Will Microsoft’s Proof-of-Authority Network Drive More Adoption?

Will Microsoft’s Proof-of-Authority Network Drive More Adoption?

By Benson Toti - min read
Updated 21 March 2023

Microsoft on Tuesday announced a blockchain product targeted at enterprises. It is built on the Ethereum blockchain but does not does not use a proof-of-work algorithm. Instead it uses a proof-of-authority and therefore does not require mining.

As the name infers, transactions in a proof-of-authority blockchain are verified by approved accounts. Validators gain their position by right, owing to their reputation and are motivated to maintain this position.


“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. To accomplish this, we’ve built an abstraction which allows each consensus participant to delegate multiple nodes to run on their behalf,” Cody Born of Azure explained in a blog.

Proof-of-work networks on the other hand are commonly used in open networks where participants do not trust each other.

Microsoft’s service dubbed Azure is targeted for very specific niche uses in enterprise environments.

In a PoA network, members can also delegate their authority to other members. Authority can also be delegated when a participant goes offline.

PoA networks such as these can be deployed within a short time. In the case of Azure, it takes only a few minutes to deploy the blockchain network.

Smart contracts

Microsoft has also allowed the ability for developers to write smart contracts on to the network using various programming languages including C and C + +.

The service also comes with Azure Monitor to track node and network statistics.

If all goes well, the product could spur more adoption of Ethereum at both consumer and enterprise levels.

More and more established firms are showing enthusiasm towards the technology including the likes of JP Morgan.

In enterprise environments, the technology can find application especially in areas such as employee remuneration, smart contract agreements or even supply chain management.

One advantage with PoA networks is that it does not require huge amounts of computing power compared to PoW networks. This means it can save on huge electricity costs.

Some do not however consider PoA networks as truly decentralised. The entity behind them is usually charged with securing its network unlike PoW networks where thousands of anonymous computers verify transactions.

“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,” Cody Born, Software Engineer at Azure wrote.