Blockchain is a continuously updated list of records, referred to as “blocks,” which are linked to each other using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and data on a transaction. Blockchains are used to keep records of cryptocurrency transactions for systems such as bitcoin.
Proof of authority, or PoA, is an algorithm used with blockchains to deliver speedy transactions through a consensus mechanism based on identity as a stake. In PoA-based cryptocurrency networks, transactions and blocks are validated by approved accounts, held by users known as validators. Validators run software that allows them to put transactions into blocks.
The process is automated and does not require validators to be constantly monitoring their computers. It does, however, require ensuring that the computer, the source of the authority, remains uncompromised.
The term “Proof of Authority” was coined by Gavin Wood, co-founder of Ethereum, an open-source, public, blockchain-based distributed computing platform and operating system. (Wood is also the co-founder of Parity Technologies, a company which builds core blockchain infrastructure.)
Users in the PoA system earn the right to become validators, and there is an incentive to retain the position that they have gained. By attaching a reputation to identity, validators are incentivized to uphold the transaction process, as they do not wish to have their identities attached to a negative reputation.
Proof of Authority contrasts with other validation processes referred to as Proof of Stake and Proof of Work.
“The use of Proof of Work mining was initially proposed to establish that a given block had required a certain amount of work to be mined. This allowed users to simply pick the longest valid chain with the highest amount of work as the correct chain.
However, Proof of Work is extremely inefficient in terms of energy consumption. This makes it expensive and incentivizes miners to centralize the hashing power. So, instead of pushing us towards a truly distributed network, these concentrated mining farms have become de facto authorities.
A Proof of Stake algorithm has nothing to do with mining. Instead, it is about validating. The specific actor responsible for the next block in the chain is determined by the Proof of Stake algorithm. In order to avoid overly concentrating this power, the algorithm must have some kind of randomness. At the least, voting shares must be distributed properly to avoid morphing into a centralized system.
In a Proof of Stake system, each validator must own some stake in the network. These stakes are bonded, which means that network participants deposit some money into the network using it as a collateral to vouch for a block.”
In a May 2018 interview, Siddig “Ziggy” Zeidan, a PoA developer evangelist, stated that there were only 17 PoA validators as of May 2018. So, the opportunity to establish Proof of Authority is wide open.
The steps to establishing one’s Proof of Authority in blockchain include: having a valid U.S. Notary license, being prepared to having some personal information publicly available (name, address and phone numbers), being a U.S. resident, being prepared to secure your network by maintaining your node and participating actively in all ballots and onchain governance decisions.