Cryptocurrency transaction speed is a hot topic today. Transaction speed means how fast the network can verify a transaction and transfer money from point A to point B.
Even though modern banking systems are far much ahead in terms of scalability and the handling of simultaneous transactions at any given time, digital currencies are the real deal when it comes to transaction speeds.
Modern-day banking systems can take as many as 3-5 days to verify and complete payments in some transactions. While most cryptos are lightning-fast, with some executing thousands of transactions per second.
What is a cryptocurrency transaction speed?
There are two main methods of analyzing transaction speeds in a given blockchain network: the number of transactions per second (TPS) and the amount of time it takes for coins to get from one wallet to another (generally known as confirmation time).
It’s also worth noting that transaction speeds vary from one blockchain to another due to the fee provided when making a particular transaction and network congestion.
So, what are the transaction speeds of different cryptocurrencies in 2020? Well, keep reading to find out!
Definition of Terms
Before we dive into cryptocurrency transaction speeds, there are a few terms every investor needs to understand. They include:
- Average transaction speed: This is what a cryptocurrency is handling on average.
- Actual transaction speed: This is what a digital currency can handle based on current mathematical calculations.
- Theoretical Transaction Speed: This is what a cryptocurrency can handle when stars align. Most digital currencies claim they can handle 50,000 or more theoretical transactions per second.
- Claimed Actual Transaction Speed: This is what a digital currency can handle, according to the development team. It is called “claimed” because there is no network volume or evidence that shows it can handle what the developers estimate.
Note: Before investing in a cryptocurrency, it is important to analyze average and actual transaction speeds using the best estimates. Most networks promise insane transaction speeds that have not been confirmed.
Hence you should be careful about the news you receive regarding transaction speed updates.
As a smart investor, never rely on the claimed actual transaction speeds claimed by development companies or communities before taking action.
What Are Transaction Speeds?
Cryptocurrency transaction speed is basically the rate at which data is transferred from one wallet to another.
Simply put, transaction speed measures the amount of time taken for an individual transaction to be completed.
The faster a particular transaction is confirmed, the better the transaction speed of a blockchain network. Transaction speed is one of the primary parameters through which the viability of a cryptocurrency is determined.
Below are transaction speeds of different cryptocurrencies:
Bitcoin Transactions Speed
Bitcoin transaction speed is one of the things people in the cryptocurrency ecosystem want to understand. Created 10 years ago, Bitcoin is regarded as the pioneer of digital currencies.
It has a block time of 10 minutes, which simply means that a new block is mined and added to the network every 10 minutes. Every block contains thousands of transaction data that are simultaneously solved by mining rigs that are operated by miners from all over the world.
The Bitcoin blockchain processes about seven transactions per second. Due to the potential threat of this low transaction speed on this crypto, a new Bitcoin-based currency known as Bitcoin Cash was introduced.
Its main aim was to increase the maximum block size from one to eight megabytes, and this has gone a long way in increasing bitcoin transfer speed.
Even though Bitcoin transfer speed is regarded as one of the slowest in the crypto space, it is still reliable and convenient compared to the 3-5 day period imposed by traditional banking systems on some transactions.
EOS Transactions Speed
EOS was launched via an ICO in 2017 and was launched in 2018. It is built on a platform that allows developers to create smart contracts and decentralized applications on a reliable, fast, and secure blockchain network. It is currently ranked 5th by market cap.
EOS is more scalable than other cryptocurrencies of its caliber, such as Ethereum, because it uses Byzantine Fault Tolerance and Delegated Proof-of-Stake mechanisms to verify transactions. It is allegedly capable of completing over 10,000 transactions per second.
EOS has a claimed TPS capacity of 3,996 and an estimated TPS of 50. In 2018, EOS’s chief technology officer Daniel Larimer released a Twitter statement claiming that this crypto was performing at 2,351 transactions per second.
However, Whiteblock, a blockchain testing company, released a report a few months later that showed EOS had a TPS of below 50. EOS rubbished this report arguing that Whiteblock hired Ethereum folks for the testing project.
Despite its contested transaction speeds, the EOS.IO platform is one of the fastest in the crypto industry.
During the initial stages of its release, it crossed 3,000 TPS and became the first digital currency to surpass the transaction speed of VISA of 1,700 TPS. Currently, EOS claims to process over 50,000 transactions per second.
Ethereum Transaction Speed
Ethereum is the second most valuable digital currency after Bitcoin. It was developed in 2015 by Vitalik Buterin. Just like EOS, Ethereum is more than a cryptocurrency.
It is a blockchain-based network used by developers to create smart contracts and decentralized applications.
The native cryptocurrency utilized for transactions in the Ethereum blockchain is known as Ether.
Ethereum has an estimated TPS of 15. Despite having a huge amount of miners from across the globe, Ethereum still scales poorly as far as transaction speed is concerned.
Currently, Ethereum transaction speed stands at 20 TPS. Just like Bitcoin, this cryptocurrency is facing serious scalability issues in 2020. It still uses the proof-of-work algorithm, which is an obsolete mechanism of verifying transactions.
However, it is worth noting that Ethereum is actively working towards fixing this by moving to the Proof-of-stake algorithm.
Reportedly the transfer from proof-of-work (PoW) to Proof-of-Stake (PoS) will be implemented in a protocol known as Casper – Friendly Finality Gadget, which will enhance PoS.
It is not clear when Casper will be introduced, but when this happens and transaction speeds improve, rest assured we will be the first to let you know.
Apart from Bitcoin, EOS, and Ethereum, thousands of other cryptocurrencies have penetrated the market. Others include:
Ripple is a one-of-a-kind cryptocurrency whose main purpose is to solve problems in International Payment Transfers.
