Sponsored: AI For Business Course - Enroll Now
Learn how to leverage Artificial Intelligence to scale your business and earn a certificate widely recognised across the technology industry.
More often than not, the idea of increased transactions per second or simply TPS is discussed as a trade off for security with some adding that it threatens decentralization.
If this is held to be true, then most blockchains are centralized and not secured. But how can we be really sure?
One thing is certain when it comes to major blockchains networks - they are widely centralized, but is TPS a factor for this centralization or is it something else? That's what we will try to decrypt.
What Is Transactions Per Second(TPS)?
Transactions per second(TPS) in blockchain technology is simply the number of transactions a blockchain network can handle per second.
Some blockchains can barely handle 40 transactions per second while others can handle thousands and potentially building towards millions? Kidding, that would be insane considering crypto has bigger problems to combat than upping TPS - I mean I doubt it's currently a cause of limited adoption.
Generally, the higher the number of transactions a network can handle, the more economically valuable the network is. This is because by default, in the grand scheme of things, blockchains with lower transaction capacities will struggle to scale.
By scale, one would generally think we are talking about the inability to handle a huge amount of transactions, but no, its already a known fact what loads a network can carry, so exceeding this would mean deliberately flooding the mempool in the case of bitcoin for example - which of course, can lead to a spike in transaction fee isn't the scale here.
What we really mean by scale is the fact that in the knowledge of this limitation, most products and services will seek alternatives to build on as a low TPS is effectively limiting business growth. This is why Ethereum and Binance Smart Chain control users and dApps, while bitcoiners sing their Lightning Network song all year - it is getting really gay.
This truth has often been bent to suit the narratives of people that call Bitcoin the only crypto worth investing in, but I guess that's what raising a standard is all about, just be great in some area and people will write up theories to cover your flaws, it is comical but it is the truth.
Bitcoin is slow, and slow isn't what the world wants at this time(economically) but the rich might have it.
Sponsored: Zero Knowledge Proofs (ZKP) Masterclass - Enroll Now
As Zero Knowledge Proofs becomes the new shiny tech within blockchain networks, industry players are actively seeking capable individuals with deeper insight on ZKP. Enroll Now and be ZKP certified!
High TPS blockchains are not better than Bitcoin
It is important to understand that blockchain networks with higher TPS are not automatically better than Bitcoin, the idea of an overall best blockchain is something I personally kick against because every system has its own merits and flaws.
This means that, at the same time, bitcoin isn't better than other blockchains - overall.
We have to narrow things down to "utility" if we truly seek to find better alternatives to something.
For Bitcoin, it is the most viable option if you're looking for security. Due to the heavy focus on computation on Bitcoin which plays a role in its low TPS and block time, it is the most secured blockchain network provided the mining landscape isn't centralized.
Other than security, low market cap(which is also a limitation in the grand scheme of things), there isn't much more to Bitcoin.
The Lightning Network Doesn't Make Bitcoin Fast
The lightning network is often discussed as what makes bitcoin economically scalable but that isn't true. The lightning protocol can basically process numerous kinds of assets other than Bitcoin and it really doesn't make bitcoin fast, bitcoin will always be slowed. When you use the lightning network you are not using bitcoin.
Same thing applies to Ethereum and its long list of so-called "Layer 2" blockchains. These networks are independent protocols that simply integrate a few lines of code to make some random blockchain of their choice a "finanality network", this secondary consensus layer doesn't really make the two networks connected, they are simply just communicating and levering smart contrast to lock, unlock and more assets around in a way that the average user does not really know that nothing actually leaves Ethereum and appears on Polygon for example, that is simply an abomination to the structures of blockchains.
TPS are not the cause of security flaws or centralization
At least not yet.
At the time, smart contracts are the primary cause of most protocol exploits, not TPS that barely gets reached on some blockchains.
Also, a Blockchain's TPS isn't currently a factor of centralization, most centralized blockchains have token distribution and crappy consensus mechanisms to blame.
Of course, these things are done deliberately on most chains. So whilst a high TPS has its risks, it isn't currently causing blockchain exploits or centralization, it is in fact currently a driver of economic value for a few chains.
Sponsored: Learn Decentralized Finance (Defi) in just 1 week - Enroll Now
Tired of losing in DeFi? Most failed investments is as a result of ignorance of the key plays of the financial markets. Gain exposure to the inner workings of Decentralized Finance(DeFi) and start winning.