Microsoft Azure announced on its blog on Tuesday the launch of a platform based on Ethereum, which replaces the Proof of Work (PoW) protocol with Proof of Authority.
Cody Born, a software engineer at Azure, Microsoft’s cloud computing platform, explained in the report that the PoW protocol, used by the Bitcoin and Ethereum blockchains, is based on computation costs for self-regulation of these networks and to allow open participation. Proof of Authority, on the other hand, does not require such costs and is more appropriate for private networks.
Proof-of-Work is a Sybil-resistance mechanism that leverages computation costs to self-regulate the network and allow fair participation. This works great in anonymous, open networks where competition for cryptocurrency promotes security on the network. However, in private/consortium networks the underlying ether has no value. An alternative protocol, Proof-of-Authority, is more suitable for permissioned networks where all consensus participants are known and reputable. Without the need for mining, Proof-of-Authority is more efficient while still retaining Byzantine fault tolerance.
Proof of Work is a mechanism of consensus in which the miners compete in the solving of cryptographic tasks and when a miner finds the answer he disseminates it to all the participating nodes. For this, the miners obtain cryptocurrencies as a reward.
The Proof of Authority protocol, on the other hand, is based on a set of Trust Nodes, known as “authorities,” which have the ability to secure the blockchain through the verification of transactions and to create new blocks. The validation of the operations in the new blocks is done similarly as in the PoW, but without mining.
In Proof-of-Authority, each consensus node on the network has its own Ethereum identity. In the case that a node goes down, it’s important that the member doesn’t lose consensus participation. Ideally, each member would run redundant consensus nodes to ensure a highly available network presence.
Microsoft, which directs its proposal of decentralized solutions on private blockchains, will use an expansion platform for Ethereum, Parity, which allows intelligent programming contracts in widely used languages such as C ++ and Rust. Although there are Microsoft projects which use the language created for Ethereum, Solidity, Born states that corporate clients consider this language to be challenging to manage.
Previously, Azure has served to develop innovative blockchain applications for different companies. One of them was Renault, which used it to create an app for vehicle maintenance. On the other hand, various financial institutions have also used it to improve their processes.