Over the years, blockchain technology has gained recognition for emerging as a transformational force shaping the future of digital economies and as the underlying architecture that powers cryptocurrencies. As a testament to the revolutionary strides, blockchain technology redefines the online economy through cross-border payment in secure interactions. By storing financial records in digital ledgers (also known as blocks), blockchain technology eliminates the need to use financial institutions such as banks, governments, and escrows. As a result, we can all exercise digital transactions in a decentralized manner.
High transaction speeds are among this innovation’s first-hand benefits, as seen in third-generation blockchains like Cardano. Through the combination of scientific research and approved methods, Cardano implements edge-cutting technologies that address the limitations of traditional finance systems and older blockchain generations alike. In turn, Cardano solves the blockchain trilemma — security, decentralization, and scalability — and stretches further to provide inclusivity and accessibility, governance and sustainability, and environmental responsibility. From the transaction speed standpoint, Cardano’s transparency is a key area of interest. It’s pretty compelling to look into how Cardano sustains high transaction speeds while solving the problems mentioned earlier. This can be explained in the design rationale.
Read more of this article to get an overview of what factors determine the speed of crypto transfers. Once we build momentum on the underlying logic on which blockchain transaction speed is based, we will look into how Cardano compares to top cryptocurrencies by market cap. For each competitor, we’ll bias from the underlying consensus algorithm to transaction speed, confirmation times, and block finality. We may also bring in some philosophical aspects.
Understanding Blockchain Transaction Speeds
Transaction speed is the amount of time it takes to complete a financial transaction or payment on a digital platform. It can be explained as the duration between transaction initialization and completion. Simply put, the time between clicking the ‘Make Payment’ or the ‘Send Money’ button and receiving the ‘Payment is Successful’ message. Rather than making payments with cards like Visa, whether you’re at the gas station or the supermarket, a simple press of a button from your blockchain wallet or cryptocurrency account will do. To explain how fast this phenomenon happens, blockchain transaction speed can be explained in three ways: Transaction Per Second (TPS), confirmation times, and finality.
Transaction Per Second is a metric used in blockchain technology to measure the throughput or the number of transactions a blockchain can process on a network in one second. Recently, there’s been an enormous emphasis on TPS, mainly because it determines the scalability and efficiency of a blockchain’s ability to handle large volumes of transactions. A higher TPS improves a blockchain’s performance, increases throughput and efficiency, and reduces latency when handling concurrent transactions. Confirmation time is the duration for a blockchain transaction to be confirmed and recorded in a blockchain network. It is also the duration between the transaction initiation on the network and the block confirmation by the miners or validators on a blockchain network. This period varies with blockchain technologies due to factors such as network activity, verification times, and block size. Another metric used to calculate transaction speed is block finality, which is the duration that confirms a transaction is final after being confirmed and added to a block on the network. Once a transaction is recorded in the main blocks of the chain, it is irreversible and cannot be altered.
The ability of a blockchain to have a fast transaction speed is essential, especially in real-life applications such as decentralized finance (DeFi), non-fungible tokens (NFTs), and retail payment. In the current age of information and speed, a high transaction speed rate is vital for handling large volumes of financial asset transfers quickly and providing a better user experience for customers and businesses. Cardano has a faster transaction speed and confirmation time than other cryptocurrencies to reduce latency and improve the scalability of the block sizes transferred across the network daily. Moreover, it leverages energy-efficient solutions when handling thousands of transactions per second using groundbreaking protocols such as Ouroboros Proof of Stake (PoS) consensus mechanisms.
Transaction speed may vary between different cryptocurrency technologies because of the factors listed below:
- Safety or security checks: Security checks ensure transactions are valid and safe from cyber-attacks, hacking, and fraud. In some cases, the security checks, such as manual reviews, may take longer than usual and range from a few minutes to several hours based on the asset size in the transaction.
- Network load: When the network is congested, especially during high activity, it slows down transaction processing. This results in poor user experience, high transaction fees, and security risks.
- Block size and block time: If the transaction is huge and complex, as with smart contracts, it may overload the network and system. If the transaction is being made internationally, it may take longer than usual due to the difference in distance, currencies, and regulatory checks that may take up more processing time.
- Currency and cryptocurrency conversion: Currency conversion may take longer to process transactions because of the difference in technology and network. The transaction experiences more delay, primarily if the currency is not implemented on the network. However, we see developer tools on ecosystems like Cardano to create bridges. The Rosen Bridge serves as a good example.
