Whether you are looking for cryptocurrencies to day trade or make a purchase, transaction speed matters. In the world of cryptocurrency, the transaction speed shows how fast users can transfer money from one address to another. And to make things slightly more confusing, each coin operates at a different speed. As a beginner, this adds a lot of complexity to using cryptocurrencies.
In this article, we will first identify the background as to why transaction speed is important and then look at the top currencies on the cryptocurrency exchange in Dubai that delivers on this feature.
To understand how the blockchain performs a transaction, we first need to answer the basic questions around the technology itself. The blockchain is a decentralized ledger created to transfer money faster, cheaper, and more conveniently than a bank transfer. Although many industries now use blockchain, developers created the technology with the financial service industry in mind.
For these reasons, transaction speed is one of the key features of a blockchain. This metric tells you how quickly the network will record your transaction and make the transfer irreversible. Therefore, the longer the transaction waits for confirmation, the higher the chance that coins can be double-spent on an alternate blockchain fork. The speed at which a transaction occurs will also impact the usability or how quickly users can spend their digital currencies.
The speed at which a transaction occurs depends on several factors. Among them are:
- The congestion of the network: The more transactions in the queue, the slower the transaction time.
- The transaction fee: miners may prioritize transactions with higher fees.
- Large volumes of data: the more data, the slower the transaction speed with typically be.
Terms relating to the transaction speed
Within the world of cryptocurrency, there are several terms you may hear in use. Below is a brief definition of each.
Average transaction speed: The average transaction speed is the median time to complete a transaction confirmation. This value is typically calculated by measuring a random sample of transactions on a network and taking their average value. Average transaction speeds will accurately reflect what people can expect to see when conducting their transactions.
Actual transaction speed: The actual transaction speed is how fast the network can process a transaction.
Theoretical transaction speed: In theory, this is the maximum confirmation time for a cryptocurrency. Users can calculate this value by dividing the number of transactions that occur in a second by the amount of data in one block.
Cryptocurrencies with the fastest transaction speed
Now that we know what determines the transaction speed let’s consider which projects are performing the best.
First launched in 2012, Ripple is a project to provide a safer alternative to financial institutions. Co-founders of Ripple, Chris Larsen, and Jed McCaleb, created the digital currency in 2012. Ripple operates similar to the SWIFT system for international security and money transfers. Users can identify Ripple tokens by the ticker symbol XRP, all of which are pre-mined.
The platform processes around 1,500 transactions every second, with approvals occurring in 3-5 seconds.
EOS is a blockchain-based platform designed for use in the execution of decentralized applications. Developers created this technology to support large-scale apps and, as a result, can handle 2,800 transactions every second. Many developers believe that the EOS project may even one day become a rival to Ethereum, with benefits including faster transactions, higher scalability levels, and increasingly advanced services.
Ethereum is a blockchain-based distributed computing platform launched back in 2013. The platform supports smart contracts and decentralized finance, the Ether token powering the network. Ether is now the second-largest cryptocurrency on the planet in terms of market cap.
The network can handle 90,000 transactions each week, the equivalent of 10 transactions per second. Platform developers have since been working on Ethereum’s 2.0 upgrade, which increases transactions to an estimated 10,000/second.
For comparison purposes, the average transaction time for bitcoin is 60 minutes. To help improve the transaction speed, the Bitcoin community has developed the Lightning Network to improve performance, with an expected BTC transaction time of below one minute (10,000 TPS). Currently, this solution is still in the beta phase.
Why do we need the fastest blockchain?
Companies and individuals can use the blockchain to transfer any data, not just digital assets. Therefore, the use cases of blockchain technology are many, especially as the speed and scalability improves. The bottom line is that a transaction is a fundamental activity on the blockchain and a key factor in determining how useful a cryptocurrency can become.