Since the initial blockchain transaction on the Bitcoin network, the cryptocurrency industry has seen significant development. Other consensus mechanisms with alternate strategies for achieving consensus inside a blockchain system were developed in addition to the well-known Proof of Work and Proof of Stake algorithms.
The most dependable and secure consensus algorithm currently in use is the PoW algorithm utilized by Bitcoin. It is not truly scalable, though. Transactions per second (TPS) speed for blockchains built on PoW, including Bitcoin, is constrained. Such a restriction is caused by the fact that Bitcoin relies on a distributed network of nodes that must come to an understanding and concur on the blockchain's present states. This implies that the majority of network nodes must verify and approve a fresh block of transactions before it can be confirmed. Therefore, Bitcoin's decentralized nature limits its ability to be employed on a bigger scale in addition to offering a safe and trustworthy economic system.
Bitcoin typically performs worse than Proof of Stake blockchains in terms of the number of transactions per second. Although there is a difference, it is not very noticeable, and PoS networks were unable to fully address the scalability issue.
Because it can handle far more transactions per second, the Proof of Authority is currently being implemented as a more effective substitute in this situation.
- Limitations of P.O.A
It is believed that the PoA mechanism forgoes decentralization. Therefore, one could claim that this consensus algorithm model is basically an attempt to improve the efficiency of centralized systems. While this makes PoA an appealing option for big businesses with logistical needs, it does raise some concerns, particularly in the context of cryptocurrencies. PoA systems do have a high throughput, but when things like censoring and blacklisting are simple to implement, parts of immutability are called into doubt.
The fact that anyone can see the identities of PoA validators is another frequent complaint. The counterargument to this is that the only people qualified to occupy this position would apply to become a validator (as a participant who is well-known to the public). The identity of the validators may still be manipulated by outside parties if they were known. For instance, a rival may attempt to get publicly recognized validators to engage in dishonest behavior in order to undermine a PoA-based network from within.
Each PoW, PoS, or PoA has distinct benefits and drawbacks. The cryptocurrency community is fully aware of the need of decentralization, and PoA, as a consensus technique, compromises decentralization in order to achieve high throughput and scalability. The fundamental characteristics of PoA systems stand in sharp contrast to how blockchains have operated up to this point. PoA, a developing blockchain solution, meanwhile, offers an intriguing strategy and cannot be ignored. It may be suitable for private blockchain applications.
https://academy.binance.com/en/articles/proof-of-authority-explained