaching their identities and reputations, not just computational power or token holdings.

Drawbacks:

• Centralization: Fewer validators means lower decentralization.

• Trust requirements: Users must trust the validators’ integrity. Collusion (when validators secretly work together for unfair advantage) or other malicious behavior is a risk.

• Censorship risk: Known validators can be pressured by external actors to censor transactions.

• Limited transparency: Validator selection may not be fully open to all users.

• Vulnerability to authority corruption: Compromised entities controlling validator selection threaten network security.

PoA prioritizes speed and efficiency over decentralization. It works well for trusted networks but requires faith in the validators’ honesty.

Common use cases

• Private and consortium blockchains: Enterprise networks with known partners (e.g., supply chains, interbank settlements).

• Permissioned networks: Internal organizational systems prioritizing efficiency and cost over public access.

• Test networks: Simple PoA testnets allow developers to test applications without staking or mining requirements.

• Supply chain management: Validators are known companies with reputational stakes in accurate tracking.

• Identity verification systems: Networks where verified identities are essential.

• Public blockchains with specific goals: Examples include VeChain, which uses PoA for enterprise adoption and supply chain efficiency.

PoA is like a board meeting compared to a public town hall. Faster and more efficient, but limited to trusted participants.

PoA vs PoW vs PoS

The table below highlights the differences between three different types of Sybil resistance mechanisms: Proof of Authority (PoA), Proof of Work (PoW), and Proof of Stake (PoS).

Feature	PoA	PoW	PoS
Validator selection	Pre-approved, verified identities	Anyone with computing power	Token holders who stake
What’s at stake	Reputation	Electricity and hardware	Locked cryptocurrency
Energy consumption	Very low	Very high	Low to moderate
Transaction speed	Very fast (seconds)	Slow (minutes)	Fast (seconds–minutes)
Decentralization	Low	High	Moderate (depends on token distribution)
Trust required	High	Low (trustless)	Low (crypto-economic security)
Setup cost	Low	Very high	Moderate to high
Best for	Private/enterprise networks	Public, censorship-resistant networks	Public networks balancing efficiency and decentralization

Each Sybil resistance mechanism makes different trade-offs, often described as the blockchain trilemma. PoA sacrifices decentralization for speed and efficiency, PoW sacrifices efficiency for maximum decentralization, and PoS tries to balance both but requires token distribution.

Using "proof of authority" in English

Here are common ways the term "proof of authority" appears in blockchain contexts:

Describing consensus mechanisms

When explaining how a blockchain validates transactions and secures the network through trusted validators.

Structure: [Blockchain] uses Proof of Authority + explanation of validators

VeChain uses Proof of Authority with 101 Authority Masternodes that validate transactions.

Our enterprise blockchain runs on Proof of Authority where each partner company operates a validator node.

Comparing blockchain types

When discussing trade-offs between different consensus approaches.

Structure: Proof of Authority + comparison to other mechanisms

Proof of Authority is faster than Proof of Work but more centralized.

We chose Proof of Authority over Proof of Stake because we need known validators for compliance reasons.

Explaining validator requirements

When describing who can validate blocks and what they risk.

Structure: In Proof of Authority + validator characteristics

In Proof of Authority, validators stake their reputation rather than cryptocurrency.

Proof of Authority networks require validators to have verified identities.

Discussing use cases

When explaining why certain blockchains use PoA for specific purposes.

Structure: [Use case] benefits from Proof of Authority + reason

Supply chain applications benefit from Proof of Authority because speed and known participants matter more than decentralization.

Proof of Authority works well for private blockchains where all parties are trusted business partners.