How Does PoA’s Reliance on Identity Differ from PoW’s Reliance on Computational Power?
Proof-of-Authority (PoA) relies on the known identity and reputation of the validators, who are pre-selected and explicitly trusted. Security is maintained by the risk of reputational damage or legal penalty for misbehavior.
Proof-of-Work (PoW) relies on anonymous participants expending computational power to solve a complex puzzle. Security is maintained by the high cost of acquiring enough computing power to execute a 51% attack.
PoA is permissioned; PoW is permissionless.
Glossar
Anonymous Participants
Access ⎊ Anonymous Participants interact with decentralized exchanges and derivative protocols utilizing pseudonymous addresses, obscuring their true identity from the general ledger visibility.
Energy Consumption
Footprint ⎊ The energy consumption associated with securing a proof-of-work blockchain represents a significant external cost factor that increasingly influences institutional adoption and regulatory scrutiny of the underlying asset class.
Power
Influence ⎊ Within cryptocurrency, options trading, and financial derivatives, influence transcends mere market movement; it represents the capacity to shape expectations and, consequently, asset valuations.
PoA
Mechanism ⎊ Proof of Authority (PoA) is a consensus mechanism where transactions are validated by a limited number of pre-approved, trusted validators rather than through competitive mining.
Computing Power
Resource ⎊ In Proof-of-Work systems, computing power represents the total aggregated hash rate contributed by miners to solve the cryptographic puzzle required for block validation.