Blockchain Scalability, a very real problem!
For bitcoin and ethereum to compete with more mainstream systems like visa and paypal, they need to seriously step up their game when it comes to transaction times. While paypal manages 193 transactions per second and visa manages 1667 transactions per second, Ethereum does only 20 transactions per second while bitcoin manages a whopping 7 transactions per second! The only way that these numbers can be improved is if they work on their scalability.
If we were to categorize the main scalability problems in the cryptocurrencies, they would be:
- The time is taken to put a transaction in the block.
- The time is taken to reach a consensus.
The Time Taken To Put A Transaction In The Block
In bitcoin and ethereum, a transaction goes through when a miner puts the transaction data in the blocks that they have mined. So suppose Alice wants to send 4 BTC to Bob, she will send this transaction data to the miners, the miner will then put it in their block and the transaction will be deemed complete.
However, as bitcoin becomes more and more popular, this becomes more time-consuming. Plus, there is also the small matter of transactions fees. You see, when miners mine a block, they become temporary dictators of that block. If you want your transactions to go through, you will have to pay a toll to the miner in charge. This “toll” is called transaction fees.
The higher the transaction fees, the faster the miners will put them up in their block. While this is ok for people who have a huge repository of bitcoins, it might not be the most financially viable options. In fact, here is an interesting study for you. This is the amount of time that people had to wait if they paid the lowest possible transaction fee: