Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice.

While the world of blockchain advocates for security and transparency, we can’t forget about transaction speed. The transaction per second, or TPS, plays a pivotal role in assessing a blockchain’s ability. It impacts many things that contribute to the utility of blockchain networks. There are so many things crypto enthusiasts discuss such as market prices and new features, that transaction speed usually takes a backseat. Don’t underestimate the importance of TPS.

Table Of Contents
  1. What is Transaction Per Second (TPS)
  2. Blockchain Transaction Per Second Compared
  3. Potential TPS Drawbacks
  4. Conclusion

What is Transaction Per Second (TPS)

In simple terms, the transactions per second (TPS) are basically the number of transactions blockchain networks can process in one second. TPS can be equated to a blockchain’s efficiency and speed. So ideally, you’d want a blockchain with high TPS.

Does TPS Matter?

You’re probably thinking, faster is always good, but some people may be perfectly fine settling for a blockchain they’re used to but has a lower TPS. TPS matters not only for speed and efficiency but also for other reasons such as:

  1. Scalability solutions – Blockchain networks are meant to be used by millions, but this can be a problem if the TPS is low. The blockchain won’t be able to handle large-scale transactions (especially during peak hours) and impact its scalability.
  2. Reducing network congestion – Following the above point, a slow blockchain will have network congestion, whereas one with high transaction speeds can process transactions much more quickly and reduce the chances of clogged traffic.
  3. Lowering transaction fees – A way around network congestion on low TPS blockchain networks is to pay higher transaction fees for prioritization. Higher TPS blockchains can mitigate this issue because they perform transactions more smoothly.
  4. Competitive appeal – A primary goal for cryptocurrencies is adoption, and it can be exceedingly difficult for a blockchain network that has low TPS. When companies are looking to adopt crypto, TPS is a key factor they look at. In most cases, companies prefer a blockchain network with high TPS.
  5. Improved UI – Smooth transactions done at fast speeds will greatly improve the user’s experience.

Blockchain Transaction Per Second Compared

There are daily new improvements being made in the crypto world, so a blockchain network that had a low TPS can have the potential to improve and vice versa. However, here are the top blockchain transaction speeds and the fastest ones ranked.

Top Blockchain Networks TPS

Just for comparison so you get an idea, Visa, which is one of the world’s most widely accepted payment methods, has a TPS of around 1,700. It’s a centralized system and a standard that decentralized networks are working hard to surpass.

Potential TPS Drawbacks

While a high TPS is generally more revered, it is not the only determining factor for a blockchain’s superiority. Some blockchains may pad their TPS numbers a bit, and sometimes these lightning-fast speeds come at a sacrifice to other aspects of the blockchain technology. Certain techniques that implement fast transaction rates could compromise security.

Other potential drawbacks include:

  1. More centralization – A high TPS might mean more centralization. In order to process transactions quickly, some networks might rely on a smaller number of powerful nodes, which can lead to a more centralized system.
  2. Blockchain bloat – High TPS could mean a blockchain generates much more data, leading to rapid growth. This is referred to as blockchain bloat, which can reduce a chain’s performance and potentially lead to more centralization.
  3. Data verification – Because everything is happening so quickly, nodes can have a challenging time keeping up with data verification and transaction validation, which could lead to security risks.

Conclusion

Blockchain technology is still a relatively new sphere, so while how many transactions a blockchain can handle per second is important, it’s crucial to understand that there are still drawbacks. The key for blockchain developers is to find the right balance between efficiency and security. Although it isn’t perfect yet, TPS is one of the most important aspects of cryptocurrency evolution.

Related Articles:

What is a Crypto Wallet? & Which is the best Crypto Wallet?
What are Permissioned Blockchains – An Intro to Blockchain Basics
What are Altcoins? The Alternative to Bitcoin

Sources:

https://academy.binance.com/en/glossary/transactions-per-second-tps
https://www.miamiherald.com/software-business/article274817896.html

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