Within the context of blockchain, the term transactions per second (TPS) measures the quantity of transactions a network can handle in a single second.
The Bitcoin blockchain’s estimated mean transaction per second (TPS) is approximately 5, although this can fluctuate. On the other hand, Ethereum can process nearly twice as many transactions per second.
Over the years, significant research has been conducted into creating technologies that enhance blockchains’ transaction speed. The scalability of these decentralized networks to meet growing demand presents unique challenges.
The issue at hand is not solely about enhancing TPS. Centralized databases can already manage thousands of transactions per second. Take VISA, which processes approximately 1,500-2,000 transactions per second. So, why not adopt these solutions? The primary concern is that Bitcoin, Ethereum, and other blockchain technologies strive to rival this capacity while preserving significant decentralization.
Decentralization often compromises performance and security. Therefore, scalability solutions must enhance the network’s performance and preserve all other beneficial attributes of blockchain technology. If not, the blockchain merely becomes an ineffective database.
Understanding that a blockchain with a high Transactions Per Second (TPS) rate doesn’t necessarily outperform those with lower TPS is crucial. Numerous blockchain initiatives often highlight their high TPS figures. However, it’s almost guaranteed that such performance comes at the expense of other significant network features. For instance, Bitcoin operates thousands of nodes worldwide at any given time. A blockchain with merely 10-20 nodes might surpass Bitcoin in performance, but it would hardly qualify as decentralized or distributed.
