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November 11, 2022

Cryptocurrency Transaction Speed 2022

Cryptocurrency Transaction Speed 2022

One of the major concerns surrounding cryptocurrency and its ability to become the new financial system of the world has been transaction speeds. Currently, Visa has the power to process 24,000 transactions per second – hence why it’s one of the most widely used and accepted payment processing platforms.

Although, in the early days, crypto transaction speed was a concern and rapid and noticeable developments are being made to enhance some blockchain networks, moving us closer to near-instant transactions.

As a society, both individuals and businesses are used to instant payment processing. To attract a mass audience and make crypto viable for everyone, it must overcome the challenges and present transaction speeds equivalent to what we’re used to.

Why Does Cryptocurrency Transaction Speed Matter?

The aim is to create the most efficient blockchain network, and efficiency is judged by the number of transactions that can be successfully processed in a specified period of time – usually per second or minute.

Something to remember is the multiple variables that can dictate crypto transactions per second. As blockchain is a peer-to-peer system, it isn’t as straightforward as a centralized network such as Visa.

Block size, block time, transaction size, and network traffic are all major factors to consider.

Nodes working in the network have to complete the verification and processing of one transaction before they can move on to the next. When network activity is high, this slows transaction speeds.

Fastest Crypto Transactions: Proof of Stake vs. Proof of Work

Cryptocurrency uses two consensus protocols. These processes are designed to keep the network safe and process transactions correctly.

Proof-of-work is used by Bitcoin. You may know this as mining. To verify a transaction, miners work to complete mathematical equations. On the flip side, proof-of-stake networks process and validate transactions much faster while consuming less energy than the proof-of-work model.

The Compromises to Be Made

Cryptocurrency developers must make compromises to achieve the fastest crypto transaction speeds and volume to create a global solution.

At some point, it needs to be decided whether it’s more important to sacrifice the scalability of a cryptocurrency in favor of remaining decentralized. Alternatively, if scaling is deemed more important than 100% decentralization.

While the majority of the crypto space claims to be decentralized, it isn’t. They’re businesses, owned, run, and controlled by a select few individuals. In their current state, most cryptocurrencies have to decide to give up decentralization or scalability – they can’t have both.

The development will continue, and payment processing systems will continue to be developed. And, with the progress that’s already been made, we aren't far away from platforms that will be able to handle large volumes of transactions while remaining decentralized.

Crypto by Transaction Speed

Although Bitcoin is the most well-known cryptocurrency, its transaction speeds are relatively slow in comparison to other cryptos. Some are rapid and able to process large volumes of transactions quickly.

Let’s take a look at the crypto with faster transaction speeds.

Ripple (XRP)

By some, XRP is considered to be the only viable option to be used as a mass-market global payment system. Recognized as being capable of coping with the demands of society and replacing our existing systems, XRP can process around 1500 transactions per second with an average approval time of 3-5 seconds.

Cardano (ADA)

Cardano is a blockchain ecosystem, like Ethereum, that uses a proof of stake consensus model. It was founded by the co-founder of Ethereum and is in direct competition with it.

Recognized as one of the cryptocurrencies with the highest market caps, ADA has a focus on improving transaction speeds while offering an enhanced security experience. Impressively, Cardano can process around 1 million transactions per second.

Solana (SOL)

A blockchain network used to facilitate the development and usage of dApps (decentralized apps), Solana actually uses a Proof of History consensus protocol and comets scalability issues.

Recognized as the most efficient cryptocurrency, Solana says it can process 50,000 transactions per second, with a validation time of around 5 minutes. What’s important to note is that it improves the experience for both smart contracts and transactions.

Stellar (XML)

Stellar: Designed to connect businesses to the blockchain, XML offers one of the fastest crypto transaction speeds with an impressive confirmation time of 3-5 seconds. Overall, it offers cost-effective transactions to businesses, enabling them to implement cryptocurrency into their day-to-day operations.

Ethereum

Ethereum recently completed its merge and switch to Ethereum 2.0 Today, with the network completing up to 100,000 transactions per second. While its validation speeds are still around 13 seconds, the drastic increase in TPS makes it a more scalable and realistic option for a global payment system.

Bitcoin

Bitcoin has relatively slow transaction speeds, meaning it is unlikely to become the blockchain of choice for creating a rapid and user-friendly payment system. However, there are teams working on developing layer 2 blockchains that will increase P2P transaction speed. The Lightning Network opens a channel between two wallets that can complete transactions near-instantly.

Only when the channel is closed will these transactions be added to the layer 1 blockchain.

In Summary

Some blockchains set out with the mission of providing a high volume of transactions per second, while others are developing and improving their offering to match what exists in the fiat industry.

For cryptocurrencies to become a new global financial system, this is a hurdle they need to overcome, with payment processing systems, such as Escrypto being a viable option. With near-instant processing and institutional-grade security, it has the power to offer all uses exactly what they need.

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