WHAT IS TPS?

*Transactions per second (TPS) is the number of transactions that a blockchain network can process in one second.

As the popularity of cryptocurrencies and decentralized applications grows, the TPS indicator becomes more than just a metric; it is a crucial element that determines the future of entire ecosystems. The efficiency and scalability of blockchains directly affect their ability to support mass adoption and remain resilient as network traffic increases.

What is TPS and why is it important?

TPS is a metric that measures the performance of a blockchain system by indicating how many transactions it can process within a given time frame. The higher the TPS, the faster the network can process transactions, which directly impacts its scalability and ability to serve a large number of users.

The impact of TPS on blockchain and scalability

Blockchain networks that can only handle a few transactions per second face scalability issues. For example, Bitcoin processes approximately 7 transactions per second, which makes it inefficient for mass usage in daily transactions. For applications like mass payments, gaming, or decentralized apps (dApps), higher TPS rates are essential.

Transaction speed

A higher TPS reduces transaction confirmation times, which is crucial for users who expect fast processing. For cryptocurrency exchanges or financial applications, this factor is critical to avoid delays and losses.

Issues related to low TPS:

1. High fees
   When the network is overloaded, transactions accumulate in blocks, and users compete for space in these blocks, leading to higher transaction fees. This is particularly relevant for networks with low TPS.
2. Delays in confirmations
   In cases of network congestion, the time needed to confirm transactions can significantly increase, creating problems for users and potentially causing them to abandon the use of the cryptocurrency.

Advanced solutions to increase TPS:

1. Layer 2 solutions
   Layer 2 protocols, such as Lightning Network for Bitcoin or Optimistic Rollups for Ethereum, allow for significant TPS improvements by processing transactions off the main blockchain and then confirming them with minimal costs.
2. Block size reduction
   Increasing the block size (such as in Bitcoin or Bitcoin Cash) also helps raise the number of transactions per second. However, this requires careful balancing to avoid compromising the security of the network.
3. Improving consensus algorithms
   Transitioning from Proof of Work (PoW) to Proof of Stake (PoS) or other more energy-efficient and faster consensus algorithms can significantly increase network performance.