If improved, the above factors may positively affect transaction speed to enhance efficiency and reduce latency in digital payment on cryptocurrencies. For a deep dive into this, you can look into crypto transfers and what factors come into play.
Top 10 Cryptocurrencies by Market Cap Compared
As of August 2024, more than 20,000 cryptocurrencies are running, with new ones released while others become inactive or get discontinued annually. Behind this significant number and huge competition are rallies where different cryptocurrencies offer different solutions, get accessed differently, and are backed by fast transactions. Let’s see how Cardano compares with other networks in the top ten by market cap. We didn’t rank them in any particular order.
- Cardano
Cardano, a third-generation blockchain network launched in 2017, is one of the crypto marketplace’s fastest and most secure networks. Its key commanding features include a high transaction speed that takes up to 250 transactions per second and is heading to 1,000 TPS upon the completion of sidechains and Hydra. The transaction speed of any cryptocurrency depends on the consensus algorithm, a set of rules governing how nodes in a blockchain network validate transactions and information on a block. In this case, Cardano’s fast transaction speed can be credited to a unique consensus algorithm called Ouroboros. Ouroboros is a proof-of-stake (PoS), a better alternative, as shown in Cardano’s quest for environmental and sustainability impact.
From Cardano’s design docs, it is clear that blocks are created every 20 seconds, having a quick initial confirmation time. Unlike other PoS systems with instant finality, Cardano employs probabilistic finality, such that the longer a transaction is in the chain, the higher the probability that it’s final and won’t be reverted. The practical finality is 5 – 10 minutes, which gives a high level of confidence. Still, the full finality cannot happen in less than a day, with the probability of a block being discarded exponentially decreasing with the depth and number of nodes that have to adapt the block. In the long-term, Cardano’s speed is set to increase with the maturity of other layer 2 solutions like Hydra, the advent of sidechains, and the rolling out of newer Ouroboros versions.
- Bitcoin
Bitcoin is the largest blockchain network in the digital market, often known as the first-generation cryptocurrency. Unfortunately, it takes 10 to 60 minutes to process a transaction, depending on the network activity. Despite its slowness in transaction speed, Bitcoin remains at the top ranking because of its simplicity and emphasis on decentralization at an age where other cryptocurrencies aim to improve different aspects of the blockchain industry. Bitcoin’s transaction speed is limited due to its consensus algorithm, proof-of-work (PoW), which involves solving complex computation puzzles to add new blocks to the blockchain. In this operation model, miners compete to process large chunks of information (crunching) through trial and error before finding correct hashes. Hence, much work and time is spent in verifying BTC’s transactions.
Bitcoin, presaged as a perfect software for distributed computing, is a decentralized system that requires more communication overhead to synchronize all transactions with all nodes in the blockchain. Bitcoin’s average confirmation time is 10 minutes when new blocks are added to the blockchain. During transactions, you’ll need several confirmations to have your transaction processed with this heavily depending on your exchange and wallet. Some will require a single confirmation to process your transaction, others three, while others will require up to six confirmations, varying with the amount of assets on transfer. As a result, most Bitcoin transactions will take 1 to 1.5 hours to complete. The finality in BTC transactions follows a probabilistic approach — although they aren’t immune to reversals, they get secure as more blocks confirm the transaction. That said, slow as BTC is, there are solutions to speed up the network, including Lightning Network, a layer 2 build-up.
- Ethereum
Ethereum is a decentralized, open-source Blockchain platform and the second-largest cryptocurrency market after Bitcoin. It is commonly used in decentralized finance ecosystems, such as smart contracts. Despite its popularity and high market rating, its transaction speed is 14 TPS. Until December 2020, Ethereum was running on the PoW but switched to the PoS consensus mechanism. With a primary goal of improving scalability, accessibility, and transaction throughput, the platform has been working on an upgrade, Ethereum 2.0. In this development endeavor to revamp Ethereum, the progress is set to span around five to ten years, as gathered from the developmental roadmap.
At the time of writing, Ethereum transactions are typically confirmed within 5 – 20 seconds, and it takes around 13 minutes to reach a block’s finality. From my experience, on some exchanges like Binance, small transactions of around $10 will take up at least 25 minutes. Why would Ethereum process transactions at a slower pace even with fast confirmation and finality time? This scalability limitation is attributed to Ethereum’s current architecture, including its use for sharding, a complex smart contract system, and high gas fees, which all bind to higher computational resources and costs and slow processing. Eventually, Ethereum will offer a single slot finality, but whether the finality could go below 15 minutes is still a hot topic of discussion.