It was developed in 2012 to strengthen international transactions and make them fast and affordable.
There are currently a total of 100 billion XRP, and 50 billion of them are held by Ripple Labs, the company that operates this digital currency. This is quite unique because most cryptocurrencies don’t have a central entity holding a majority of the currency.
While international money transfer takes 5-7 working days to be completed, Ripple makes this happen in seconds. It has a claimed TPS capacity of 50,000 and an estimated speed of 1,500 TPS.
It is worth noting that unlike other cryptocurrencies, Ripple doesn’t have a blockchain. Instead, it uses its own patented technology known as the Ripple Protocol consensus algorithm.
Even though some communities have disregarded it as a cryptocurrency, it has what is arguably the fastest crypto transaction speed in the world of digital currencies.
Thanks to its speed, its transaction fees are considerably lower when compared to what is charged by banks and other financial institutions. In 2017, Ripple charged $0.0004 per transaction, and this has significantly reduced since then.
It is one of the few digital currencies that has been widely adopted and has ties with renowned financial institutions such as Santander and American Express.
Litecoin was developed in 2011 by an ex-Google Employee known as Charlie Lee. It was created on the Bitcoin blockchain to improve it. Unlike EOS and Ethereum, Litecoin is a digital currency and does not provide developers with a platform to create decentralized apps or smart contracts.
It is one of the oldest cryptocurrencies in the market and is among the #10 by market cap.
As earlier mentioned, Litecoin’s intention was to improve Bitcoin’s blockchain.
While it takes up to 10 minutes for a bitcoin transaction to be completed, it takes only two and a half minutes for a Litecoin transaction to be completed. This digital currency is estimated to have a TPS capacity of 56.
Since bitcoin transaction speed is lower than that of Litecoin, it means that the latter’s transaction costs are significantly lower. While investors pay $1.8 for every bitcoin transaction, they can pay as low as $1.179 for Litecoin transactions.
With significant improvements in the Bitcoin algorithm, it is expected that both Bitcoin’s and Litecoin’s transaction speeds will improve significantly over the next few years.
Stellar was established in 2014 by Jed McCaleb – the founder of Ripple. Just like Ripple, Stellar focuses on improving the speed, efficiency and reducing the costs of cross-border payments.
It also aims at working with developing markets instead of well-established financial institutions.
Although it is built on the Ripple protocol, Stellar is quite different from its parent company. It is operated by a non-profit organization. It is also more decentralized and has secured partnerships with over 30 financial institutions and multinational organizations such as IBM and Deloitte.
Stellar has a claimed TPS capacity of 1,000. However, according to Stephen Van Collar, the CEO of Barclays Africa, a Stellar prototype test showed that it could process close to 36 million transactions in one hour using Google cloud servers.
This means that it can process about 10,000 transactions in a second. Even though it is not as fast as VISA or EOS, it is still one of the fastest cryptocurrencies you can find.
IOTA entered the cryptocurrency market in 2015. Unlike other cryptocurrencies, it doesn’t rely on blockchain technology. Instead, it relies on a new protocol known as Tangle.
Also, IOTA doesn’t focus much on the financial market, but rather, it aims at making the Internet-of-things (IoT) more scalable, secure, and seamless.
Plus, while other cryptos are struggling with scalability, the technology used by this cryptocurrency enhances infinite scalability. According to its creators, the system in which IOTA runs gets faster as more people join.
This cryptocurrency has a claimed TPS capacity of 1,500 and an estimated TPS capacity of 50. Thanks to its scalability, IOTA stands out from most digital currencies of its caliber since it doesn’t charge any transaction fees.
Cardano is a platform that maintains the operations of a digital currency known as ADA. It has a claimed TPS capacity of 50-250.
In a recent video on YouTube, the co-founder of this cryptocurrency, Charles Hoskinson, notes that when more sidechains are added to Cardano’s system in the future, it will be able to handle up to 5,000 transactions per seconds.
This is something that remains to be seen in the next few years.
Qtum is another cryptocurrency that hasn’t been in the market for long. According to its developers, it has a TPS capacity of 10,000.
They argue that transactions in the Qtum network are confirmed as soon as they are sent due to its high speeds.
What Determines Cryptocurrency Transaction Speed?
One of the factors that affect cryptocurrency transaction speed is the network load. In case the network load is high, crypto transactions will take longer than normal.
Occasionally, transactions will take 24-32 hours when the network load is high. In most cases, investors can do nothing to lower the network load because they don’t have control over a blockchain‘s capacity or speed.
However, they can check the network load before initiating a transaction using various online tools such as Block Explorer, BTC.com, Blockchain Explorer, and more.
The Lighting network is an additional layer of technology applied in the Bitcoin blockchain. It uses micropayment channels to enhance the blockchain‘s capability to conduct faster and more efficient transactions.
This technology can also be used to conduct other off-chain transactions that involve exchanges between digital currencies.
The lightning network is an effective transaction mechanism between parties. Using this channel, users can send and receive payments from one another.
These transactions are processed differently from standard transactions that take place on the bitcoin‘s blockchain. They are updated on the primary blockchain when both the sender and receiver open and close the channel.
Using the lightning network, parties can initiate an unlimited number of transactions without informing the main blockchain.
This increases transaction speeds because transactions will not need to be approved by all nodes in a blockchain.
This means that the presence of a lightning network in a Bitcoin blockchain is one of the factors that affect crypto transaction speed.
We hope you learned all about cryptocurrency speed and which currency you should invest. Make sure to always check the real transaction speed and keep your assets safe.
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