Throwing up the challenge and facing up to the large bitcoin community was Gerald Fenech when he claimed in his Forbes article that the Principle deployed in bitcoin PoW did not hold out technically and was in its real sense a ‘flaw.’
The world of cryptocurrency is actually a complex network of technical processes which evolve to deliver solutions which are steeped in concepts such as immutability, transparency and decentralized distribution of ledgers. Hence, time and again there are deeply technical aspects which are debated amongst the community members to offer alternative solutions which could be technical better feasible or take the platform forward to a different level.
One such technical debate is PoW (Proof of Work) vs. PoA (Proof of Authority).
Historical Background to bitcoin
It is time for investors and the bitcoin community to identify that at the time of the launch of this super-power crypto coin in 2009 by Satoshi Nakamoto the intent was to offer as a reward the first ‘transaction’ evaluator on the block. Thus the concept followed was Proof of Work. There is a school of thought among bitcoin purists that this was a concept which was originally developed back in 1977 by Adam Back’s and simply known as Hashcash.
The current argument is that the use of PoW is only a documentation of ‘challenges’ which eventually will be fatal. The particular perception of fatal in this case is that the process of validating blocks on the principle of PoW consumes high quantities of computing power, energy and is also environmentally harmful, due to the mining process. It is very similar to the carbon footprints created by the data storage industry where servers guzzling massive power are cooled down using water and other alternatives.
Hence, Fenech argues that the issue before PoW currency mining is that there are high investments required in terms of the hardware as well as the operating processes requiring large areas or real estate apart from the infrastructure itself being proofed for disaster and risk management in bigger mining centers. The formation of these pooled resources at the mining farms reveals that there is centralization of resources.
PoA is the alternative
Fenech argues, in this poorly reasoned presentation that PoA is a better solution in such centralized mining and coin production centers. He suggests that PoA becomes the protocol which will ensure that “A validator has to be personally identified and verified on the platform, making them a trusted node. Users who confirm their identity earn the right to validate blocks on the chain. The crypto rewards they receive are public, as are malicious actions undertaken; this means that individuals have their personal reputation at stake when acting to secure the network.”
However, critics are quick to point out that PoA is limited in its approach as it does not focus on computational power, during the process of mining for the cryptocurrency.