- Binance Smart Chain (BSC)
The Binance Smart Chain is a blockchain platform created by Binance in September 2020. Its goal is to be a high-performance blockchain that supports smart contracts and digital ledgers. It uses a PoS consensus algorithm to power its transactions. As of September 3, 2024, a blog post shows that BSC supports 10,000 transactions per second. The confirmation time is five minutes, taking a minimum of sixty confirmations, and the block finality time is 3 seconds, typically as an ongoing process as new blocks get added. This super speed is the backbone for which BSC powers light-fast trading dApps, immersive blockchain games, and seamless interactions. By the numbers, BSC hosts over 5,500 dApps. The question boils down to how this happens without technically diving into the intricacies of BSC’s staking mechanism.
In an article titled “Turbocharged for the future”, the BSC development teams detail how they achieved this milestone. The first step entailed minimizing the network performance computing cost. Instead of following a directional connection with the sequencer that adds on the cost and delays the receiving of the transaction, the protocol migrated to a p2p connection through proxy nodes to minimize computing resources and assert that the bottleneck was no longer on the Network connection. Into the taxonomy of the block production, the BSC chain is built using the OP stack where the first — RollupDriver node — manages the mining process and the second — EngineAPI — initiates the production process and is called by the driver to update the chain to include the latest blocks. Additionally, the BSC chain introduced a kickoff optimization and block production optimization, making the layer 1 state 20x faster. To boost block production throughput, the network leverages transaction execution cache and concurrency in block commitment.
- Solana
As an open-source blockchain network and cryptocurrency, Solana was created to address scalability issues in Ethereum and Bitcoin. Since then, it has earned a spot in the “Ethereum killers” for adopting a baseline that emulates Ethereum’s architecture but is extensively modified to serve scalability needs. Its theoretical speed is 65,000 tps, but practically, the network supports 800 plus transactions per second, with the maximum recorded being 7,299. As a percentage, this is an 8% efficiency on the ratio of practical achievements to theoretical aims and presentations. This high speed is accompanied by a confirmation time of 0.4 seconds to 5 and a finality of up to 13 seconds. How these lightning speeds are achieved stems from the design rationale that differentiates Solana from other cryptocurrencies. As gathered from Solana’s white paper, other blockchains do not rely on time or make weak assumptions about all node participants’ abilities to keep time. In turn, nodes may make different choices, accepting or rejecting messages. This would birth a new technique to achieve consensus through records of time passage on ledgers.
To better understand Solana’s consensus algorithm, we will use bias from Ethereum. Initially, Ethereum ran on Satoshi’s proof of Work mechanism (PoW). Only in August 2022 did Ethereum transition to proof of stake (PoS). This upgrade, however, did not eliminate PoW but primarily uses it to produce its blocks while the PoS mechanism is integrated on top as additional elements. Solana adopts unique criteria where a system operates correctly even with malicious or unreliable nodes based on system finality and consistency, which bloom from securing agreements on all transactions among all nodes. Solana’s consensus mechanism is the explained PoS model explained above (such as Ethereum’s) with a slight variant where there’s a global clock (also known as Proof of History) before the consensus. As a result, Solana runs on a hybrid algorithm, with the latter used to arrange the order of blocks, data, and transactions. More details on the implementation can be found in Solana’s documentation.
- Polkadot
Polkadot, designed as a baseline on which other blockchain projects and applications can build on, is a decentralized network, arguably one of the most dedicated to improving the fundamental technologies that power the Web3 ecosystems. Envisioned to allow the transfer of tokens and data across all blockchains, Polkadot breaks the barriers between different ecosystems through intermediary-free communications, and as a result, it eliminates bottlenecks in Web3 interactions. Through parachains, relay chains, and bridges, Polkadot allows different blockchain architectures to interact with each other. Parachains are custom blockchains that run independently, and relay chains bind the parachains to the shared network security, consensus mechanism, and interoperability. Bridges are the connections and means of data transfer across different blockchains. In the post “Is Polkadot dying or delivering on the promise?” you can learn about its initial mission to solve scalability, isolatability, developability, governance, and practicability of the network.
As of this writing, Polkadot has attained a maximum speed of 450 transactions per second. However, from the design documents, it is clear that their tests claim to support a thousand TPS, up to 100,000 if run on 100 parachains. Once an asynchronous backing upgrade is implemented into the system, the number could hit 1,000,000. A detailed breakdown of this can be accessed in Polkadot’s FAQs. The confirmation time of Polkadot depends on the network configuration, as you might have guessed, and the number of confirmations required. Typically, the block time is 6 to 12 seconds, 32 confirmations for asset transfers, and a processing time of approximately 5 minutes for every 2 confirmations. In attribution to this lies the nominated proof of stake (NPoS) consensus mechanism, which Cardano’s Ouroboros has greatly influenced. The hybrid consensus mechanism relies on validators and nominators to maintain chain security.
