Transaction speeds are one of many real-world issues cryptocurrency looks to solve. When you need to send a payment, being aware of the transaction time is important. This tends to be vague within traditional banking systems, and even more so in international payments. However, cryptocurrency provides a solution.
While traditional banks sometimes require days to complete a payment, Bitcoin, for example, can perform the same transaction in under an hour. As a result, transaction speeds are a commonly emphasized feature of blockchain networks, and a metric crypto users and developers keep a keen eye on.
In this guide, we'll help you to understand what TPS means for a blockchain network and explore the top blockchain networks for TPS today.
TL;DR
Transactions per second (TPS) is a metric for measuring the performance of a blockchain network.
A high TPS is preferred for any blockchain network, as slow speeds can lead to network congestion and negatively impact the user experience.
Blockchains have both an average TPS and a maximum TPS. This is because network congestion, where many users are active on a network, can reduce a blockchain's speed, reducing its real-time TPS.
High TPS is influential in helping a network to scale, which is why some projects look at ways to increase the TPS of their own blockchain.
Solana, SUI, and BSC are among the highest performing networks for TPS today.
What is transaction per second (TPS)?
First, let’s discuss the definition of transactions per second. For the most part, the concept is rather self-explanatory. As the name suggests, it refers to the number of transactions that the network can process per second. The number of transactions per second varies from one network to another.
Meanwhile, blockchains have an average TPS and a maximum TPS. The average TPS is the time in which a blockchain takes to handle regular demand. However, at times of price surges or crashes, a lot more people are performing transactions at the same time. As a result, a blockchain must be able to meet this demand in order to avoid network congestion.
Despite being the largest crypto, Bitcoin also has the one of the lowest TPS count. It's worth noting that crypto’s decentralization ethos has affected the success of some projects when it comes to achieving low transactions per second. A centralized service such as VISA is reportedly capable of processing more than 65,000 transactions per second. This makes the service much more efficient than Bitcoin, as well as many other cryptocurrencies.
What does TPS mean for blockchain network speed?
The TPS count is closely connected to the speed of a blockchain network. As mentioned, TPS shows how many transactions can be performed in one second. Of course, TPS is not the only parameter used to determine the speed of the blockchain network. Another important aspect is the transaction finality time. This metric determines how much time is required to confirm a transaction.
How many transactions per second can Bitcoin perform?
Bitcoin’s average TPS is five, and although this figure varies, Bitcoin’s TPS can reach seven.
Since Bitcoin’s inception, there have been several proposals to increase the TPS. Some recommended increasing Bitcoin’s block size, while improvements to the network's consensus mechanism have also been touted. However, none of these propositions have been passed, as it’s the Bitcoin community's desire to keep the ecosystem untouched.
The lack of innovation is what keeps Bitcoin’s TPS low. Its average TPS remains at five even when there are blockchains that can achieve over 60,000 TPS comfortably. For example, since its inception, Ethereum was able to process up to 15 TPS. In September 2022, it received an upgrade that changed its consensus mechanism from Proof of Work to Proof of Stake. As a result, it's believed that Ethereum can handle anywhere from 20,000 TPS to 100,000 TPS.
Do blockchain transaction speeds matter?
We live in the age of information and speed. People expect transactions to be quick and seamless. The old saying of “time is money” has never been more relevant. With this in mind, many would agree that yes, transaction speed is important for the success of a network.
Now that the crypto industry has millions of users, it's even more important that a blockchain has a high TPS rate. The more people use cryptocurrency, the more transactions there are to process. If a network cannot process them quickly, this leads to network congestion. Essentially, network congestion means that transactions will have to wait long periods of time to get processed.
Whenever users make transactions, they also have to pay transaction fees, which tend to be fairly low. This also makes cryptocurrencies potentially more cost-effective than some traditional banking solutions. However, in the past, those who wanted faster transaction times started paying higher fees. The idea was that higher fees would make transactions more attractive to the miners, which it did.
Unfortunately, as more people realized that higher transaction fees meant faster processing, they all started paying more. This raised the cost of an average fee to the point where many couldn’t afford it. This is one example of why transactions per second is an important metric in any blockchain.
How does the transactions per second metric impact blockchain scalability?
Another concept worth understanding in the crypto industry is blockchain scalability. Essentially, as the usage of cryptocurrency and blockchain continues to rise, networks need to be able to handle the extra demand. That means increasing a network's TPS to be able to process more when necessary.
We mentioned that blockchains have an average TPS and a maximum TPS. The average TPS is the time in which a blockchain takes to handle regular demand. However, at times of price surges or crashes, a lot more people are performing transactions at the same time. As a result, the blockchain must be able to meet this demand to avoid network congestion.
Which cryptocurrency networks are the fastest?
Developers realized that Bitcoin would have scalability issues almost as soon as the asset first emerged. This is why many have started working on solutions that would improve the scalability of future cryptos. As years went by, thousands of new cryptocurrencies emerged, some of which created their own blockchains. Let's look at some of the fastest cryptocurrency networks for TPS today.
Solana
The fastest and most scalable network of all is believed to be Solana (SOL). According to its whitepaper, Solana should be able to achieve 710,000 TPS. However, this is only theoretical. During tests, the project easily reached 65,000 TPS and developers believe that it could achieve 400,000 TPS. According to CoinGecko, the network has recorded a maximum daily average TPS of 1,053.7. Meanwhile, the project also has a block finality time of between 21 - 46 seconds. As mentioned before, Bitcoin requires a full hour, at the very least, to achieve the same.
SUI
SUI launched its mainnet on May 3, 2023, bringing a permissionless Layer-1 blockchain to users. The same CoinGecko data mentioned above states that SUI achieves a maximum daily average TPS of 854.1, while the project claims to offer up to 125,000 TPS. The network features parallel processing by validators to maximize its throughput, reduce latency, and enhance scalability. Meanwhile, optimized transaction handling boosts efficiency further, through immediate completions and individual transaction validations.
BSC
BSC — also known as the BNB Smart Chain — is another network offering fast TPS, recording real TPS speeds of 378 in late 2023, according to CoinGecko. BSC offers smart contract functionality and is compatible with Ethereum Virtual Machine. As a result, BSC gives access to the wide variety of Ethereum decentralized applications (DApps) and tools available today.
What other high performance networks are there?
Another asset that is more than worth mentioning as one of the fastest and most scalable now is Ethereum. Following its upgrade to Ethereum 2.0, the project increased its maximum TPS to 100,000. Since its previous TPS was 12-15, this is quite an achievement. However, Ethereum is a very popular and widely used blockchain. As such, it definitely has the need for a high TPS to handle traffic and micro-transactions from smart contract-based DApps.
Another asset deserving of mention is XRP, a cryptocurrency created by Ripple. It doesn’t use a traditional blockchain but rather its own version called RippleNet. Ripple and XRP have been scrutinized for the project’s centralization, however, it's still one of the fastest networks available today. RippleNet can allegedly handle up to 50,000 TPS, which is considerably higher than SWIFT.
The final word
The cryptocurrency industry has been pursuing speed and scalability for years as demand grew. As crypto adoption continues to rise, there's no telling how high TPS might need to go to accommodate future demand.
The advancements made in improving TPS demonstrate that solutions do exist to meet demand, which bodes well for the success and sustainability of the industry at large.
