In Blockchain terminology, the number of transactions that a network can process per second is called transactions per second, or TPS for short. For a TPS metric, you first calculate how many transactions were performed in a period, and then calculate how many transactions were performed per second.
This measurement can be useful in assessing the capacity of blockchains to process real-world transactions. There are several variables on which this measurement depends:
Block Time
Block time refers to how fast a blockchain confirms transactions. For Bitcoin, it is 10 minutes on average, which means that the Bitcoin network processes approximately 7 transactions per second.
Transaction Size
Blockchains differ in terms of the data transmitted by each transaction. For example, a Bitcoin transaction can be as small as 226 bytes or as large as 500 bytes. Larger transaction size results in higher transaction times.
Block Size
Block size is the amount of data related to transactions that a block can contain on the blockchain. As the block grows, so does the number of users needed to run a full node.
To calculate TPS, we need to know the block time, the average transaction size and the maximum block size. For example, if the block size is 1MB, the average transaction size is 1KB, and the block time is 30 seconds on a blockchain, TPS is 33. Here is the formula:
(Block Size / Transaction Size) / Block Time = TPS
Why Is TPS Important?
The development of technologies that may increase TPS has been an important subject of research over the years. The high processing power of a blockchain does not guarantee that it will be successful or that it will be able to compete with ecosystem giants such as Ethereum and Bitcoin. The features of these major blockchains such as scalability, security, and decentralization are vital. High TPS is not enough for a blockchain to succeed, but it does make a blockchain preferable.
As seen above, Ethereum has 10 – 15 TPS, while the Solana network is among the fastest blockchains with 50,000 TPS.
As the competition between blockchains and smart contract platforms grows, new projects emerge. Work on the Blockchain Trilemma, which consists of security, decentralization, and scalability, continues.
TPS of Bitcoin
Source: Blockchain.com
TPS of Ethereum
Source: Blockchair.com