- Avalanche
Often described as a network of networks, Avalanche is a blockchain platform offering tooling and features targeted at developing, launching, and supporting decentralized applications (dApps). It is also the first platform in the blockchain industry known to finalize transactions in less than a second. Processing over 4,500 transactions per second, the network is a baseline upon which financial assets and enterprise-scale solutions can be built. Running on smart contracts, Avalanche supports the entire toolset used on the Ethereum blockchain — Developers familiar with the Ethereum Virtual Machine (EVM) can easily build and deploy their dApps. Unlike Ethereum, Avalanche’s block finality time is roughly 3 seconds, with the difference cited in the support documentation being that blocks are produced asynchronously — there’s no consistent block time.
Though a complex network, Avalanches circles around four factors in its consensus algorithm: high throughput, parallelizability, finality, and decentralization. Simply put, the protocol is designed to process many transactions simultaneously, with a rapid finality, and allows for a wide range of participants. In its implementation, Avalanche takes a keen approach to enhancing the PoW and PoS algorithms. It also implements the Snowman consensus protocol — high optimization for blockchain networks — subnetworks, and multiple built-in blockchains. Subnetworks allow developers to create their own networks geared at specific use cases, with nearly instantaneous transaction finality. By operating on a multi-chain architecture (Platform, Exchange and Contract), asset transfers are based on different functions, hence the network has reduced congestion.
- Algorand
As an open-source, decentralized digital currency and blockchain, Algorand follows a single-layer architecture. This means that the network cannot be forked (also known as splitting, a scenario in software development where an application’s source code is copied and modified to create a newer version of the existing package), guaranteeing that completed transactions cannot be altered. In its inception, Algorand was designed to work as a global virtual machine, making it a direct competitor of the Ethereum network, and since its debut in 2019, the blockchain has established its space as a powerful and sustainable layer one blockchain. Simply put, it is an energy-efficient, high throughput and near-instant finality layer one chain. By the numbers, Algorand is currently at 3 seconds for the confirmation and block time, with a theoretical threshold of over 9,000 tps, although the maximum recorded has been 5,716 tps, while at the time of writing, this is 13 as gathered from Chainspect.
The data above present Algorand as a lucrative network from the point of view of speed and technical capabilities. To these definitive qualities, we can attribute Algorand’s operation model, where the network runs on the Pure Proof of Stake (PPOS) consensus mechanism. Not only does the blockchain network have participation nodes to vote on and add new blocks, but it also uses relay nodes to enable efficient communication paths. In a continuous process, the blockchain compresses information, and in turn, this reduces the data burden placed on the network. Unlike other networks, where Staking is mandatory to secure the network — for instance, in Cardano, Staking ADA enhances its efficiency and stability — holders of Algo, Algorand’s native token, always have control over their token.
Even without delving into the specifics of how Pure Proof of Stake works, it is important for Cardano users to learn how our Ouroboros PoS mechanism inspires and compares to other networks. In this case, Algorand’s consensus can be summarized into five steps: random verifiable functions (VRFs) identify block proposers, a block is proposed, it moves to the soft voting phase, and once certified, the block is written on the chain.
- Ripple
Ripple, a leading provider of a suite of payment tools, is a digital protocol and network with the native cryptocurrency XRP. Since its inception, the ledger has been initialized to allow quick and cheaper transactions, unlike other crypto platforms. While this baseline is a nice fit for day-to-day transactions, development shifted focus, leaning more on the support for institutional use of its native token, and this has been its thriving source of value. As a major aspect of crypto, security is uniquely handled in the Ripple protocol. Unlike BTC’s PoW, which utilizes mathematical algorithms, or Cardano’s Ouroboros staking initiative, Ripple is secured through token issuing by executives and, as expected, from Ripple Labs, the company behind this technology. Put differently, Ripple is not an alternative to traditional currencies but a middleman currency for global transactions. Though usable as a trade between value units, Ripple’s positioning is a better solution for those aware of the limitations of traditional banking. Because a private entity runs it, it’s not a truly decentralized ecosystem. Nevertheless, it’s one of the fastest crypto platforms.
