Understanding Cryptocurrency Transaction Speeds
There are multiple online claims with regard to cryptocurrency transactions speeds. There is a difference between the average transaction speed, the theoretical transaction speed, the actual transaction speed and the claimed actual transactions speed.
- Average transaction speed — What the coin is currently handling on average.
- Actual transaction speed — What the coin can handle per current mathematical calculations.
- Theoretical Transaction Speed — What the coin will handle when the stars align.
- Claimed Actual Transaction Speed — What the coin can handle as claimed by the development team without any evidence or network volume.
The majority of coins are claiming 50,000 theoretical transactions per second (ttps) and upwards right now. But it is more useful to analyze actual and average transaction speeds using best estimates, as opposed to what is claimed by the company or community putting the cryptocurrency forward.
However, it should also be borne in mind that it is nearly impossible to test the maximum limit for a network with real time traffic. Because when it goes over the limit, the network will crash, leaving behind many dissatisfied customers.
What are Transactions Speeds?
There are two general criteria in analyzing transaction speeds for a given cryptocurrency. One is the time it takes to get from one wallet to the other — the confirmation time. And the other is the amount of transactions per second (tps), which is a key figure in determining the scalability of a particular cryptocurrency.
Transactions speeds may vary due to network congestion and the fee provided when making the transaction. So it is not quite fixed in stone, and there is much conflicting information on actual transaction speeds. It is an area that is constantly evolving with new features and additional users on the network. Some coins have test networks only, and make large claims. Other have main networks, meaning they have real traffic.
Confirmation times are an average. So a coin that has a 60 minute confirmation time can take 10 minutes or two hours to confirm. This will depend on the variance of the coin. Litecoin has a high variance, so the time taken for any given transaction is likely to be further away from the average than a coin with a lower variance, such as DASH.
Complications with Cryptocurrency Transaction Speeds
But transactions speeds are generally debatable, depending on the exchange data and also due to variance and different features which can speed up or slow down the time. Depending on the time period used from different sources, the actual transaction speed may vary. But these times are useful for a comparison even if there are multiple confounding variables.
With regard to transaction speeds, many cryptocurrencies also have fixed limits. The limit for Litecoin is 56 tps and the limit for Bitcoin is 7. But there are added features and forks that can remove these limits if the community votes for it. There are a number of moving variables in terms of transaction times, scalability, fees and decentralization. It is often a trade-off between these. This is what the block size debate was about with regard to Bitcoin, which led to the creation of Bitcoin Cash. Increasing the block size means a larger max transaction speed so the network can scale better.
Cryptocurrency Comparison List
The following list should give a good indication of the transaction speeds of various cryptocurrencies, and serve as an effective comparison. However, it is very difficult to get exact times in such a fast-moving field. There is often no official source aside from claims from the company, and the best way forward is to take a time stamp from a high volume exchange and work out the confirmation times and tps. Confirmation times are sourced from high volume exchange Kraken.
- Visa states it can handle 24,000 tps, based on IBM testing conducted in 2010. This figure is widely cited but has never actually been reached in real time. The company says that it can handle up to 56,000.
- PayPal can handle around 193 transactions per second. This figure is based off the total transactions processed per year and averaged out per second. The company has stated that it handled 450 tps on cyber Monday in 2015.
- Ripple can handle 1,500 tps and takes around 4 seconds to confirm. The team claims 50,000 tps.
- Stellar (a fork of ripple) can handle 1000 tps takes 2–5 seconds to confirm.
- Bitcoin Cash can handle 61 tps and takes 60 minutes to confirm.
- Litecoin can handle 56 tps with Segwit and takes 30 minutes to confirm.
- Bitcoin can handle 7 tps and takes 60 minutes to confirm. It currently averages 3 tps.
- Ethereum can handle 25 tps and takes 6 minutes to confirm. It currently averages around 15 tps.
- IOTA can handle 1500 tps and takes 2 minutes to confirm. However, real time stress tests show it is currently handling 3 tps.
- Monero takes about 30 minutes to confirm as per Kraken. Transaction speeds are unknown, though estimated to be around 4 tps.
- DASH can handle 28 tps and takes 15 minutes to confirm. Average tps is about 10(a much lower figure is claimed by the DASH team in terms of confirmation times).
Ripple is by far the best coin for scalability and current transactions speeds. It handles 1,500 tps and takes around 4 seconds to confirm. This is not debated within the community. Ripple is far ahead of the curve in proven transactions speeds. Nano and Nem claim they are capable of 7000 tps and 4000 tps respectively.
Note that in the cases of Litecoin and Bitcoin the transaction speeds are drastically reduced when the Lightning Network is used. So while the average transaction time for bitcoin may be 25 minutes, this may not be entirely accurate, and transactions can be completed in as little as 30 seconds.
Lightning Network is currently being adopted. To use this feature, BTC holders will have to have a lightning enabled wallet such as Zap. Ethereum also has Raiden underway, and Dash has an Instasend feature, where transactions can be complete in 4 seconds. So even the average transaction times may not be entirely accurate, because the majority of participants are not making use of certain additions which can dramatically reduce fees, confirmation times and increase tps.
It is also worth bearing in mind that Visa has had about 60 years to develop its network, and blockchain companies are likely to develop at a much quicker pace. This has already been demonstrated and there are many projects and features under development and being actively deployed.