How does proof of authority (PoA) consensus algorithm work in the world of digital currencies?

1 answers

• Fadak AlqassabJun 23, 2025 · a month ago
  In the world of digital currencies, the proof of authority (PoA) consensus algorithm plays a crucial role in maintaining the integrity and security of the blockchain. Unlike proof of work (PoW) or proof of stake (PoS), PoA relies on a set of trusted authorities to validate transactions. These authorities are selected based on their reputation and expertise, ensuring that only reliable validators have the power to add new blocks to the blockchain. By eliminating the need for resource-intensive mining or staking, PoA offers faster transaction confirmations and higher scalability. However, it also introduces a level of centralization, as the authorities have the ultimate decision-making power. Despite this trade-off, PoA is well-suited for certain use cases where efficiency and trust are paramount, such as private or consortium blockchains.
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