In this age of one-click shopping, we want everything instantly. We’ve become used to virtually instant fulfillment for everything, ranging from digital goods to ordering physical items online. The crypto space is no exception. Investors, developers and ordinary users find faster transaction times more desirable because they create a more satisfying user experience. As a result, speed is an essential benchmark for determining the potential of a crypto project.
This article will look at the transaction per second metric, how to calculate it, and how many transactions per second ETHereum currently processes, as well as after the transition to a Proof-of-Stake consensus mechanism.
What Does Transactions Per Second (TPS) Mean?
In blockchain, transactions per second (TPS) is the number of transactions a blockchain network can process each second or the number of transactions executed per second. The term is quite popular in the crypto space, especially when talking about scalability.
How to Calculate Transactions Per Second (TPS)
To calculate TPS, you have to know the block time, the average transaction size, and the block size. Block time is the average time it takes to create a new block in a chain. Bitcoin’s is 10 minutes long. The average transaction size has to be calculated by yourself. The block size is the size of a block in a chain, in which, Bitcoin’s is 1 MB.
If we use an example, a block size of 1MB with an average transaction size of 1 Kb and a block time of 30 seconds will equate to a theoretical TPS of 33 [(1MB / 1Kb) / 30 seconds = 33].
Currently, Bitcoin’s TPS is 7, which when compared to other cryptocurrencies isn’t the quickest. Other crypto coins with higher TPS rates than Bitcoin include Ripple (1,500 transactions), Bitcoin Cash (60 transactions), Litecoin (56 transactions), and Dash (48 transactions)
How Many Transactions Per Second ETHereum Processes?
Like Bitcoin, the main reason for the ETHereum scalability problem is the network protocol that each node in the network has to process each transaction. Ethereum implements a slightly modified version of the proof-of-work (PoW) consensus mechanism.
In ETHereum, miners have to race to find the nonce to meet the target difficulty. Every node needs to verify that the miners’ work is valid and keep an accurate copy of the current network state. This greatly limits the transaction process capability and throughput of the Ethereum blockchain network. Currently, it can only process 12-15 transactions per second.
ETHereum is a global platform, and it plans to grow even further, which leads to the urgent need for more scalability. Ethereum 2.0 pledges to be capable of handling up to 100,000 transactions per second. In general, these significant differences can only be achieved through the implementation of the sharding model.
Bitcoin TPS and Fiat Money
Compared to PayPal, which can handle 193 transactions per second, and VISA, which can handle about 25,000 transactions on average, cryptocurrencies still have a long way to go before completely replacing such traditional ways of transacting.
Bitcoin’s decentralization makes it hard to scale up without sacrificing on some things. Achieving greater speeds comes at the expense of decentralization, which defeats the whole idea of a decentralized ecosystem, the coin and technology aim for.
While Bitcoin stands out as a top-performing network, many blockchain projects exist that boast high TPS numbers. However, a deep dive into their inner workings shows such high performance is due to some sacrifices to the network.
As more solutions keep coming up to help with the blockchain scalability problem, there is still more to learn about the technology. Currently, there is yet to be found a robust solution that achieves high TPS while retaining decentralization.
Closing Thoughts
Understanding how many transactions per second ETHereum is able to process at the moment gives you an idea of the industry benchmark as transaction speed is an essential metric in the widespread use and adoption of blockchain technology. Many newer blockchains have demonstrated significant capacity for scalability, which is an important requirement for the blockchains of the future.
However, the blockchains that will rule web 3.0 must maintain reasonable transaction speed without sacrificing security and decentralization.
