Microsoft is going full speed ahead with their entry into cryptocurrency... but miners aren't coming with them.

Last week Microsoft announced their role in a partnership with the owners of the New York Stock Exchange (NYSE) and Starbucks and the launch of the new cryptocurrency based company Bakkt (that story here)

Today, Microsoft unviled their new Ethereum Proof-of-Authority Algorithm, which works along side Azure’s original proof of work algorithm (Azur is Microsoft's cloud computing service).

"We’ve had great traction with our support of Ethereum on Azure. The existing Proof-of-Work solution has been deployed tens of thousands of times across a variety of industry verticals. Through the extensive development on our platform, we’ve received great feedback from the community that has helped us shape our next Ethereum ledger product. I’m excited to announce the release of Ethereum Proof-of-Authority on Azure.

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." says Microsoft Azur engineer Cody Born.

However it's important to note - this algorithm is for use by larger enterprise operations looking to run decentralized applications (dApps) built on the Ethereum blockchain, but unlike typical dApp's which use miners as their consensus participants, the miners here are replaced with a network of 'known and trusted' participants for confirmations.

Sounds like bad news for miners at first, but in reality they simply aren't needed for dApp's being used by companies internally “In private/consortium networks the underlying ether has no value.” added Born. So it's not as if mining rewards that were going out to miners are now going to themselves, there's simply no mining fees at all in this case.

Author: Oliver Redding
Seattle News Desk