Blockchain Industry Review - Issue 7, September 2021

Page 32

Article 7

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Blockchain Industry Review

Proof of Authority: The consensus mechanism for government blockchain applications BY: IOV42

Consensus mechanisms are the heart of any de-

gain traction, the limitations of these early consen-

centralised ledger technology (DLT). Leveraging

sus mechanisms began to show.

cryptography and decentralisation, consensus mechanisms dictate the security, performance, and environmental impact of any DLT. The first generation of mechanisms, Proof of Work (PoW) and, later, Proof of Stake (PoS), enabled the meteoric rise of Bitcoin and subsequent cryptocurrencies, sending off revolutionary ripples across our digital society. But as cryptocurrencies continued to

Early Challenges Take the case of Bitcoin and PoW, for example. Nobody in the crypto space needs to be reminded that Bitcoin often faces criticism over its energy-intensive PoW mining process (not to mention this shadow this negative reputation continues to cast across DLT writ large). PoW also poses limitations to a network’s ability to scale. PoS came along as a kind of