For any payment system, one of the most important performance indicators is the value of the maximum transaction speed. In the Ethereum network, the average transaction speed in 2021 will not even reach a few dozen payments per second. In this review of cryptocurrencies, consider how transactions on the Ethereum network proceed and what they depend on. The news is not financial advice.
Principle of transaction processing
Crypto payment systems, which operate without intermediaries, make it possible to exclude a number of procedures from the payment process and significantly accelerate it by automating and deleting a number of actions. This is possible because of:
- application of cryptographic methods for information security and user authorization;
- direct connection of the sender and recipient of the payment in real-time mode via the global network via security protocols;
- a high level of trust between participants;
- Inability to cancel the transaction.
In the Ethereum network, scalability is significantly increased when additional chains connected to the main block chain are added to the network. Using a network with PoW and PoS segments will completely solve the speed problem, but as long as Ethereum only has a PoW blockchain, floating transactions will exist successfully.
In the Ethereum PoW network, mining pools (or large solo miners with their own full nodes) decide which transactions are included in the block. Before being included in the block, the transactions are stored in a common pending pool, from which the “boldest” transactions from the mining nodes (pools) are included in a separate list (a reduced copy of the entire mempool).
A business with a low fee may never be included in the block if there are many other, more attractive alternatives. However, in some cases, transactions with minimal fees can also be included in the block.
What does the turnaround time of a transaction in the Ethereum network depend on?
A transaction signed by an Ethereum purse, such as exchange Ethereum to BNB, is checked in a variety of ways and is part of a blockchain, most of which have been in limbo for some time. If the network is low and the commission rate is sufficient, the transaction can be included in the next block and executed within a few seconds. The duration of transactions in Ethereum networks depends mainly on two factors:
- time between blocks tied to a timing defined by the developer;
- maximum number of transactions that a single block can contain.
The frequency of blocker generation in PoW blockchains is regulated by changing the mining complexity. In the Bitcoin network, the target time between blocks is 10 minutes, in the Ethereum network it is 13-15 seconds. The shorter the time between blocks, the higher the throughput of the network. The time between blocks must not be too short, as it is problematic to ensure synchronous operation of such a network on a global scale.
How to increase the speed of payment processing
The amount of information that a single block can contain is limited by its (maximum possible) size and the amount of data it contains. The easiest way to increase performance (without shortening the time between blocks) is to increase the block size. It is also possible to increase the number of processed transactions by optimizing, removing and/or removing some service information from a block.
One can still relieve the network by introducing additional communication channels into the system, which allow almost instant payments, such as light network technology. In addition, the fees (Txn Fee) should be set so that they correspond to the network utilization in order to avoid hanging up the transactions.
Problems with transactions with cryptocurrencies
The possibilities of cryptocurrency buying systems are not unlimited. They have only been used as a means of payment for a few years and are therefore not unproblematic. The biggest problems of popular cryptocurrency exchanges are:
- low transaction speeds (low bandwidth);
- high commissions with high network overload.
David Prior
David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.
