Proof of Authority (PoA)
Overview
Proof of Authority (PoA) is a reputation-based consensus algorithm that delivers high performance and fast transaction confirmation times. It is particularly popular for private networks, consortium blockchains, and enterprise applications where absolute decentralization is secondary to speed.
How It Works
In a PoA blockchain, block producers are not selected based on computational power or stake, but rather on their real-world identity and reputation. These validators are pre-approved entities whose identities are verified on-chain. If a validator acts maliciously, their authority is revoked, and their reputation is ruined.
Key Trade-offs
PoA is highly scalable, requiring negligible computational energy and achieving high transaction throughput. However, the system is centralized around the approved validators, making it less suitable for public, permissionless networks where trustless censorship resistance is required.