What is Transactions Per Second (TPS)? What is the Importance of TPS in the Cryptocurrency Market?
What is TPS (Transactions Per Second)?
TPS, or “Transactions Per Second,” refers to the maximum number of transactions a blockchain network can process successfully in one second. This value is used to evaluate a blockchain’s performance and scalability and is generally an indicator of the technology’s efficiency and speed.
TPS Values in Bitcoin
For example, the Bitcoin network has a transaction capacity of approximately 5-7 TPS. This capacity offers various advantages and limitations compared to other financial systems or next-generation blockchain projects. This TPS is calculated as follows:
In Bitcoin, blocks contain approximately 3,000 transactions. Knowing that a block is processed every 10 minutes, we get 3,000/10 = 300 transactions per minute. Dividing this number by the number of seconds in a minute gives us 300/60 = 5 transactions per second. This is the mathematical representation of Bitcoin’s TPS being 5.
The Importance of TPS for Cryptocurrency Networks
User Experience
High TPS rates allow transactions to be confirmed faster, leading to a smoother and more efficient experience for users. The faster transactions are completed, the more users will prefer the network.
Scalability
High TPS rates are necessary for a cryptocurrency to handle increasing user and transaction loads. The higher a network’s transaction capacity, the more users and transactions it can serve.
Competitiveness
A blockchain platform’s ability to compete in the industry largely depends on its TPS capacity. Platforms offering higher TPS values typically become more preferred due to lower transaction fees and superior user experiences.
Widespread Adoption
The ability of blockchain technology to be fast and efficient enough for daily transactions and commercial applications facilitates its widespread adoption. High TPS encourages more individuals and institutions to use this technology.
In conclusion, TPS is a critical metric in cryptocurrencies and blockchain technologies. It plays a significant role in a network’s scalability, user experience, and competitiveness. Blockchain projects continually develop technical solutions and infrastructure improvements to increase TPS rates. This is a factor that directly impacts and shapes innovations in the industry.