By the numbers, Ripple supports 1,000 transactions per second on-chain, potentially scaling like other payment channels off-chain, probably up to 50,000. The transaction confirmation time and block finality, as a dual, typically take 3 – 5 seconds based on its consensus mechanism — transactions achieve immediate finality, or as you’re thinking, finality is nearly instantaneous after transaction validation. Underlying such powerful capabilities is the Ripple Consensus Ledger, which has since been updated to incorporate XRP payment channels, a zero-latency technique for infinite scaling and throughput. Worthy of note are a few properties that define the Ripple Consensus Algorithm: anyone on the ledger can agree on the latest states for which transactions have occurred, all transactions execute without the need for a middleman, the ledger progresses even with some participants joining, leaving or behaving inappropriately, if many participants get involved in malicious activity the network fails, and confirmation times do not require a wasteful or competitive usage for resources.
- Tezos
Designed to facilitate peer-to-peer transactions and deploy decentralized applications, Tezos is an open-source blockchain platform. Similar to Cardano, the network has a wide array of uses, from cheap transactions in decentralized finance (DeFi) to non-fungible tokens (NFTs) and tapping into sectors like gaming and Game-Fi. Anyone owning the XTZ token, Tezos native token, can vote on future protocol upgrades, as in Cardano’s Project Catalyst. Tezos, known as a self-upgradable blockchain, has automatic updates and upgrades. To put this into perspective, once any changes on the network have been voted on and consensus has been reached for the proposed rules, the protocol (or software) updates the rules across all nodes — forkless upgrades in the developer’s terms. As a result, users of Tezos have the power to shape its future of Tezos’ future. In differentiation, Tezos stands out for energy efficiency and baking rewards (a variant of the staking rewards in PoS consensus protocols).
In a report from Nomadic Labs, the masterminds behind the Tezos blockchain, we gather that the protocol performs 1 million transactions per second. If you deposit assets into the network, finality is achieved after four confirmations, each with 10 – 15 seconds block time. How these fast speeds are achieved, the credit goes to its operation model, where the blockchain is split into two parts. The first is a network shell that handles transactions, administrative tasks and upgrades (or network amendments). The last is a network protocol for which blocks are proposed before being sent to the network shell for review. In its consensus, Tezos has been inspired by Cardano’s Ouroboros to run on a slightly different model, liquid proof of stake. Whether staking or if you prefer to use baking, the ecosystem depends on validators who run nodes, and delegators can choose or change to who they delegate their assets, an easy way for users to align their tokens with the incentives that propel their participation.
The Bottom Line
When choosing a cryptocurrency and blockchain platform, whether for personal or institutional use or to fulfill your technology or technical curiosity, transaction speed is a major concern. Many factors will come into play in the speed of transactions in blockchain technology, but choosing the right platform to build your digital and investment kingdom will save you lots of time, energy and resources upfront. How you choose between the above-listed crypto platforms can be hectic, but we can narrow it down to a single question. What kind of an ecosystem are you looking to engage with?
If security, decentralization, and scalability are your core motivations, then there are probably existing competitors to challenge our own Cardano. However, for a digital ecosystem to thrive, the bias goes beyond these to include sustainability and social and economic impact. There are existing faster blockchains like BSC, Ripple, and Tezos. Well ultimately, it is undeniable that all these have some missing fundamental concepts that define a truly decentralized ecosystem. BSC and Ripple are run by private entities and cannot shape a clear Web3 ecosystem. With Tezos, the protocol embraces a consensus protocol that borrows from Cardano’s original and probably the first secure proof of stake mechanisms, Ouroboros.
With Bitcoin and Ethereum, the pioneers of blockchain technology and the first platforms to introduce smart contracts, it is clear that scalability is a key concern as we usher in a world where transaction speeds are removed from the list of bottlenecks in applications and financial endeavors, this rules them out. If you shift the concern to Solana, network outages have been an issue, not to mention the collapse of FTX, a major crypto closely associated with it. Polkadot’s biggest challenge is interoperability and network dynamics. Algorand faces big blockers like SDK’s immaturity, poor token distribution and centralization. And with Avalanche, the block is on revenue dilemma and poor governance.
We cannot stress enough how Cardano offers reliable speeds, but it is still on the development roadmap to elevate its current potential. If you look at the missing fundamental aspects that delimit other blockchain platforms, Cardano has already figured them out. In this listicle, we have seen many blockchain families that have stemmed their research and inspiration from Cardano’s Ouroboros. And as we head to the era where Cardano’s scaling solutions (Hydra and sidechains) mature, it is evident that Cardano remains the leading blockchain platform in the entire Web3 family.
If you have doubts about this, then here’s our invitation. Learn why Cardano is a third-generation blockchain and why you must and should build your digital life on it.
