● Intermediate Crypto Basics

Transactions Per Second Tps

8 minutes 8 months ago

Addressing transaction speeds is just one of the challenges cryptocurrencies aim to resolve. Unlike conventional banks, which might take several days or weeks to finalise payment, blockchain networks can execute an equivalent transaction in less than sixty minutes. If you’re interested in this aspect, let’s look into the Transactions Per Second (TPS).

What is Transactions Per Second?

Largely, the concept is fairly self-evident. As the name implies, Transactions Per Second (TPS) refers to the number of transactions the network can handle in a second. This figure fluctuates across different networks, with each blockchain network setting its TPS.

Centralised services like VISA can efficiently process a range of 1500 to 2000 transactions per second. This efficiency places them significantly ahead of Bitcoin and numerous other cryptocurrencies. Meanwhile, the decentralised philosophy of cryptocurrencies has impacted their ability to achieve a low transactions-per-second rate.

Why is TPS Important?

TPS shows the network’s ability to gauge its real-time transaction processing capacity and potential for expansion to facilitate novel use cases and more users. Scalability tends to exhibit an inverse correlation with a blockchain network's other two fundamental attributes: decentralisation and security. Striking a harmonious balance among all three is a complex endeavour that drives ongoing innovation in the blockchain ecosystem.

The blockchain trilemma postulates that crafting a blockchain that simultaneously achieves optimal scalability, security, and decentralisation levels is a formidable task. Typically, one of these attributes is compromised to bolster the others. For instance, Bitcoin showcases robust security and decentralisation but with limited scalability.

Certain blockchains surpass others in terms of TPS, but this achievement can sometimes come at the expense of other indispensable traits like security or decentralisation.

Header

TPS can be determined using the following equation:

TPS = (block size/transaction size) / block time.

Block time: This parameter establishes the speed at which the blockchain confirms transactions. In the case of Bitcoin, the average block time is around 10 minutes, leading to the network processing roughly seven transactions per second.

Block size: This parameter denotes the volume of transaction data a blockchain block can accommodate. The magnitude of the block size also influences the number of individuals required to maintain a full node. Larger blocks necessitate a greater number of participants for full node operation.

Transaction size: The amount of data transmitted with each transaction varies significantly across blockchains. A basic Bitcoin transaction can span as little as 226 bytes or expand to as much as 500 bytes. Greater transaction sizes correspond to prolonged processing durations within the blockchain.

Consider a blockchain with a 1MB block size, an average transaction size of 1kb, and a block time of 30 seconds. In this scenario, the TPS for the blockchain network calculates to 33 TPS.

Blockchains with High TPS

Solana (SOL) is the fastest and most scalable blockchain. According to its whitepaper, Solana strives to achieve a staggering 710,000 TPS. But during testing, the project achieved 65,000 TPS, with developers speculating it could reach up to 400,000 TPS. It also boasts a block finality time of 21-46 seconds, starkly contrasting Bitcoin's minimum one-hour requirement for the same task.

Ethereum is a noteworthy player in the race for speed and scalability. Following its transition to Ethereum 2.0, the project escalated its peak TPS to 100,000, a remarkable improvement from its previous 12-15 TPS range. This achievement is remarkable given Ethereum's extensive popularity and use cases, necessitating a high TPS to manage traffic and micro-transactions from smart contract-based dApps.

Despite deviating from a traditional blockchain in favour of its proprietary RippleNet framework, Ripple warrants attention. Despite criticism surrounding its centralisation, RippleNet purportedly handles up to 50,000 TPS—a notably superior figure to Visa or SWIFT.

Note that possessing a high TPS doesn't inherently signify superiority over blockchains with a lower TPS. Many blockchain projects tout elevated TPS figures, often achieved at the expense of other critical network facets. For instance, while a blockchain with 10-20 nodes might surpass Bitcoin's performance at a given moment, such a scenario lacks the decentralised or distributed nature synonymous with Bitcoin's thousands of globally dispersed nodes running its software.

The Bottom Line

The crypto sector has pursued higher speed and scalability for years to match the expanding demand. As the adoption of cryptocurrencies keeps soaring, the extent to which TPS might need to escalate to meet future demand remains uncertain. In light of this, the journey to attain heightened speed and TPS may persist in the years ahead. It's reassuring that the crypto sector can cater to global requirements, signifying its readiness for universal adoption.

Share this article

Further Reading


● Intermediate Technology
Web3 Tutorial: The fundamentals of Web3
Cryptography is the study of encrypting and decrypting information - In this article we talk about cryptography and its role in cryptocurrency.
10 minutes 13 days ago
● Intermediate Technology
What is Web3 and What Does it Mean for Crypto?
Why is there such a buzz around Web 3.0 in the crypto community? Learn what it is and how it could shape the future of the internet and cryptocurrency.
8 minutes a year ago
● Advanced Coin Highlight
Polygon Blockchain Explained: A Beginner’s Guide To MATIC
Polygon is a Layer 2 scaling solution for the Ethereum blockchain. Here we explain what it is, how it works, and all its special features.
8 minutes 6 months ago

Join 2.5 million other users
and start earning!