You’ve heard it time and time again, how blockchain networks in today’s crypto market are competing with one another to see who can produce the fastest transaction speeds. So, why is it important in the first place then and how does transaction speed differ between today’s top coins? Well, let’s go over what transaction speeds are to answer these questions and to understand why they’re so significant for the future of cryptocurrency.
This is not financial investment advice.
This article touch upon key aspects of transaction speeds and how they differ among today’s top coins.
In this article
What Are Transaction Speeds?
Before we can get into why or how transaction speeds vary between different blockchain networks in today’s industry, let’s first discuss what they are and their role in facilitating transactions. To start off, there are two primary ways to analyze transaction speeds for a given cryptocurrency: the time it takes to get from one wallet to the other — the confirmation time — and the amount of transactions per second (tps), which is a key figure in determining the scalability of a particular cryptocurrency.
Furthermore, it should be noted that transactions speeds can actually vary from blockchain to blockchain due to network congestion and the fee provided when making that transaction. Resultantly, there is a ton of conflicting information regarding actual transaction speeds along with some networks promising to achieve insanely fast transaction speeds that haven’t been confirmed, so be sure to take every piece of news surrounding transaction speed updates with a grain of salt.
Also, confirmation times are recorded as an average, so a coin that is known to have a thirty minute average confirmation time can confirm a transaction in ten minutes or an even an hour. This will all depend on the variance of the coin, along with a few other factors that can drastically influence how fast your transaction is confirmed. All in all, each blockchain network strives to provide the fastest confirmation time to increase their transaction speeds.
Transaction speeds can be assessed by determining the time it takes to get from one wallet to the other or by figuring out how many transactions per second (tps) the network can handle. These times vary from network to network and each coin aims to have the fastest transaction speed.
What Affects Transaction Speed
There are several factors which determine transaction speed for a given network, which is usually debatable since things like exchange data and general variance can speed it up or slow it down. It also depends on the time period used from different sources, which can also cause the transaction speeds to vary.
The biggest aspect of what affects transactions speeds for many cryptocurrencies is their fixed limits. Coins like Bitcoin and Litecoin (and pretty much any other top coin) have limits for how many transactions per second they can execute at a given time, sparking many heated debates between developers and users across the crypto world. However, developers can implement forks to get around these limits if there is enough support and the entire community can reach a consensus, which is pretty rare considering all the tradeoffs.
For example, Bitcoin Cash emerged from a fork that was regarding the block size limit in Bitcoin. Increasing the block size means a larger max transaction speed so the network can scale better, which is what the block size debate was about with regard to Bitcoin. Remember, though, that each modification or fork which might increase the transaction speed or get rid of a fixed limit will also give up a tradeoff. So if someone tries to tell you that all forks are always good, remind them to be aware of the trade offs which include transaction times, scalability, fees and decentralization.
Transaction speeds vary depending on the blockchain network, but most networks have a fixed limit for transactions per second which restrict scalability. As such, developers turn to forks which can either get rid of a specific fixed limit or modify the transactions per second rate.
Current Crypto Transaction Speeds
So how do the top coins stack up against each other when it comes to transaction speed? Well, it’s important to remember that measuring transaction speed can vary based on several factors, but numerous online sources have consolidated the average transaction speeds and have ranked these networks based on these transactions per second statistics.
- Bitcoin: 7 TPS
- Bitcoin Cash: 61 TPS
- Ethereum: 15 TPS
- Ripple: 1,500 TPS
- EOS: 3,000 TPS
- IOTA: 1,500 TPS
- Stellar: 3,000 TPS
- Cardano: 257 TPS
Remember to take each of these rates with a grain of salt, as the average number of transactions per second varies considerably depending on numerous factors.
There you have it, we finally understand why transaction speeds matter so much when it comes to cryptocurrency scalability. As each blockchain network aims to beat its competitors by striving to handle the most transactions per second, they must also take into account each tradeoff which they risk losing to increase their TPS. Although average confirmation time is also used to assess the transactions per second, your transaction speed can be completely different than what it’s supposed to be. As long as you’re aware of what transactions speeds are and why they’re so significant, you’ll be in good hands regarding how much you understand about this. As always, happy investing!
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