How to Measure Bitcoin's Throughput Per Second

While Bitcoin provides many functions, one of the most important uses is as a payment system. Often used to compare Bitcoin to companies like VISA, Paypal, and even newer blockchains that tout higher transaction capabilities, the yardstick for comparison is how many transactions the system can handle, usually seen as throughput per second (tps ).

Not only does Bitcoin have a throughput of three to four quarters per second, but it also works for the type of transaction it is targeting.

other factors

While how many transactions a network can handle is important, other characteristics of those transactions are also important. In other words, there are two other things to consider: the size of the deal, and what the terms call "settlement assurance."

Transaction size is very easy to understand, but it is the factor that describes small or large actual transactions. For cryptocurrencies, this is easy because transaction fees are usually based on calculating how many are put into use (and thus how many kb transactions there are) to determine how many transactions can be in a block, which in Bitcoin's case has a 1 The upper limit of MB.

In other words, a transaction worth 1 MB can propagate to the network every 10 minutes. The average transaction size is about 550 bytes, which means that about 1800 transactions can be processed at 10-minute intervals.

The settlement guarantee describes the certainty of these transactions. For example, chargebacks typically occur within 30-120 days of a transaction, even though credit card companies have a much higher transaction-per-second throughput. On the other hand, transactions in cash are settled immediately within the time period when no refund can be issued.

With these three factors, it is possible to paint a complete picture of the economy, with transaction times that vary for each payment system. What you are noticing is that while Bitcoin may have a lower transaction throughput per second, regardless of the currency value, transactions are completed within 10 minutes, with every 10 minute block after further setting the transaction to digital stone Good for another transaction.

Depending on the angle, 10 minutes can be fast or slow. In the case of moving hundreds or thousands of bitcoins quickly, ten minutes until the transaction is resolved is lightning fast. Ten minutes of awkward waiting can feel like an eternity when you're in line for breakfast. Also, thanks to this, we can see what kind of scenarios Bitcoin excels in, and the second solution needs to resolve two transactions.

So, what is the current state of Bitcoin?

In three ways, we can get a better idea of ​​where Bitcoin is in other systems like SWIFT, cash, debit and credit cards, but it doesn't let Bitcoin escape responsibility.

Bitcoin still has a lot of work to do to compete when it comes to day-to-day transactions. While protocols like SegWit are helpful, if Bitcoin wants to have a chance to compete with customers when it comes to buying coffee, groceries, or other everyday purchases, it has to have a new s solution.

Improvements outside the protocol also need to be made. Bitcoin-backed POS machines have seen increased adoption, users can easily purchase goods and services using Bitcoin, and mobile wallets are intuitive and easy to use, while lowering the barriers to acquiring cryptocurrency. Every link of the barrier needs improvement, and Bitcoin's viability as a payment network is defined as the weakest chain.

However, Bitcoin outperforms as a settlement network due to its strong settlement guarantee. Bitcoin is one of the best methods due to its global reach, low fees, and fast settlement times. Literally millions can be transferred from an account with a few dollars, and thanks to the blockchain, the transaction is instantly identified from the recipient and available within ten minutes.

All of this without the need for a third party or mutual trust between the parties. These characteristics make Bitcoin an excellent choice for certain transactions, those high-value transactions that need to be settled as quickly as possible and where mutual trust is not always guaranteed.

Because of its optimization for one transaction, Bitcoin is not the most efficient solution for low-value transactions. While this is still achievable, the 10-minute settlement time that occurs when Bitcoin is sent makes POS operations with Bitcoin more difficult due to the increased transaction costs of larger, high-value transactions.

The best option for Bitcoin is to continue working on secondary solutions for low-value transactions, in which case settlement can be deferred until later, while Bitcoin continues to focus on high-value transactions.