Proof of Authority (PoA)

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Proof of Authority (PoA) is a consensus mechanism used in blockchain technology that relies on the reputation of its participants, known as validators, to secure the network and validate transactions. Unlike Proof of Work (PoW) which requires significant computational power, or Proof of Stake (PoS) which relies on users staking cryptocurrency, PoA selects validators based on their established identity and trustworthiness. These validators are typically well-known entities or individuals who have a vested interest in maintaining the integrity of the network because their reputation is at stake.

In a PoA system, a limited number of pre-approved validators are authorized to create new blocks and confirm transactions. This makes the process significantly faster and more energy-efficient compared to PoW. PoA is often favored for private or permissioned blockchains where participants are known and trusted, such as in enterprise solutions or consortium networks. While it offers high throughput and scalability, its reliance on a small set of validators can lead to concerns about centralization and the potential for censorship if validators collude or are compromised.

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