What’s the Logic Behind a Blockchain Network and the Crypto Transaction Speed?

What’s the Logic Behind a Blockchain Network and the Crypto Transaction Speed?

Speed is undoubtedly a key characteristic in blockchains and the digital asset market. Naturally, a blockchain becomes more efficient when it can settle transactions quickly. This aspect helps reduce traffic on the ledger as transactions get verified by various community members. So how does the transaction speed relate to a blockchain network?

The Scalability Question

Scalability represents a blockchain’s ability to handle transactions within the shortest time possible. Nodes (validators) are responsible for verifying these transactions through various consensus mechanisms. This decentralized structure gives community members the authority to confirm transactions without any central oversight.

In general, a blockchain’s scalability status largely affects crypto transaction speeds. The transaction verification period of digital currencies is relatively different from other payment solutions available today. 

For instance, Visa can process more than 20,000 transactions per second (TPS), while Bitcoin can only manage close to seven TPS. This problem, therefore, hinders blockchains from achieving near-instant transactions. Some of the factors that expound on the scalability issue include:


Throughput refers to a process that measures the transaction verification speeds of blockchains. As mentioned above, the rate is usually expressed in transactions per second (TPS). A blockchain network can have a higher transaction throughput depending on its consensus mechanism. 

For example, cryptocurrencies with a PoW mechanism may have a lower throughput than those with a PoS system. The argument may be true since PoW coins are more labor-intensive than PoS-based currencies. 

Blockchain Capacity

A blockchain’s capacity can be determined by the amount of data it can hold. Before validators verify trades, the ledger creates a block representing a user’s transaction request. Thereafter, nodes receive this block, validate, and publish it to an existing blockchain network. Validators are also rewarded with the network’s coin for confirming every transaction. 

A blockchain can become more scalable if its network can retain a growing number of transactional data. In that respect, transactional speeds may become an issue if a blockchain lacks block space.  

Network Charges

Trading fees also directly impact a blockchain’s transaction speed and scaling goals. Transaction validation processes like the PoW mechanism can become complex to perform. This fact may be true since miners require significant computational power to validate transactions faster. 

Transactional charges become strenuous to users with low-fee trades as the complexities grow. Thus, users will have to pay a bigger fee if they need speedy verification services.  

The Transaction Speed Dilemma in Bitcoin and Ethereum

In 2017, Bitcoin’s network began to experience several issues that affected its transaction throughput. At the time, Bitcoin’s blockchain was slow, and users had to wait for extended periods to get their trades verified. As a result, users had to speed up their transactions by paying a bigger trading fee to the network. At one point, the transaction charges would range from $25 to $70. 

Ethereum also had its fair share of network congestion in 2017 after the launch of CryptoKitties. Essentially, the game allows users to breed kittens and trade NFTs with ETH. After the game’s release, Ethereum’s blockchain began to clog, and numerous unconfirmed transactions were piling up. Within no time, CryptoKitties accounted for 12% of the network’s transactions a few days after its launch. 

How Blockchains can Improve Speed

Industry experts are coming up with several solutions addressing the blockchain scalability concern. By implementing these solutions allow blockchains to have manageable traffic and relatively fast transaction speeds. The approaches include:


Sharding is a form of database management that divides blockchains into smaller segments. Furthermore, each segment is under the control of nodes that manage and process transactions. In essence, nodes can verify a limited number of transactions simultaneously as they have to reach a consensus. Moreover, every validator has a copy of the network’s transaction history from the genesis block to the current block.

Having sharded blockchains eliminates the need to confirm every trade available or download a blockchain’s entire history. That way, a blockchain can scale and become more effective in transaction validation.

Payment Protocols 

Implementing payment protocols can ease the number of transactions taking place on the primary blockchain. The idea here is to use an off-chain network to validate transactions on the main chain. This approach reduces the need for global consensus since smart contracts are available. 

Consequently, payment protocols encourage immediate trade executions and cheaper transaction fees. Among the prominent payment protocols available in the crypto market today include the Lightning Network, the Raiden Network, and many more.


Blockchains have different transaction settlement times in the digital asset economy. The transaction speeds are attributed to the ledger’s ability to scale as the network expands. Once a blockchain overloads, the transaction speeds ultimately become slower. In the end, traders will pay higher fees to verify their transactions faster. 

Scaling approaches like sharding and payment protocols help relieve the load blockchains carry. Hence, once blockchains adopt these solutions, the transaction speeds of cryptocurrencies may improve significantly.

Julius Mutunkei

Julius is a blockchain reporter skilled at synthesizing all crypto-related information to make articulate texts easy for anyone to grasp. With a beginner's level certificate in Financial Analysis, Julius can read, interpret and report crypto findings to help investors exercise the best judgment in their decision-making process. When he is not caught up in the crypto frenzy, Julius likes playing a game of FIFA with his online buddies.