Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

Blockchain: Proof of Authority (PoA)

Intro. 

Blockchain: Proof of Authority (PoA)

In the PoW the effort of mining gives security and validity to the network, while in the PoS it’s the guarantee of the greater stake, together with other details, to cover these functions.

There is a different type of consensus that is emerging in the Blockchain world: the Proof of Authority.

In 2017 Gavin Wood, Co-Founder and CTO of Ethereum, proposed precisely the PoA as a possible “natural” evolution of the PoW system of Ethereum itself.

Everything always starts from the “trilemma”.

Every Blockchain technology and every new or old consensus model must face the Blockchain trilemma: a network must be secure, decentralized and scalable. Today it is very complex to guarantee the 3 characteristics at very high levels, simultaneously.

The objective is and will always be to set them all to find the highest balance point by adopting various architectural, software and system solutions, testing in the field the various types of consensus and the effects they produce.

This is why one of the key working methods of the actors involved is to evaluate constructively the pros and cons that each consensus method produces in the field, not philosophically “theoretically”, but with a scientific approach “in practice and tangible ”.

PoA: identity as a “stake”.

In this case, the Proof of Authority (PoA) consists of a system in which the actors “put their identity” into stakes: it is clear, therefore, that they put their reputation at stake.

As in the PoS, validator nodes come into play in the PoA:

  • they must set their identities, which must be real, corresponding to those of everyday life, also confirming any additional qualifications and / or characteristics in relation to the rules introduced by the PoA variant in question;
  • successfully passed the initial filters, they become validators and can thus verify blocks and transactions;
  • once the standard has been chosen for the approval of the validators, the standard one must be respected for all the others that will come later.

The reputation put into play on the same level as a coin stake of any type is the primary filter of this system: the selection process of the validators is as complete as the risk of inserting under-validated validators into the system will be low.

Pros and cons.

Since the validators are small, in numbers, compared to the other consensum systems, blocks and transactions can be verified with greater speed, thus creating a more scalable Blockchain system compared to the others.

The “visibility” factor of the validators is seen here as a virtue: every actor who is authorized, becoming a validator of the whole process, makes his identity visible to everyone, so everyone will know it.

Anyone can therefore affect the reputation of the validator himself, if he has attempted to defraud the system. This reputation will be compromised both at the digital level (in the Blockchain circuit) and at the level of real life, since it is permanent in Blockchain.

In the Blockchain trilemma, of course, the PoA seeks to give greater weight to scalability, greatly increasing network performance, but lowering the level of decentralization (compared to other networks such as PoW), making it especially attractive for systems that need a greater “control” on the safety of the chain carried out through the verification of identities.

In Bitcoin, for example, the big limits of scalability are joined by a high decentralization and network security. This is why in Bitcoin, for example, systems such as the lightning network are being introduced, to perform some “off-chain” processes, trying to increase the scalability of the system.

From which necessity the PoA was born.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about it, you’ll do things differently.” – Warren Buffett

This sentence basically sums up the reason why the PoA was born: an important date was February 24, 2017, when Ropsten was the victim of a “Denial of Service” attack.

Ropsten was the public development environment used by Ethereum programmers to test Smart Contracts before running them on Ethereum’s main net: in a nutshell, it was a testnet.

Because of this attack, within a few hours, a new development testnet was created, based this time on the PoA, which was called Kovan.

Gavin Wood (Co Founder of Ethereum) coined the term PoW: “After the failure of Ropsten, it was clear that we needed a reliable infrastructure to help the development of Ehereum dapps in an inclusive and interoperable manner. “

The focal points.

As we mentioned earlier, validators are the fulcrum of the whole system, those who give life to consensus. They are then chosen with extreme care, precisely because of the role they will then have within the system.

  • Validators must provide their official identity, recognized in real life. The Blockchain must therefore be able to obtain real, truthful data;
  • the verification method chosen must be homogeneous and impartial, not corruptible (computationally), precisely to guarantee impartiality;
  • the validation standards, whether they are classic or accessories, must be high, precisely because the system works when it filters well from the beginning;
  • the validators must be both rewarded (economically) and subjected to a tangible and heavy deterrent element, in case they are not honest. This would guarantee freedom to become validators, with the certainty that in serious cases they would suffer both open public judgment and an economically tangible and heavy sentence;
  • while on the one hand the degree of decentralization is lowered, on the other hand the level of sustainability rises: there is no need for high hardware power to solve complex computational puzzles;
  • often in this type of system rules are inserted that do not allow the same validator to validate one or more consecutive blocks: this is one of the reasons for which the PoA is often considered more resistant to attacks 51%;
  • if on the one hand we speak of a permissioned network (we need to log in, authenticate, to access it), on the other hand it guarantees high performance and high standards of fault tolerance: only the validating nodes have the authority to “sign” transactions and blocks;
  • the validator nodes must guarantee their continuous participation: if a validator is seen as inactive by the system, the role can be revoked;
  • 51% attack in a consensum of this type is much more difficult to carry out: the attacker does not have to get 51% of the computational power, but the real control of 51% of the nodes of the network

Briefly: if the identity is the primary element required by a Blockchain network, the PoA could be seen as a promising solution.

Blockchain: the goal is “trust”.

In any context the Blockchain is applied, whatever the preferred type of consensum, whatever the accessory tools connected to it, the maximum goal that it strives to achieve is only one: trust.

The Blockchain is born, in fact, only and only to transmit confidence in those who use it tangibly, gaining advantages, without wondering “who can I trust?”.

The Proof of Authority develops on the basis of a concept that is as simple as it is acceptable for certain aspects: who can you trust most?

  • Can I trust 1 million people whose identities are unknown, who may not be properly competent in the matter and who use highly energy-intensive systems?
  • Can I trust a smaller group of subjects considered authoritative on the subject, on which hanging rules of demonstrated competition with rewarding and deterrent effects, which are public in the eyes of the users and which know each other the identities of each of them?

Let’s take an example: the Proof of Work bases its system by cutting the problem of trust at its root. The system thus described is extremely decentralized, based on open competition between miners.

By building a trustless system, the user tends to have faith in it, even if, digging deep, it is possible to come to know that the vast majority of computing power is in the hands of very few mining pools, which was certainly not a will or goal of the Bitcoin PoW creator.

A highly decentralized system is tending towards centralization as it is no longer economically viable to be used by miners as originally. In the future new scenarios could develop, but currently few can decide on many computationally.

The PoA bases its system not on protecting itself by inserting millions of sentinels, but giving a hundred sentinels technologies (weapons) better to protect the “fort”.

These sentinels, according to the PoA rules, will have a recognizable identity, rewarding and deterrent effects and will have to comply with computational rules built to prevent cases like identity simulation or agreements between validators.

This is why the PoA describes itself as “leaner”, more scalable, based on the recognition of identity, therefore recognizable by national or supra-national entities, fully usable even by the latter, “compliant” with the rules that every citizen – company – institution – Nation – follows daily.