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Proof Of Authority (POA)
The PoA consensus differs from the PoS consensus in that it uses identity rather than the digital assets each user owns. Identity here refers to the certainty that validators are who they say they are, as shown by the correspondence between their personal identity on the platform and any formal documents presented by them. Thus, a person’s reputation is more valuable than their possessions.
Validators are pre-approved by a group of “authorities” to verify transactions and build new blocks. To be trusted, validators must adhere to a set of requirements. Two of these demands are that they use the same identity on the platform to register in the public notary database and follow the rules to ensure that the network functions properly. Furthermore, the process for choosing authorities should adhere to accepted norms to guarantee that all applicants have an equal opportunity to get selected for the privileged position.
Finally, authorities (around 25 entities) must disclose their identity to act in their position, for which they get rewarded in return. However, using the PoA algorithm for a decentralized network is challenging as only a few users hold power. The PoA consensus is therefore considered a private network solution instead of a public blockchain solution.