Microsoft, hot off the news that they are partnered with the much discussed Bakkt exchange headed by the owners of the NYSE, has unveiled a new Ethereum proof-of-authority (POA) algorithm.
Microsoft's new algorithm, which it announced on its company blog, built on its cloud computing platform Azure, is modeled on the proof-of-work (POW) algorithms which are now used for validating mining exchanges. When mining for crypto, POW algorithms ensure validity of exchanges and the security of the blockchain by ensuring metrics which confirm the computationally expensive procedures that make up crypto mining have actually been performed in reality.
The proof-of-work algorithm is what makes mining competitive, and is what adds new blocks to a blockchain. Microsoft's POA algorithm would be used in networks comprised only of members who trust each other and are existing in network enviornments where the 'the underlying ether has no value,' like private/consortium networks and dApps.
This new algorithm is essentially an abstraction of known POW algorithms which makes the validation process more efficient and streamlines it for blockchains that aren't designed for the transfer of monetary value.